-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VJxbMkrV7423zW+kQheCpp0yk0qgECPOjO8K98bdq3u+vD60eew7eTkbtFamvzZg 67XluZ9VZQBFz7+S3773+g== 0000856517-99-000047.txt : 19991101 0000856517-99-000047.hdr.sgml : 19991101 ACCESSION NUMBER: 0000856517-99-000047 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19991029 EFFECTIVENESS DATE: 19991029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONEY MARKET OBLIGATIONS TRUST /NEW/ CENTRAL INDEX KEY: 0000856517 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 251415329 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-31602 FILM NUMBER: 99736817 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05950 FILM NUMBER: 99736818 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222-3779 BUSINESS PHONE: 8003417400 MAIL ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURG STATE: PA ZIP: 15222-3779 485BPOS 1 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 ----- Pre-Effective Amendment No. ............................... Post-Effective Amendment No. 36 ............................... X -------- ----- and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X ----- Amendment No. 37 ............................................. X -------- ----- 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) X on October 31, 1999 pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a)(i) on _________________ pursuant to paragraph (a)(i) 75 days after filing pursuant to paragraph (a)(ii) on _________________ pursuant to paragraph (a)(ii) of Rule 485 If appropriate, check the following box: This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Copies to: Matthew G. Maloney, Esquire Dickstein Shapiro Morin & Oshinsky LLP 2101 L Street, N.W. Washington, DC 20037 PROSPECTUS Money Market Obligations Trust Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund INSTITUTIONAL SHARES As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. OCTOBER 31, 1999 CONTENTS Risk/Return Summary 1 What are Each Fund's Fees and Expenses? 11 What are Each Fund's Investment Strategies? 14 What are the Principal Securities in Which the Funds Invest? 15 What are the Specific Risks of Investing in the Funds? 18 What Do Shares Cost? 19 How are the Funds Sold? 19 How to Purchase Shares 19 How to Redeem Shares 21 Account and Share Information 23 Who Manages the Funds? 24 Financial Information 25 Risk/Return Summary WHAT IS EACH FUND'S INVESTMENT OBJECTIVE? Each Fund is a money market fund that seeks to maintain a stable net asset value of $1.00 per Share.
FUND Objective Government Obligations Fund (Government Fund) To provide current income consistent with stability of principal. Government Obligations Tax-Managed Fund (Government Tax-Managed Fund) To provide current income consistent with stability of principal and liquidity. Municipal Obligations Fund (Municipal Fund) To provide current income exempt from all federal regular income tax consistent with stability of principal. Prime Obligations Fund (Prime Fund) To provide current income consistent with stability of principal. Prime Cash Obligations Fund (Prime Cash Fund) To provide current income consistent with stability of principal and liquidity. Prime Value Obligations Fund (Prime Value Fund) To provide current income consistent with stability of principal and liquidity. Tax-Free Obligations Fund (Tax-Free Fund) To provide dividend income exempt from federal regular income tax consistent with stability of principal. Treasury Obligations Fund (Treasury Fund) To provide current income consistent with stability of principal.
While there is no assurance that a Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus. The investment objective of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund may be changed by the Funds' Trustees without shareholder approval. WHAT ARE EACH FUND'S MAIN INVESTMENT STRATEGIES? Each of the Funds invests in a portfolio of securities maturing in 397 days or less. The portfolio of each Fund will have a dollar-weighted maturity of 90 days or less. GOVERNMENT FUND The Government Fund invests primarily in U.S. Treasury and agency securities, including repurchase agreements collateralized fully by U.S. Treasury and agency securities. GOVERNMENT TAX-MANAGED FUND The Government Tax-Managed Fund invests primarily in U.S. Treasury and agency securities that pay interest exempt from state personal income tax. MUNICIPAL FUND The Municipal Fund invests primarily in high quality tax exempt securities. Under normal market conditions, the Municipal Fund will invest at least 80% of its total assets in tax exempt securities. At least 80% of the Municipal Fund's annual interest income will be exempt from federal regular income tax. Interest from the Municipal Fund's investments may be subject to the federal alternative minimum tax for individuals and corporations (AMT). PRIME FUND The Prime Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. PRIME CASH FUND The Prime Cash Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. PRIME VALUE FUND The Prime Value Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. TAX-FREE FUND The Tax-Free Fund invests primarily in high quality tax exempt securities. At least 80% of the Tax-Free Fund's annual interest income will be exempt from federal regular income tax. Interest from the Tax-Free Fund's investments may be subject to AMT. TREASURY FUND The Treasury Fund invests primarily in U.S. Treasury securities, including repurchase agreements collateralized fully by U.S. Treasury securities. WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS? All mutual funds take investment risks. Therefore, even though the Funds are money market funds that seek to maintain a stable net asset value, it is possible to lose money by investing in a Fund. The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis. The Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.67%. Within the periods shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.68% (quarter ended March 31, 1991). Its lowest quarterly return was 0.76% (quarter ended June 30, 1993). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.45% 5 Years 5.29% Start of Performance 1 5.21% 1 The Fund's Institutional Shares start of performance date was March 30, 1990. The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 4.91%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis. The Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.65%. Within the periods shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.36% (quarter ended December 31, 1997). Its lowest quarterly return was 1.26% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.37% Start of Performance 1 5.44% 1 The Fund's Institutional Shares start of performance date was June 2, 1995. The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 4.94%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Shares of Municipal Obligations Fund (the "Former Fund") prior to its reorganization into the Municipal Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Municipal Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Shares total returns on a calendar year-end basis. The Former Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 2.44%. Within the periods shown in the Chart, the Former Fund's Institutional Shares highest quarterly return was 1.04% (quarter ended June 30, 1995). Its lowest quarterly return was 0.60% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 3.56% 5 Years 3.55% Start of Performance 1 3.39% 1 The Former Fund's Institutional Shares start of performance date was February 8, 1993. The Former Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 3.77%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis. The Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.73%. Within the periods shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.74% (quarter ended March 31, 1991). Its lowest quarterly return was 0.77% (quarter ended June 30, 1993). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.52% 5 Years 5.34% Start of Performance 1 5.27% 1 The Fund's Institutional Shares start of performance date was March 26, 1990. The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 5.07%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Shares of Prime Cash Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Cash Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Cash Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Shares total returns on a calendar year-end basis. The Former Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.74%. Within the periods shown in the Chart, the Former Fund's Institutional Shares highest quarterly return was 1.53% (quarter ended June 30, 1995). Its lowest quarterly return was 0.81% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.56% 5 Years 5.38% Start of Performance 1 5.05% 1 The Former Fund's Institutional Shares start of performance date was February 8, 1993. The Former Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 5.10%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Shares of Prime Value Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Value Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Value Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Shares total returns on a calendar year-end basis. The Former Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.76%. Within the periods shown in the Chart, the Former Fund's Institutional Shares highest quarterly return was 1.53% (quarter ended June 30, 1995). Its lowest quarterly return was 0.82% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.58% 5 Years 5.41% Start of Performance 1 5.08% 1 The Former Fund's Institutional Shares start of performance date was February 8, 1993. The Former Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 5.15%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis. The Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 2.28%. Within the periods shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.48% (quarter ended December 31, 1990). Its lowest quarterly return was 0.55% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD Fund 1 Year 3.38% 5 Years 3.40% Start of Performance 1 3.66% 1 The Fund's Institutional Shares start of performance date was December 12, 1989. The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 3.58%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis. The Fund's Institutional Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.57%. Within the periods shown in the Chart, the Fund's Institutional Shares highest quarterly return was 2.02% (quarter ended September 30, 1990). Its lowest quarterly return was 0.75% (quarter ended June 30, 1993). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.37% 5 Years 5.23% Start of Performance 1 5.23% 1 The Fund's Institutional Shares start of performance date was December 12, 1989. The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was 4.75%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. What are Each Fund's Fees and Expenses? MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Shares of the Government Obligations Fund and the Government Obligations Tax-Managed Fund.
Government Government Obligations Obligations Tax-Managed SHAREHOLDER FEES Fund Fund Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price). None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None Exchange Fee None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% Distribution (12b-1) Fee None None Shareholder Services Fee 3 0.25% 0.25% Other Expenses 0.09% 0.10% Total Annual Fund Operating Expenses 0.54% 0.55% 1 Although not contractually obligated to do so, the adviser and shareholder services provider waived certain amounts. These are shown below along with the net expenses the Funds actually paid for the fiscal year ended July 31, 1999. Total Waiver of Fund Expenses 0.34% 0.35% Total Actual Annual Fund Operating Expenses (after waivers) 0.20% 0.20% 2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The management fee paid by Government Obligations Fund and Government Obligations Tax-Managed Fund (after the voluntary waiver) was 0.11% and 0.10%, respectively, for the fiscal year ended July 31, 1999. 3 The shareholder services provider voluntarily waived the shareholder services fee. The shareholder services provider can terminate this voluntary waiver at any time. The shareholder services fee paid by the Funds' Institutional Shares (after the voluntary waiver) was 0.00% for the fiscal year ended July 31, 1999.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Shares operating expenses are BEFORE WAIVERS as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Government Obligations Fund $55 $173 $302 $677 Government Obligations Tax-Managed Fund $56 $176 $307 $689 MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Shares of the Prime Obligations Fund, Tax-Free Obligations Fund and Treasury Obligations Fund and the Government Obligations Tax-Managed Fund.
PRIME TAX-FREE TREASURY OBLIGATIONS OBLIGATIONS OBLIGATIONS SHAREHOLDER FEES FUND FUND FUND Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price). None None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None None Exchange Fee None None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% 0.20% Distribution (12b-1) Fee None None None Shareholder Services Fee 3 0.25% 0.25% 0.25% Other Expenses 0.10% 0.10% 0.09% Total Annual Fund Operating Expenses 0.55% 0.55% 0.54% 1 Although not contractually obligated to do so, the adviser and shareholder services provider waived certain amounts. These are shown below along with the net expenses the Funds actually paid for the fiscal year ended July 31, 1999. Total Waiver of Fund Expenses 0.35% 0.35% 0.34% Total Actual Annual Fund Operating Expenses (after waivers) 0.20% 0.20% 0.20% 2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The management fee paid by Prime Obligations Fund, Tax-Free Obligations Fund and Treasury Obligations Fund (after the voluntary waiver) was 0.10%, 0.10% and 0.11%, respectively, for the fiscal year ended July 31, 1999. 3 The shareholder services provider voluntarily waived the shareholder services fee. The shareholder services provider can terminate this voluntary waiver at any time. The shareholder services fee paid by the Funds' Institutional Shares (after the voluntary waiver) was 0.00% for the fiscal year ended July 31, 1999.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Shares operating expenses are BEFORE WAIVERS as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Prime Obligations Fund $56 $176 $307 $689 Tax-Free Obligations Fund $56 $176 $307 $689 Treasury Obligations Fund $55 $173 $302 $677 MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Shares of the Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund.
MUNICIPAL PRIME CASH PRIME VALUE OBLIGATIONS OBLIGATIONS OBLIGATIONS SHAREHOLDER FEES FUND FUND FUND Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price). None None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None None Exchange Fee None None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% 0.20% Distribution (12b-1) Fee None None None Shareholder Services Fee 3 0.25% 0.25% 0.25% Other Expenses 0.16% 0.11% 0.11% Total Annual Fund Operating Expenses 4 0.61% 0.56% 0.56% 1 Although not contractually obligated to do so, the adviser and shareholder services provider expect to waive certain amounts. These are shown below along with the net expenses the Funds expect to pay for the fiscal year ending July 31,2000. Total Waiver of Fund Expenses 0.43% 0.38% 0.40% Total Actual Annual Fund Operating Expenses (after waivers) 0.18% 0.18% 0.16% 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 Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund (after the anticipated voluntary waiver) is expected to be 0.02%, 0.07% and 0.05%, respectively, for the fiscal year ending July 31, 2000. 3 The shareholder services provider has no present intention of paying or accruing the shareholder services fee during the fiscal year ending July 31, 2000. 4 For the fiscal year ended July 31, 1999, prior to the reorganization of Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund, the Former Funds, as portfolios of Money Market Obligations Trust, had Total Annual Fund Operating Expenses and Total Actual Annual Fund Operating Expenses (after waivers) of 0.61% and 0.18%, 0.56% and 0.18% and 0.56% and 0.16%, respectively.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Shares operating expenses are BEFORE WAIVERS as estimated in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Municipal Obligations Fund $62 $195 $340 $762 Prime Cash Obligations Fund $57 $179 $313 $701 Prime Value Obligations Fund $57 $179 $313 $701 What are Each Fund's Investment Strategies? Each Fund's investment strategy is described earlier under "What are Each Fund's Main Investment Strategies?" Following is additional information on the investment strategies for the Funds. The Adviser for each of the Funds targets a dollar-weighted average portfolio maturity range based upon its interest rate outlook. The Adviser formulates its interest rate outlook by analyzing a variety of factors, such as: * current U.S. economic activity and the economic outlook; * current short-term interest rates; * the Federal Reserve Board's policies regarding short-term interest rates; and * the potential effects of foreign economic activity on U.S. short-term interest rates. The Adviser generally shortens the portfolio's dollar-weighted average maturity when it expects interest rates to rise and extends the maturity when it expects interest rates to fall. The Adviser selects securities used to shorten or extend the portfolio's dollar-weighted average maturity by comparing the returns currently offered by different investments to their historical and expected returns. MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND The Adviser performs a fundamental credit analysis to develop an approved list of issuers and securities that meet the Adviser's standard for minimal credit risk. The Adviser monitors the credit risks of all portfolio securities on an ongoing basis by reviewing periodic financial data and ratings of nationally recognized statistical rating organizations (NRSROs). MUNICIPAL FUND AND TAX-FREE FUND In targeting a dollar-weighted average portfolio maturity range, the Adviser also will consider the tax exempt securities available. In addition, the Adviser may invest in securities subject to AMT in an attempt to enhance yield and provide diversification. INDUSTRY CONCENTRATION The Prime Fund may invest 25% or more of its assets in commercial paper issued by finance companies. The Prime Value Fund may invest 25% or more of its assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund and the Tax-Free Fund may temporarily depart from their principal investment strategies by investing their assets in securities subject to federal income tax. They may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Funds to receive and distribute taxable income to investors. What are the Principal Securities in Which the Funds Invest? GOVERNMENT FUND The Government Fund invests primarily in fixed income securities, including U.S. Treasury securities, agency securities and repurchase agreements. GOVERNMENT TAX-MANAGED FUND The Government Tax-Managed Fund invests primarily in fixed income securities, including U.S. Treasury securities and agency securities. MUNICIPAL FUND The Municipal Fund invests primarily in tax exempt securities, a type of fixed income security, including variable rate demand instruments and municipal notes. Certain of these tax exempt securities may be subject to credit enhancement. PRIME FUND The Prime Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. PRIME CASH FUND The Prime Cash Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. PRIME VALUE FUND The Prime Value Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. TAX-FREE FUND The Tax-Free Fund invests primarily in tax exempt securities, a type of fixed income security, including variable rate demand instruments and municipal notes. Certain of these tax exempt securities may be subject to credit enhancement. TREASURY FUND The Treasury Fund invests primarily in fixed income securities, including U.S. Treasury securities and repurchase agreements. FIXED INCOME SECURITIES Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically. In addition, the issuer of a fixed income security must repay the principal amount of the security, normally within a specified time. U.S. TREASURY SECURITIES U.S. Treasury securities are direct obligations of the federal government of the United States. AGENCY SECURITIES Agency securities are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority (a GSE). The United States supports some GSEs with its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. CORPORATE DEBT SECURITIES Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. The Prime Fund, the Prime Cash Fund and the Prime Value 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 less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. DEMAND INSTRUMENTS Demand instruments are corporate debt securities that the issuer must repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The Funds treats demand instruments as short-term securities, even though their stated maturity may extend beyond one year. BANK INSTRUMENTS Bank instruments are unsecured interest bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit and banker's acceptances. Yankee instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments are denominated in U.S. dollars and issued by non- U.S. branches of U.S. or foreign banks. ASSET BACKED SECURITIES Asset backed securities are payable from pools of obligations other than mortgages. Most asset backed securities involve consumer or commercial debts with maturities of less than ten years. However, almost any type of fixed income assets (including other fixed income securities) may be used to create an asset backed security. Asset backed securities may take the form of commercial paper, notes or pass through certificates. TAX EXEMPT SECURITIES Tax exempt securities are fixed income securities that pay interest that is not subject to federal regular income taxes. Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment. VARIABLE RATE DEMAND INSTRUMENTS Variable rate demand instruments are tax exempt securities that require the issuer or a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The securities also pay interest at a variable rate intended to cause the securities to trade at their face value. The Funds treat demand instruments as short-term securities, because their variable interest rate adjusts in response to changes in market rates, even though their stated maturity may extend beyond 13 months. MUNICIPAL NOTES Municipal notes are short-term tax exempt securities. Many municipalities issue such notes to fund their current operations before collecting taxes or other municipal revenues. Municipalities may also issue notes to fund capital projects prior to issuing long-term bonds. The issuers typically repay the notes at the end of their fiscal year, either with taxes, other revenues or proceeds from newly issued notes or bonds. CREDIT ENHANCEMENT Credit enhancement consists of an arrangement in which a company agrees to pay amounts due on a fixed income security if the issuer defaults. In some cases the company providing credit enhancement makes all payments directly to the security holders and receives reimbursement from the issuer. Normally, the credit enhancer has greater financial resources and liquidity than the issuer. For this reason, the Adviser usually evaluates the credit risk of a fixed income security based solely upon its credit enhancement. Common types of credit enhancement include guarantees, letters of credit, bond insurance and surety bonds. Credit enhancement also includes arrangements where securities or other liquid assets secure payment of a fixed income security. If a default occurs, these assets may be sold and the proceeds paid to the security's holders. Either form of credit enhancement reduces credit risks by providing another source of payment for a fixed income security. REPURCHASE AGREEMENTS Repurchase agreements are transactions in which a Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. A Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser. Repurchase agreements are subject to credit risks. INVESTMENT RATINGS The money market instruments in which the Prime Fund, the Prime Cash Fund and the Tax-Free Fund invest must be rated in the highest short-term rating category by one or more NRSROs or be of comparable quality to securities having such ratings. The securities in which the Municipal Fund and the Prime Value Fund invest must be rated in one of the two highest short-term rating categories by one or more NRSROs or be of comparable quality to securities having such ratings. What are the Specific Risks of Investing in the Funds? Each of the Funds is subject to interest rate risks. In addition, each of the Funds (except the Government Tax-Managed Fund) is subject to credit risks. Finally, the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund are subject to sector risks. INTERESTS RATE RISKS Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Money market funds try to minimize this risk by purchasing short-term securities. CREDIT RISKS MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND Credit risk is the possibility that an issuer will default on a security by failing to pay interest or principal when due. If an issuer defaults, a Fund will lose money. Money market funds try to minimize this risk by purchasing higher quality securities. Many fixed income securities receive credit ratings from services such as Standard & Poor's and Moody's Investors Service. These services assign ratings to securities by assessing the likelihood of issuer default. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, a Fund must rely entirely on the Adviser's credit assessment. GOVERNMENT FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TREASURY FUND Credit risk includes the possibility that a party to a transaction involving a Fund will fail to meet its obligations. This could cause a Fund to lose the benefit of the transaction or prevent a Fund from selling or buying other securities to implement its investment strategy. SECTOR RISKS A substantial part of the portfolios of the Prime Fund and the Prime Value Fund may be comprised of securities issued by finance companies or the banking industry, respectively, or companies with similar characteristics. In addition, a substantial part of the portfolios of the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund may be comprised of securities credit enhanced by banks or companies with similar characteristics. As a result, the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund will be more susceptible to any economic, business, political or other developments which generally affect these entities. What Do Shares Cost? You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is open. The Funds attempt to stabilize the net asset value (NAV) of their Shares at $1.00 by valuing the portfolio securities using the amortized cost method. A Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The Funds do not charge a front-end sales charge. The NAV of the Municipal Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund is determined at 12:00 noon and 3:00 p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The NAV of the Government Tax- Managed Fund is determined at 1:00 p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The NAV of the Government Fund, the Prime Fund and the Treasury Fund is determined at 5:00 p.m. (Eastern time) each day the NYSE is open. The required minimum initial investment for each Fund is $1,000,000. There is no required minimum subsequent investment amount. An account may be opened with a smaller amount as long as the $1,000,000 minimum is reached within one year. An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through investment professionals may be subject to a smaller minimum investment amount. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions. How are the Funds Sold? The Funds offer three share classes: Institutional Shares, Institutional Service Shares and Institutional Capital Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Shares. Each share class has different expenses, which affect their performance. Contact your investment professional or call 1- 800-341-7400 for more information concerning the other classes. The Funds' Distributor, Federated Securities Corp., markets the Shares described in this prospectus to entities holding Shares in an agency or fiduciary capacity, financial institutions, financial intermediaries and institutional investors, or to individuals, directly or through investment professionals. The Municipal Fund and the Tax-Free Fund may not be a suitable investment for retirement plans because they invest in municipal securities. The Distributor and its affiliates may pay out of their assets other amounts (including items of material value) to investment professionals for marketing and servicing Shares. The Distributor is a subsidiary of Federated Investors, Inc. (Federated). How to Purchase Shares You may purchase Shares through an investment professional or directly from the Funds. The Funds reserve the right to reject any request to purchase Shares. THROUGH AN INVESTMENT PROFESSIONAL * Establish an account with the investment professional; and * Submit your purchase order for Shares of the Government Tax-Managed Fund to the investment professional before 2:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 2:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. * Submit your purchase order for Shares of the Municipal Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund to the investment professional before 3:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 3:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. * Submit your purchase order for Shares of the Government Fund, the Prime Fund and the Treasury Fund to the investment professional before 5:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 5:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. Investment professionals should send payments according to the instructions in the sections "By Wire" or "By Check." DIRECTLY FROM THE FUNDS * Establish your account with a 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 incurred by the Fund of Federated Shareholder Services Company, the Fund's transfer agent. An institution may establish an account and place an order by calling the Fund and will become a shareholder after the Fund receives the order. BY WIRE Send your wire to: State Street Bank and Trust Company Boston, MA Dollar Amount of Wire ABA Number 011000028 Attention: EDGEWIRE Wire Order Number, Dealer Number or Group Number Nominee/Institution Name Fund Name and Number and Account Number You cannot purchase Shares by wire on holidays when wire transfers are restricted. BY CHECK Make your check payable to THE FEDERATED FUNDS, note your account number on the check, and mail it to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that requires a street address, mail it to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will not accept third-party checks (checks originally payable to someone other than you or The Federated Funds). Orders by mail are considered received when payment by check is converted into federal funds (normally the business day after the check is received) and Shares begin earning dividends the next day. BY INVEST-BY-PHONE Once you establish an account, you may use the Funds' Invest-By-Phone privilege for future Share purchases if you have an account with a bank that is an Automated Clearing House (ACH) member. To apply, call the Funds for an authorization form. You may use Invest-By-Phone to purchase Shares approximately two weeks from the date you file the form with Federated Shareholder Services Company. BY AUTOMATED CLEARING HOUSE 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 a Fund if you purchased Shares directly from the Fund. THROUGH AN INVESTMENT PROFESSIONAL Submit your redemption request to your investment professional by the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment professionals are responsible for promptly submitting redemption requests and providing proper written redemption instructions as outlined below. DIRECTLY FROM THE FUNDS BY TELEPHONE You may redeem Shares by calling a Fund at 1-800-341-7400 once you have completed the appropriate authorization form for telephone transactions. If you call before 12:00 noon (Eastern time) with respect to the Municipal Fund and the Tax-Free Fund, 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Government Fund, the Prime Fund and the Treasury Fund, your redemption will be wired to you the same day. You will not receive that day's dividend. If you call after 12:00 noon (Eastern time) with respect to the Municipal Fund and the Tax-Free Fund, 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Government Fund, the Prime Fund and the Treasury Fund, your redemption will be wired to you the following business day. You will receive that day's dividend. With respect to the Tax-Free Fund and the Government Tax-Managed Fund, under limited circumstances, arrangements may be made with the Distributor for same-day payment of redemption proceeds, without that day's dividend, for redemption requests received before 12:00 noon (Eastern time) and 2:00 p.m. (Eastern time), respectively. BY MAIL You may redeem Shares by mailing a written request to a Fund. Your redemption request will be processed on the day the Fund receives your written request in proper form. Dividends are paid up to and including the day that a redemption request is processed. Send requests by mail to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 All requests must include: * 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 Funds 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 30 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 each 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 a Fund's ability to manage its assets. You will not accrue interest or dividends on uncashed checks from a Fund if those checks are undeliverable and returned to the Fund. ADDITIONAL CONDITIONS TELEPHONE TRANSACTIONS The Funds will record your telephone instructions. If a Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. SHARE CERTIFICATES The Funds no longer issue share certificates. If you are redeeming Shares represented by certificates previously issued by a Fund, you must return the certificates with your written redemption request. For your protection, send your certificates by registered or certified mail, but do not endorse them. Account and Share Information ACCOUNT ACTIVITY You will receive periodic statements reporting all account activity, including dividends and capital gains paid. DIVIDENDS AND CAPITAL GAINS The Funds declare any dividends daily and pay them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after a Fund receives your check. In either case, you earn dividends through the day your redemption request is received. The Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Funds will pay any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments. ACCOUNTS WITH LOW BALANCES Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum. TAX INFORMATION The Funds send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. Fund distributions of dividends and capital gains are taxable to you whether paid in cash or reinvested in the Funds. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time a Fund holds its assets. Fund distributions are expected to be primarily dividends. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. The Municipal Fund and the Tax-Free Fund send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that distributions from the Municipal Fund and the Tax-Free Fund will be primarily dividends that are exempt from federal income tax, although a portion of each Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Funds. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. Who Manages the Funds? The Board of Trustees governs the Funds. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Funds' assets, including buying and selling portfolio securities. The Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The Adviser and other subsidiaries of Federated advise approximately 175 mutual funds and separate accounts, which totaled approximately $111 billion in assets as of December 31, 1998. Federated was established in 1955 and is one of the largest mutual fund investment managers in the United States with approximately 1,900 employees. More than 4,000 investment professionals make Federated Funds available to their customers. ADVISORY FEES The Adviser receives an annual investment advisory fee of 0.20% of each Fund's average daily net assets. The Adviser may voluntarily waive a portion of its fee or reimburse the Funds for certain operating expenses. YEAR 2000 READINESS The "Year 2000" problem is the potential for computer errors or failures because certain computer systems may be unable to interpret dates after December 31, 1999 or may experience other date-related problems. The Year 2000 problem may cause systems to process information incorrectly and could disrupt businesses, such as the Funds, that rely on computers. While it is impossible to determine in advance all of the risks to the Funds, the Funds could experience interruptions in basic financial and operational functions. Fund shareholders could experience errors or disruptions in Fund share transactions or Fund communications. The Funds' service providers are making changes to their computer systems to fix any Year 2000 problems. In addition, they are working to gather information from third-party providers to determine their Year 2000 readiness. Year 2000 problems would also increase the risks of the Funds' investments. To assess the potential effect of the Year 2000 problem, the Adviser is reviewing information regarding the Year 2000 readiness of issuers of securities the Funds may purchase. 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. The financial impact of these issues for the Funds is still being determined. There can be no assurance that potential Year 2000 problems would not have a material adverse effect on the Funds. Financial Information FINANCIAL HIGHLIGHTS The Financial Highlights will help you understand each Fund's financial performance for its past five fiscal years, or since inception, if the life of the Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains. This information has been audited by Arthur Andersen LLP and Ernst & Young LLP, whose reports, along with each Fund's audited financial statements, are included in the Annual Reports. Financial Highlights-Government Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 5.04% 5.59% 5.43% 5.55% 5.57% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.54% 0.55% 0.55% 0.56% 0.60% Net investment income 2 4.58% 5.10% 4.97% 5.05% 5.18% Expenses (after waiver) 0.20% 0.20% 0.20% 0.20% 0.20% Net investments income (after waiver) 4.92% 5.45% 5.32% 5.41% 5.58% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $4,498,581 $3,707,106 $3,293,392 $2,182,999 $1,926,516
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntarily waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Government Obligations Tax-Managed Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 1 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.01 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.01) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 2 5.00% 5.49% 5.35% 5.50% 0.94% RATIOS TO AVERAGE NET ASSETS: Expenses 3 0.55% 0.57% 0.58% 0.61% 0.85% 4 Net investment income 3 4.53% 4.98% 4.88% 4.84% 5.13% 4 Expenses (after waivers) 0.20% 0.20% 0.20% 0.17% 0.20% 4 Net investment income (after waivers) 4.88% 5.35% 5.26% 5.28% 5.78% 4 SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $1,066,412 $953,268 $510,683 $199,243 $3,070
1 Reflects operations for the period from June 2, 1995 (date of initial public investment) to July 31, 1995. 2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 3 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 4 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Municipal Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.03 0.04 0.04 0.04 0.03 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.03) (0.04) (0.04) (0.04 ) (0.03) Distributions from net realized gains on investments - - - - (0.00) 3 - NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 4 1.59% 3.53% 3.68% 3.56% 4.03% 3.04% RATIOS TO AVERAGE NET ASSETS: Expenses 5 0.36% 6 0.59% 0.41% 0.38% 0.30% 0.31% Net investment income 5 2.99% 6 3.00% 3.34% 3.28% 3.83% 2.70% Expenses (after waivers) 0.18% 6 0.18% 0.18% 0.18% 0.18% 0.15% Net investment income (after waivers) 3.17% 6 3.41% 3.57% 3.48% 3.95% 2.86% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $354,034 $303,899 $217,838 $159,561 $135,120 $93,595
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Amount represents less than ($0.01) per share. 4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 5 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 6 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.06 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.06) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 5.14% 5.64% 5.45% 5.58% 5.65% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.55% 0.55% 0.56% 0.56% 0.58% Net Investment income 2 4.64% 5.16% 4.99% 5.07% 5.22% Expenses (after waivers) 0.20% 0.20% 0.20% 0.20% 0.20% Net investment income (after waivers) 4.99% 5.51% 5.35% 5.43% 5.60% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $5,185,448 $3,980,339 $3,588,082 $3,032,602 $2,457,797
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Cash Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.06 0.05 0.06 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.06) (0.05) (0.06) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 2.42% 5.50% 5.61% 5.38% 6.08% 4.52% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.31% 5 0.55% 0.30% 0.32% 0.25% 0.25% Net Investment income 4 4.68% 5 4.92% 5.32% 5.11% 5.82% 4.17% Expenses (after waivers) 0.18% 5 0.18% 0.18% 0.18% 0.17% 0.12% Net investment income (after waivers) 4.81% 5 5.29% 5.44% 5.25% 5.90% 4.30% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $1,929,887 $1,825,266 $1,100,620 $1,572,912 $3,919,186 $1,538,802
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Value Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.06 0.05 0.06 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.06) (0.05) (0.06) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 2.44% 5.53% 5.68% 5.41% 6.10% 4.51% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.31% 5 0.56% 0.32% 0.31% 0.25% 0.25% Net investment income 4 4.72% 5 4.97% 5.41% 5.14% 5.85% 4.04% Expenses (after waivers) 0.16% 5 0.16% 0.14% 0.16% 0.17% 0.09% Net investment income (after waivers) 4.87% 5 5.37% 5.59% 5.29% 5.93% 4.20% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $1,147,717 $1,474,123 $865,742 $387,994 $2,754,390 $1,470,317
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Tax-Free Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.03 0.03 0.03 0.03 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 3.14% 3.50% 3.49% 3.55% 3.64% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.55% 0.55% 0.55% 0.56% 0.59% Net investment income 2 2.73% 3.10% 3.08% 3.10% 3.23% Expenses (after waivers) 0.20% 0.20% 0.20% 0.20% 0.20% Net investment income (after waivers) 3.08% 3.45% 3.43% 3.46% 3.62% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $2,461,697 $2,279,770 $1,474,180 1,514,979 $1,295,458
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Treasury Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 4.91% 5.54% 5.36% 5.53% 5.50% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.54% 0.55% 0.55% 0.56% 0.56% Net investment income 2 4.45% 5.05% 4.89% 5.01% 5.06% Expenses (after waivers) 0.20% 0.20% 0.20% 0.20% 0.20% Net investment income (after waivers) 4.79% 5.40% 5.24% 5.37% 5.42% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $5,477,028 $5,289,871 $4,814,583 $4,649,870 $3,441,068
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. [Graphic] Federated World-Class Investment Manager Money Market Obligations Trust Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund INSTITUTIONAL SHARES PROSPECTUS OCTOBER 31, 1999 A Statement of Additional Information (SAI) dated October 31, 1999, is incorporated by reference into this prospectus. Additional information about the Funds and their investments is contained in the Funds' SAI, Annual and Semi-Annual Reports to shareholders as they become available. The Annual Reports discuss market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year. To obtain the SAI, the Annual Report, the Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Funds at 1-800-341-7400. You can obtain information about the Funds (including the SAI) by writing to or visiting the Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942- 8090 for information on the Public Reference Room's operations and copying fees. [Graphic] Federated Money Market Obligations 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. 811-5950 Cusip 60934N104 Cusip 60934N856 Cusip 60934N658 Cusip 60934N203 Cusip 60934N625 Cusip 60934N583 Cusip 60934N401 Cusip 60934N500 G02705-01 (10/99) [Graphic] STATEMENT OF ADDITIONAL INFORMATION Money Market Obligations Trust Government Obligations Fund (Government Fund) Government Obligations Tax-Managed Fund (Government Tax-Managed Fund) Municipal Obligations Fund (Municipal Fund) Prime Obligations Fund (Prime Fund) Prime Cash Obligations Fund (Prime Cash Fund) Prime Value Obligations Fund (Prime Value Fund) Tax-Free Obligations Fund (Tax-Free Fund) Treasury Obligations Fund (Treasury Fund) INSTITUTIONAL SHARES This Statement of Additional Information (SAI) is not a prospectus. Read this SAI in conjunction with the prospectus for Institutional Shares of the Funds, dated October 31, 1999. This SAI incorporates by reference the Funds' Annual Reports. Obtain the prospectus or the Annual Reports without charge by calling 1-800-341-7400. OCTOBER 31, 1999 [Graphic] Federated World-Class Investment Manager Money Market Obligations Trust Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor G02705-03 (10/99) [Graphic] CONTENTS How are the Funds Organized? 1 Securities in Which the Funds Invest 1 What Do Shares Cost? 5 How are the Funds Sold? 5 Subaccounting Services 6 Redemption in Kind 6 Massachusetts Partnership Law 6 Account and Share Information 7 Tax Information 7 Who Manages and Provides Services to the Funds? 7 How Do the Funds Measure Performance? 11 Who is Federated Investors, Inc.? 14 Financial Information 16 Investment Ratings 16 Addresses 17 How are the Funds Organized? Each Fund is a diversified portfolio of Money Market Obligations Trust (Trust). The Trust is an open-end, management investment company that was established under the laws of the Commonwealth of Massachusetts on October 3, 1988. The Trust may offer separate series of shares representing interests in separate portfolios of securities. The Municipal Fund and the Prime Value Fund, which were established on February 5, 1993, and the Prime Cash Fund, which was established on November 16, 1992, will be reorganized as portfolios of the Trust on November 1, 1999. The Board of Trustees (the Board) has established three classes of shares of the Funds, known as Institutional Shares, Institutional Service Shares and Institutional Capital Shares. This SAI relates to Institutional Shares (Shares). The Funds' investment adviser is Federated Investment Management Company (Adviser). Effective March 31, 1999, Federated Management, former adviser to the Funds (except the Government Tax-Managed Fund) and Federated Administrative Services, former adviser to the Government Tax-Managed Fund, became Federated Investment Management Company (formerly, Federated Advisers). Securities in Which the Funds Invest SECURITIES DESCRIPTIONS AND TECHNIQUES The Funds' principal securities are described in the prospectus. In pursuing their investment strategies, the Funds may invest in such securities, or the securities described below, for any purpose that is consistent with their investment objectives. ZERO COUPON SECURITIES Zero coupon securities do not pay interest or principal until final maturity unlike debt securities that provide periodic payments of interest (referred to as a coupon payment). Investors buy zero coupon securities at a price below the amount payable at maturity. The difference between the purchase price and the amount paid at maturity represents interest on the zero coupon security. Investors must wait until maturity to receive interest and principal, which increases the interest rate and credit risks of a zero coupon security. SPECIAL TRANSACTIONS DELAYED DELIVERY TRANSACTIONS Delayed delivery transactions, including when-issued transactions, are arrangements in which a Fund buys securities for a set price, with payment and delivery of the securities scheduled for a future time. During the period between purchase and settlement, no payment is made by a Fund to the issuer and no interest accrues to a Fund. A Fund records the transaction when it agrees to buy the securities and reflects their value in determining the price of its shares. Settlement dates may be a month or more after entering into these transactions so that the market values of the securities bought may vary from the purchase prices. Therefore, delayed delivery transactions create interest rate risks for a Fund. Delayed delivery transactions also involve credit risks in the event of a counterparty default. SECURITIES LENDING A Fund may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, a Fund receives cash or liquid securities from the borrower as collateral. The borrower must furnish additional collateral if the market value of the loaned securities increases. Also, the borrower must pay a Fund the equivalent of any dividends or interest received on the loaned securities. A Fund will reinvest cash collateral in securities that qualify as an acceptable investment for a Fund. However, a Fund must pay interest to the borrower for the use of cash collateral. Loans are subject to termination at the option of a Fund or the borrower. A Fund will not have the right to vote on securities while they are on loan, but it will terminate a loan in anticipation of any important vote. A Fund may pay administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash collateral to a securities lending agent or broker. The Prime Fund has no present intention to engage in securities lending. ASSET COVERAGE In order to secure its obligations in connection with special transactions, a Fund will either own the underlying assets or set aside readily marketable securities with a value that equals or exceeds the Fund's obligations. Unless a Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without terminating a special transaction. This may cause a Fund to miss favorable trading opportunities or to realize losses on special transactions. INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES The Funds may invest their assets in securities of other investment companies, including the securities of affiliated money market funds, as an efficient means of carrying out its investment policies and managing its uninvested cash. In addition, a Fund may invest in the securities described below. PRIME FUND, PRIME CASH FUND AND PRIME VALUE FUND MUNICIPAL SECURITIES Municipal securities are issued by states, counties, cities and other political subdivisions and authorities. Although many municipal securities are exempt from federal income tax, the Funds may invest in taxable municipal securities. INSURANCE CONTRACTS Insurance contracts include guaranteed investment contracts, funding agreements and annuities. The Funds treat these contracts as fixed income securities. FOREIGN SECURITIES Foreign securities are securities of issuers based outside the United States. The Funds consider an issuer to be based outside the United States if: * it is organized under the laws of, or has a principal office located in, another country; * the principal trading market for its securities is in another country; or * 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. Along with the risks normally associated with domestic securities of the same type, foreign securities are subject to risks of foreign investing. The Prime Fund, the Prime Cash Fund and the Prime Value Fund also may invest in U.S. Treasury securities and agency securities, which are described in the prospectus. MUNICIPAL FUND AND TAX-FREE FUND GENERAL OBLIGATION BONDS General obligation bonds are supported by the issuer's power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer's authority to impose additional taxes may be limited by its charter or state law. SPECIAL REVENUE BONDS Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not collect from the municipality's general taxes or revenues. For example, a municipality may issue bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds. PRIVATE ACTIVITY BONDS Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds from its bonds to the company using the factory, and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company's loan payments, not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds. The interest on many types of private activity bonds is subject to the federal alternative minimum tax (AMT). The Funds may invest in bonds subject to AMT. MUNICIPAL LEASES Municipalities may enter into leases for equipment or facilities. In order to comply with state public financing laws, these leases are typically subject to annual appropriation. In other words, a municipality may end a lease, without penalty, by not providing for the lease payments in its annual budget. After the lease ends, the lessor can resell the equipment or facility but may lose money on the sale. The Funds may invest in securities supported by individual leases or pools of municipal leases. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund and the Tax-Free Fund may make temporary defensive investments in the following taxable securities, which are described in the prospectus or herein: U.S. Treasury securities, agency securities, bank instruments, corporate debt securities, commercial paper, repurchase agreements and reverse repurchase agreements. GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND REVERSE REPURCHASE AGREEMENTS 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 a Fund. Reverse repurchase agreements are subject to credit risks. In addition, reverse repurchase agreements create leverage risks because a Fund must repurchase the underlying security at a higher price, regardless of the market value of the security at the time of repurchase. INVESTMENT RATINGS The ratings categories of a nationally recognized statistical rating organization (NRSRO) are determined without regard for sub-categories and gradations. For example, securities rated SP-1 or SP-2 by Standard & Poor's (S&P), MIG-1 or MIG-2 by Moody's Investors Service (Moody's), or F-1+, F-1 or F-2 by Fitch IBCA, Inc. (Fitch) are all considered rated in one of the two highest short-term rating categories. The Funds will follow applicable regulations in determining whether a security rated by more than one rating service can be treated as being in the highest or one of the two highest short-term rating categories. See "Regulatory Compliance." INVESTMENT RISKS There are many factors which may affect an investment in the Funds. The Funds' principal risks are described in the prospectus. Additional risk factors are outlined below. GOVERNMENT TAX-MANAGED FUND CREDIT RISKS 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. MUNICIPAL FUND AND TAX-FREE FUND CREDIT RISKS Credit risk includes the possibility that a party to a transaction involving the Funds will fail to meet its obligations. This could cause the Funds to lose the benefit of the transaction or prevent a Fund from selling or buying other securities to implement its investment strategy. TAX RISKS In order to be tax exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by the Funds to shareholders to be taxable. Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall. PRIME FUND, PRIME CASH FUND AND PRIME VALUE FUND RISKS OF FOREIGN INVESTING Foreign securities pose additional risks because foreign economic or political conditions may be less favorable than those of the U.S. Securities in foreign markets may also be subject to taxation policies that reduce returns for U.S. investors. PREPAYMENT RISKS Unlike traditional fixed income securities, which pay a fixed rate of interest until maturity (when the entire principal amount is due), payments on asset backed securities include both interest and a partial payment of principal. Partial payment of principal may be comprised of scheduled principal payments as well as unscheduled payments from voluntary prepayment, refinancing, or foreclosure of the underlying loans. If a Fund receives unscheduled prepayments, it may have to reinvest the proceeds in other fixed income securities with lower interest rates, higher credit risks, or other less favorable characteristics. GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND LEVERAGE RISKS Leverage risk is created when an investment exposes the Funds to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain. FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES
FUND OBJECTIVE Government Fund To provide current income consistent with stability of principal. Government Tax-Managed Fund To provide current income consistent with stability of principal and liquidity. Prime Fund To provide current income consistent with stability of principal. Tax-Free Fund To provide dividend income exempt from federal regular income tax consistent with stability of principal. Treasury Fund To provide current income consistent with stability of principal.
The investment objective of each Fund may not be changed by the Fund's Trustees without shareholder approval. As a matter of investment policy which cannot be changed without shareholder approval, at least 80% of the Municipal Fund's and the Tax-Free Fund's annual interest income will be exempt from federal regular income tax. INVESTMENT LIMITATIONS DIVERSIFICATION OF INVESTMENTS With respect to securities comprising 75% of the value of its total assets, a Fund will not purchase securities of any one issuer (other than cash; cash items; securities issued or guaranteed by the government of the U.S. or its agencies or instrumentalities and repurchase agreements collateralized by such U.S. government securities; and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would be invested in securities of that issuer, or the Fund would own more than 10% of the outstanding voting securities of that issuer. ISSUING SENIOR SECURITIES AND BORROWING MONEY A Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under the 1940 Act. INVESTING IN REAL ESTATE A Fund may not purchase or sell real estate, provided that this restriction does not prevent the Fund from investing in issuers which invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein. A Fund may exercise its rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner. INVESTING IN COMMODITIES A Fund may not purchase or sell physical commodities, provided that the Fund may purchase securities of companies that deal in commodities. UNDERWRITING A Fund may not underwrite the securities of other issuers, except that the Fund may engage in transactions involving the acquisition, disposition or resale of its portfolio securities, under circumstances where it may be considered to be an underwriter under the Securities Act of 1933. LENDING CASH OR SECURITIES A Fund may not make loans, provided that this restriction does not prevent the Fund from purchasing debt obligations, entering into repurchase agreements, lending its assets to broker/dealers or institutional investors and investing in loans, including assignments and participation interests. CONCENTRATION OF INVESTMENTS A Fund (with the exception of the Prime Fund and the Prime Value Fund) will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. The Prime Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry, except that the Prime Fund may invest 25% or more of the value of its total assets in the commercial paper issued by finance companies. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. The Prime Value Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry, except that the Prime Value Fund may invest 25% or more of the value of its total assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND 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. PLEDGING ASSETS A Fund will not mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities. BUYING ON MARGIN A Fund will not purchase securities on margin, provided that a Fund may obtain short-term credits necessary for the clearance of purchases and sales of securities. INVESTING IN ILLIQUID SECURITIES A Fund will not purchase securities for which there is no readily available market, or enter into repurchase agreements or purchase time deposits maturing in more than seven days, if immediately after and as a result, the value of such securities would exceed, in the aggregate, 10% of a Fund's net assets. INVESTING IN RESTRICTED SECURITIES The Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund may invest in securities subject to restriction on resale under the federal securities laws. Except with respect to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such limitation. For purposes of the diversification limitation, the Funds consider certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings association having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be "cash items." To conform to the current view of the Securities and Exchange Commission (SEC) that only domestic bank instruments may be excluded from industry concentration limitations, as a matter of non-fundamental policy, the Funds will not exclude foreign bank instruments from industry concentration limits as long as the policy of the SEC remains in effect. As a non-fundamental operating policy, the Funds will consider concentration to be the investment of more than 25% of the value of its total assets in any one industry. For purposes of the concentration limitation (with the exception of the Prime Fund and the Prime Value Fund): (a) utility companies will be divided according to their services, for example, gas, gas transmission, electric and telephone will each be considered a separate industry; (b) financial service companies will be classified according to the end users of their services, for example, automobile finance, bank finance and diversified finance will each be considered a separate industry; and (c) asset-backed securities will be classified according to the underlying assets securing such securities. REGULATORY COMPLIANCE The Funds may follow non-fundamental operational policies that are more restrictive than their fundamental investment limitations, as set forth in the prospectus and this Statement of Additional Information, in order to comply with applicable laws and regulations, including the provisions of and regulations under the Investment Company Act of 1940. In particular, the Funds will comply with the various requirements of Rule 2a-7 (the Rule), which regulates money market mutual funds. The Funds will determine the effective maturity of their investments according to the Rule. The Funds may change these operational policies to reflect changes in the laws and regulations without the approval of their shareholders. DETERMINING MARKET VALUE OF SECURITIES The 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 is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on Shares of the Funds computed by dividing the annualized daily income on the Fund's portfolio by the net asset value computed as above may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the opposite may be true. The Fund's use of the amortized cost method of valuing portfolio instruments depends on its compliance with certain conditions in the Rule. Under the Rule, the Board must establish procedures reasonably designed to stabilize the net asset value per Share, as computed for purposes of distribution and redemption, at $1.00 per Share, taking into account current market conditions and each Fund's investment objective. The procedures include monitoring the relationship between the amortized cost value per Share and the net asset value per Share based upon available indications of market value. The 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 net asset value. What Do Shares Cost? The NAV for each class of Shares may differ due to the variance in daily net income realized by each class. Such variance will reflect only accrued net income to which the shareholders of a particular class are entitled. How are the Funds Sold? Under the Distributor's Contract with the Funds, the Distributor (Federated Securities Corp.) offers Shares on a continuous, best-efforts basis. SHAREHOLDER SERVICES The Funds may pay Federated Shareholder Services Company, a subsidiary of Federated Investors, Inc. (Federated), for providing shareholder services and maintaining shareholder accounts. Federated Shareholder Services Company may select others to perform these services for their customers and may pay them fees. SUPPLEMENTAL PAYMENTS Investment professionals may be paid fees out of the assets of the Distributor and/or Federated Shareholder Services Company (but not out of a Fund's assets). The Distributor and/or Federated Shareholder Services Company may be reimbursed by the Adviser or its affiliates. Investment professionals receive such fees for providing distribution-related or shareholder services such as sponsoring sales, providing sales literature, conducting training seminars for employees, and engineering sales-related computer software programs and systems. Also, investment professionals may be paid cash or promotional incentives, such as reimbursement of certain expenses relating to attendance at informational meetings about the Funds or other special events at recreational-type facilities, or items of material value. These payments will be based upon the amount of Shares the investment professional sells or may sell and/or upon the type and nature of sales or marketing support furnished by the investment professional. Subaccounting Services Certain investment professionals may wish to use the transfer agent's subaccounting system to minimize their internal recordkeeping requirements. The transfer agent may charge a fee based on the level of subaccounting services rendered. Investment professionals holding Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass through subaccounting fees as part of or in addition to normal trust or agency account fees. They may also charge fees for other services that may be related to the ownership of Shares. This information should, therefore, be read together with any agreement between the customer and the investment professional about the services provided, the fees charged for those services, and any restrictions and limitations imposed. Redemption in Kind Although the Funds intend to pay Share redemptions in cash, they reserve the right, as described below, to pay the redemption price in whole or in part by a distribution of a Fund's portfolio securities. Because the Funds have elected to be governed by Rule 18f-1 under the Investment Company Act of 1940, the Funds are obligated to pay Share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1% of the net assets represented by such Share class during any 90-day period. Any Share redemption payment greater than this amount will also be in cash unless the Funds' Board determines that payment should be in kind. In such a case, the Funds will pay all or a portion of the remainder of the redemption in portfolio securities, valued in the same way as the Funds determine their NAV. The portfolio securities will be selected in a manner that the Funds' Board deems fair and equitable and, to the extent available, such securities will be readily marketable. Redemption in kind is not as liquid as a cash redemption. If redemption is made in kind, shareholders receiving the portfolio securities and selling them before their maturity could receive less than the redemption value of the securities and could incur certain transaction costs. Massachusetts Partnership Law Under certain circumstances, shareholders may be held personally liable as partners under Massachusetts law for obligations of the Trust. To protect its shareholders, the Trust has filed legal documents with Massachusetts that expressly disclaim the liability of its shareholders for acts or obligations of the Trust. In the unlikely event a shareholder is held personally liable for the Trust's obligations, the Trust is required by the Declaration of Trust to use its property to protect or compensate the shareholder. On request, the Trust will defend any claim made and pay any judgment against a shareholder for any act or obligation of the Trust. Therefore, financial loss resulting from liability as a shareholder will occur only if the Trust itself cannot meet its obligations to indemnify shareholders and pay judgments against them. Account and Share Information VOTING RIGHTS Each Share of a Fund gives the shareholder one vote in Trustee elections and other matters submitted to shareholders for vote. All Shares of the Trust have equal voting rights, except that in matters affecting only a particular Fund or class, only Shares of that Fund or class are entitled to vote. Trustees may be removed by the Board or by shareholders at a special meeting. A special meeting of shareholders will be called by the Board upon the written request of shareholders who own at least 10% of a Trust's outstanding Share of all series entitled to vote. As of October 7, 1999, the following shareholders owned of record, beneficially, or both, 5% or more of outstanding Institutional Shares of the Funds: Tritel PCS, Inc., Jackson, Mississippi, 10.47%, Var & Co., St. Paul, Minnesota, 5.33% and Fleet Securities Corp., Rochester, New York, 5.29% of the Government Fund; Scaup & Co., Boston, Massachusetts, 13.27%, Panabco, Newark, Ohio, 10.98%, Loring, Wolcott & Coolidge, Boston, Massachusetts, 7.10%, Santa Monica Bank, Santa Monica, California, 6.30%, Turtle & Co., Boston, Massachusetts, 5.74% and BDG & Co., Boston, Massachusetts, 5.37% of the Government Tax-Managed Fund; Synopsys, Inc., Mountain View, California, 12.86%, Sinclair Oil Corp., Salt Lake City, Utah, 8.01%, Evergreen Florida c/o State Street Bank & Trust, North Quincy, Massachusetts, 6.85%, Evergreen Select International Tax-Exempt Bond Fund, Charlotte, North Carolina, 5.63% and Dress Barn, Inc., Suffern, New York, 5.323% of the Municipal Fund; America Online, Inc., Dulles, Virginia, 7.04% of the Prime Fund; Frost National Bank, San Antonio, Texas, 9.92% of the Prime Cash Fund; Harron Management Co., LLC, Frazier, Pennsylvania, 16.76%, Federated Investors Management Co., Pittsburgh, Pennsylvania, 9.36%, Comcast Corporate Funding, Wilmington, Delaware, 8.26% of the Prime Value Fund; The Chase Manhattan Bank, N.A., New York, New York, 13.80%, Wachovia Bank, Winston-Salem, North Carolina, 11.80%, Fleet Securities Corp., Rochester, New York, 6.67%, Maril & Co., Milwaukee, Wisconsin, 6.51% and Var & Co., St. Paul, Minnesota, 5.05% of the Tax-Free Fund; Turtle & Co., Boston, Massachusetts, 15.66%, Fleet Securities Corp., Rochester, New York, 8.29% and Var & Co., St. Paul, Minnesota, 5.41% of the Treasury Fund. Tax Information FEDERAL INCOME TAX Each Fund intends to meet requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. If these requirements are not met, it will not receive special tax treatment and will pay federal income tax. Each Fund will be treated as a single, separate entity for federal income tax purposes so that income earned and capital gains and losses realized by the Trust's other portfolios will be separate from those realized by the Fund. Who Manages and Provides Services to the Funds? BOARD OF TRUSTEES The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. Information about each Board member is provided below and includes each person's: name, address, birth date, present position(s) held with the Trust, principal occupations for the past five years and positions held prior to the past five years, total compensation received as a Trustee from the Trust for its most recent fiscal year, and the total compensation received from the Federated Fund Complex for the most recent calendar year. The Trust is comprised of 21 funds and the Federated Fund Complex is comprised of 54 investment companies, whose investment advisers are affiliated with the Funds' Adviser. As of October 7, 1999, the Trust's Board and Officers as a group owned less than 1% of the Trust's outstanding Shares.
NAME BIRTH DATE AGGREGATE TOTAL COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX JOHN F. DONAHUE*#+ Chief Executive Officer $0 $0 for the Trust and Birth Date: July 28, 1924 and Director or Trustee of 54 other investment Federated Investors Tower the Federated Fund companies in the 1001 Liberty Avenue Complex; Chairman and Fund Complex Pittsburgh, PA Director, Federated CHAIRMAN AND TRUSTEE Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling and Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd. THOMAS G. BIGLEY Director or Trustee of $22,998.69 $113,860.22 for the Trust Birth Date: February 3, 1934 the Federated Fund and 54 other investment 15 Old Timber Trail Complex; Director, Member companies in the Pittsburgh, PA of Executive Committee, Fund Complex TRUSTEE Children's Hospital of Pittsburgh; Director, Robroy Industries, Inc. (coated steel conduits/ computer storage equipment); formerly: Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician practice management); Director, Member of Executive Committee, University of Pittsburgh. NAME BIRTH DATE AGGREGATE TOTAL COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX JOHN T. CONROY, JR. Director or Trustee of the $25,312.12 $125,264.48 for the Trust Birth Date: June 23, 1937 Federated Fund Complex; and 54 other investment Wood/Commercial Dept. President, Investment companies in the John R. Wood Associates, Inc. Realtors Properties Corporation; Fund Complex 3255 Tamiami Trail North Senior Vice President, Naples, FL John R. Wood and TRUSTEE Associates, Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest Florida; formerly: President, Naples Property Management, Inc. and Northgate Village Development Corporation. NICHOLAS CONSTANTAKIS++ Director or Trustee of the $3,686.46 $47,958.02 for the Trust Birth Date: September 3, 1939 Federated Fund Complex and 29 other investment 175 Woodshire Drive formerly: Partner, companies in the Pittsburgh, PA Andersen Worldwide SC. Fund Complex TRUSTEE JOHN F. CUNNINGHAM++ Director or Trustee of some $12,056.51 $0 for the Trust and Birth Date: March 5, 1943 of the Federated Fund 46 other investment 353 El Brillo Way Complex; Chairman, companies in the Palm Beach, FL President and Chief Fund Complex TRUSTEE Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College; Director, Iperia Corp. (communications/software); formerly: Director, Redgate Communications and EMC Corporation (computer storage systems). Previous Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc. J. CHRISTOPHER DONAHUE+ President or Executive $0 $0 for the Trust and Birth Date: April 11, 1949 Vice President of the 16 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Director or Trustee of some Fund Complex Pittsburgh, PA of the Funds in the PRESIDENT AND TRUSTEE Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; President and Trustee, Federated Investment Management Company; President and Trustee, Federated Investment Counseling, President and Director, Federated Global Investment Management Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. LAWRENCE D. ELLIS, M.D.* Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: October 11, 1932 Federated Fund Complex; and 54 other investment 3471 Fifth Avenue Professor of Medicine, companies in the Suite 1111 University of Pittsburgh; Fund Complex Pittsburgh, PA Medical Director, TRUSTEE University of Pittsburgh Medical Center-Downtown; Hematologist, Oncologist, and Internist, University of Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society of America. PETER E. MADDEN Director or Trustee of the $20,158.88 $113,860.22 for the Trust Birth Date: March 16, 1942 Federated Fund Complex; and 54 other investment One Royal Palm Way formerly: Representative, companies in the 100 Royal Palm Way Commonwealth of Fund Complex Palm Beach, FL Massachusetts General TRUSTEE Court; President, State Street Bank and Trust Company and State Street Corporation. Previous Positions: Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. CHARLES F. MANSFIELD, JR. ++ Director or Trustee of some $12,056.51 $0 for the Trust and Birth Date: April 10, 1945 of the Federated Fund 50 other investment 80 South Road Complex; companies in the Westhampton Beach, NY Management Consultant. Fund Complex TRUSTEE Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, Marine Midland Bank; Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University. JOHN E. MURRAY, JR., J.D., S.J.D.# Director or Trustee of $24,201.52 $113,860.22 for the Trust Birth Date: December 20, 1932 the Federated Fund and54 other investment President, Duquesne University Complex; President, Law companies in the Pittsburgh, PA Professor, Duquesne Fund Complex TRUSTEE University; Consulting Partner, Mollica & Murray; Director, Michael Baker Corp. (engineering, construction, operations, and technical services). Previous Positions: Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law. MARJORIE P. SMUTS Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: June 21, 1935 Federated Fund Complex; and 54 other investment 4905 Bayard Street Public Relations/ companies in the Pittsburgh, PA Marketing/Conference Fund Complex TRUSTEE Planning. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; business owner. NAME BIRTH DATE AGGREGATE TOTAL COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX JOHN S. WALSH++ Director or Trustee of some $12,056.51 $0 for the Trust and Birth Date: November 28, 1957 of the Federated Fund 48 other investment 2007 Sherwood Drive Complex; President and companies in the Valparaiso, IN Director, Heat Wagon, Inc. Fund Complex TRUSTEE (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc. (heavy highway contractor); formerly: Vice President, Walsh & Kelly, Inc. EDWARD C. GONZALES Trustee or Director of some $0 $0 for the Trust and Birth Date: October 22, 1930 of the Funds in the 1 other investment Federated Investors Tower Federated Fund Complex; company in the 1001 Liberty Avenue President, Executive Vice Fund Complex Pittsburgh, PA President and Treasurer of EXECUTIVE VICE PRESIDENT some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice President, Federated Investment Management Company and Federated Investment Counseling, Federated Global Investment Management Corp. and Passport Research, Ltd.; Executive Vice President and Director, Federated Securities Corp.; Trustee, Federated Shareholder Services Company. JOHN W. MCGONIGLE Executive Vice President $0 $0 for the Trust and Birth Date: October 26, 1938 and Secretary of the 54 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Executive Vice President, Fund Complex Pittsburgh, PA Secretary and Director, EXECUTIVE VICE PRESIDENT Federated Investors, Inc.; and SECRETARY Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. RICHARD J. THOMAS Treasurer of the Federated $0 $0 for the Trust and Birth Date: June 17, 1954 Fund Complex; Vice 54 other investment Federated Investors Tower President - Funds companies in the 1001 Liberty Avenue Financial Services Fund Complex Pittsburgh, PA Division, Federated TREASURER Investors, Inc.; formerly: various management positions within Funds Financial Services Division of Federated Investors, Inc. RICHARD B. FISHER President or Vice $0 $0 for the Trust and Birth Date: May 17, 1923 President of some of the 6 other investment Federated Investors Tower Funds in the Federated Fund companies in the 1001 Liberty Avenue Complex; Director or Fund Complex Pittsburgh, PA Trustee of some of the VICE PRESIDENT Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Chairman and Director, Federated Securities Corp. WILLIAM D. DAWSON, III Chief Investment Officer $0 $0 for the Trust and Birth Date: March 3, 1949 of this Fund and various 41 other investment Federated Investors Tower other Funds in the companies in the 1001 Liberty Avenue Federated Fund Complex; Fund Complex Pittsburgh, PA Executive Vice President, CHIEF INVESTMENT OFFICER Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company 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 Investment Management Company and Passport Research, Ltd. DEBORAH A. CUNNINGHAM Deborah A. Cunningham is $0 $0 for the Trust and Birth Date: September 15, 1959 Vice President of the 6 other investment Federated Investors Tower Trust. Ms. Cunningham companies in the 1001 Liberty Avenue joined Federated in 1981 Fund Complex Pittsburgh, PA and has been a Senior VICE PRESIDENT Portfolio Manager and a Senior Vice President of the Funds' Adviser since 1997. Ms. Cunningham served as a Portfolio Manager and a Vice President of the Adviser from 1993 until 1996. Ms. Cunningham is a Chartered Financial Analyst and received her M.B.A. in Finance from Robert Morris College. Mary Jo Ochson Mary Jo Ochson is Vice $0 $0 for the Trust and Birth Date: September 12, 1953 President of the Trust. 7 other investment Federated Investors Tower Ms. Ochson joined companies in the 1001 Liberty Avenue Federated in 1982 and has Fund Complex Pittsburgh, PA been a Senior Portfolio VICE PRESIDENT Manager and a Senior Vice President of the Funds' Adviser since 1996. From 1988 through 1995, Ms. Ochson served as a Portfolio Manager and a Vice President of the Funds' Adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A. in Finance from the University of Pittsburgh.
* An asterisk denotes a Trustee who is deemed to be an interested person as defined in the Investment Company Act of 1940. # A pound sign denotes a Member of the Board's Executive Committee, which handles the Board's responsibilities between its meetings. + Mr. Donahue is the father of J. Christopher Donahue, President of the Trust. ++ Messrs. Cunningham, Mansfield and Walsh became members of the Board on January 1, 1999. Mr. Constantakis became a member of the Board on October 1, 1999. Messrs. Cunningham, Mansfield and Walsh did not earn any fees for serving the Federated Fund Complex since these fees are reported as of the end of the last calendar year. INVESTMENT ADVISER The Adviser conducts investment research and makes investment decisions for the Funds. The Adviser is a wholly owned subsidiary of Federated. The Adviser shall not be liable to the Trust or any Fund shareholder for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Trust. OTHER RELATED SERVICES Affiliates of the Adviser may, from time to time, provide certain electronic equipment and software to institutional customers in order to facilitate the purchase of Fund Shares offered by the Distributor. BROKERAGE TRANSACTIONS When selecting brokers and dealers to handle the purchase and sale of portfolio instruments, the Adviser looks for prompt execution of the order at a favorable price. The Adviser will generally use those who are recognized dealers in specific portfolio instruments, except when a better price and execution of the order can be obtained elsewhere. In selecting among firms believed to meet these criteria, the Adviser may give consideration to those firms which have sold or are selling Shares of the Funds and other funds distributed by the Distributor and its affiliates. The Adviser makes decisions on portfolio transactions and selects brokers and dealers subject to review by the Funds' Board. Investment decisions for the Funds are made independently from those of other accounts managed by the Adviser. When a Fund and one or more of those accounts invests in, or disposes of, the same security, available investments or opportunities for sales will be allocated among the Funds and the account(s) in a manner believed by the Adviser to be equitable. While the coordination and ability to participate in volume transactions may benefit the Funds, it is possible that this procedure could adversely impact the price paid or received and/or the position obtained or disposed of by the Funds. ADMINISTRATOR Federated Services Company, a subsidiary of Federated, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Funds. Federated Services Company provides these at the following annual rate of the average aggregate daily net assets of all Federated Funds as specified below: MAXIMUM AVERAGE AGGREGATE DAILY ADMINISTRATIVE FEE NET ASSETS OF THE 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 Funds for expenses. Federated Services Company also provides certain accounting and recordkeeping services with respect to the Funds' portfolio investments for a fee based on Fund assets plus out-of-pocket expenses. CUSTODIAN State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the securities and cash of the Funds. Foreign instruments purchased by the Funds are held by foreign banks participating in a network coordinated by State Street Bank. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Services Company, through its registered transfer agent subsidiary, Federated Shareholder Services Company, maintains all necessary shareholder records. The Funds pay the transfer agent a fee based on the size, type and number of accounts and transactions made by shareholders. INDEPENDENT PUBLIC ACCOUNTANTS The independent public accountants for the Government Fund, the Government Tax-Managed Fund, the Prime Fund, the Tax-Free Fund and the Treasury Fund, Arthur Andersen LLP, plans and performs its audit so that it may provide an opinion as to whether the Funds' financial statements and financial highlights are free of material misstatement. INDEPENDENT AUDITORS The independent auditors for the Municipal Fund, the Prime Cash Fund and the Prime Value Fund, Ernst & Young LLP, plans and performs its audit so that it may provide an opinion as to whether the Funds' financial statements and financial highlights are free of material misstatement. FEES PAID BY THE FUNDS FOR SERVICES
ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JULY 31 1999 1998 1997 1999 1998 1997 1999 Government Fund $ 12,594,895 $ 9,364,290 $ 6,777,523 $ 4,748,275 $ 3,531,785 $ 2,559,413 $0 5,748,147 4,778,285 3,522,148 Government Tax- Managed Fund 4,442,958 2,869,299 1,452,990 1,674,995 1,082,093 548,677 0 2,187,791 1,725,248 923,964 Prime Fund 18,192,962 14,305,445 10,030,131 6,858,747 5,395,419 3,787,706 0 9,378,326 7,090,763 5,562,429 Tax-Free Fund 7,008,989 5,174,140 4,284,365 2,642,389 1,951,404 1,617,952 0 3,652,002 2,661,895 2,116,877 Treasury Fund 22,626,298 19,318,524 13,886,919 8,530,115 7,285,996 5,244,250 0 9,896,725 9,537,113 6,879,101 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JANUARY 31 1999 1998 1997 1999 1998 1997 1999 Municipal Fund $ 803,037 $ 447,960 $ 76,352 $ 302,822 $ 190,864 $ 19,609 $0 636,478 447,960 76,352 Prime Cash Fund 4,676,382 3,485,448 911,504 1,762,996 1,315,415 30,284 $0 2,853,923 2,107,753 505,519 Prime Value Fund 3,264,534 1,821,778 202,835 1,230,729 687,478 78,894 $0 2,420,288 1,553,105 166,441 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE PERIOD ENDED JULY 31 1999 1999 2 1999 2 Municipal Fund $ 516,311 $ 194,649 $0 446,031 Prime Cash Fund 3,622,592 1,365,717 0 2,260,468 Prime Value Fund 2,380,186 897,330 0 1,769,715
1 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 2 The Fund has changed its fiscal year-end from January 31 to July 31. For the fiscal years ended January 31, 1999, 1998 and 1997, fees paid by the Municipal Fund, the Prime Cash Fund and the Prime Value Fund for services are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999. Fees are allocated among classes based on their pro rata share of Fund assets, except for shareholder services fees, which are borne only by the applicable class of Shares. How Do the Funds Measure Performance? The Funds may advertise Share performance by using the SEC standard method for calculating performance applicable to all mutual funds. The SEC also permits this standard performance information to be accompanied by non-standard performance information. The performance of Shares depends upon such variables as: portfolio quality; average portfolio maturity; type and value of portfolio securities; changes in interest rates; changes or differences in the Funds' or any class of Shares' expenses; and various other factors. Share performance fluctuates on a daily basis largely because net earnings fluctuate daily. Both net earnings and offering price per Share are factors in the computation of yield and total return. AVERAGE ANNUAL TOTAL RETURNS AND YIELD Total returns are given for the one-year, five-year or Start of Performance periods ended July 31, 1999. Yield, Effective Yield and Tax-Equivalent Yield are given for the 7-day period ended July 31, 1999. Performance of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund shown are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999.
START OF PERFORMANCE GOVERNMENT FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON MARCH 30, 1990 Total Return - 5.04% 5.44% 5.19% Yield 4.92% - - - Effective Yield 5.04% - - - START OF PERFORMANCE GOVERNMENT TAX-MANAGED FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON JUNE 2, 1995 Total Return - 5.00% - 5.36% Yield 4.85% - - - Effective Yield 4.97% - - - START OF PERFORMANCE MUNICIPAL FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON FEBRUARY 8, 1993 Total Return - 3.35% 3.63% 3.38% Yield 3.22% - - - Effective Yield 3.28% - - - Tax-Equivalent Yield 5.33% - - - START OF PERFORMANCE PRIME FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON MARCH 26, 1990 Total Return - 5.14% 5.49% 5.25% Yield 5.01% - - - Effective Yield 5.13% - - - START OF PERFORMANCE PRIME CASH FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON FEBRUARY 8, 1993 Total Return - 5.15% 5.52% 5.04% Yield 4.96% - - - Effective Yield 5.09% - - - START OF PERFORMANCE PRIME VALUE FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON FEBRUARY 8, 1993 Total Return - 5.19% 5.56% 5.08% Yield 4.99% - - - Effective Yield 5.12% - - - START OF PERFORMANCE TAX-FREE FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON DECEMBER 12, 1989 Total Return - 3.14% 3.47% 3.62% Yield 3.00% - - - Effective Yield 3.05% - - - Tax-Equivalent Yield 4.97% - - - START OF PERFORMANCE TREASURY FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON DECEMBER 12, 1989 Total Return - 4.91% 5.37% 5.20% Yield 4.79% - - - Effective Yield 4.91% - - -
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, EFFECTIVE YIELD AND TAX-EQUIVALENT YIELD The yield of Shares is based upon the seven days ending on the day of the calculation, called the "base period." This yield is calculated by: determining the net change in the value of a hypothetical account with a balance of one Share at the beginning of the base period, with the net change excluding capital changes but including the value of any additional Shares purchased with dividends earned from the original one Share and all dividends declared on the original and any purchased Shares; dividing the net change in the account's value by the value of the account at the beginning of the base period to determine the base-period return; and multiplying the base-period return by 365/7. The effective yield is calculated by compounding the unannualized base-period return by: adding one to the base-period return, raising the sum to the 365/7th power; and subtracting one from the result. The tax-equivalent yield of Shares is calculated similarly to the yield, but is adjusted to reflect the taxable yield that Shares would have had to earn to equal the actual yield, assuming a specific tax rate. To the extent investment professionals and broker/dealers charge fees in connection with services provided in conjunction with an investment in Shares, the Share performance is lower for shareholders paying those fees. TAX EQUIVALENCY TABLE With regard to the Municipal Fund and the Tax-Free Fund, set forth below is a sample of a tax-equivalency table that may be used in advertising and sales literature. This table is for illustrative purposes only and is not representative of past or future performance of the Municipal Fund or the Tax-Free Fund. The interest earned by the municipal securities owned by the Municipal Fund or the Tax-Free Fund generally remains free from federal regular income tax and is often free from state and local taxes as well. However, some of the Municipal Fund's and the Tax-Free Fund's income may be subject to the federal alternative minimum tax and state and/or local taxes. TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60% Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 OVER $283,150 Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 OVER $283,150 TAX-EXEMPT YIELD: TAXABLE YIELD EQUIVALENT: 1.00% 1.18% 1.39% 1.45% 1.56% 1.66% 1.50% 1.76% 2.08% 2.17% 2.34% 2.48% 2.00% 2.35% 2.78% 2.90% 3.13% 3.31% 2.50% 2.94% 3.47% 3.62% 3.91% 4.14% 3.00% 3.53% 4.17% 4.35% 4.69% 4.97% 3.50% 4.12% 4.86% 5.07% 5.47% 5.79% 4.00% 4.71% 5.56% 5.80% 6.25% 6.62% 4.50% 5.29% 6.25% 6.52% 7.03% 7.45% 5.00% 5.88% 6.94% 7.25% 7.81% 8.28% 5.50% 6.47% 7.64% 7.97% 8.59% 9.11% 6.00% 7.06% 8.33% 8.70% 9.38% 9.93% 6.50% 7.65% 9.03% 9.42% 10.16% 10.76% 7.00% 8.24% 9.72% 10.14% 10.94% 11.59% 7.50% 8.82% 10.42% 10.87% 11.72% 12.42% 8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in calculating the taxable yield equivalent. PERFORMANCE COMPARISONS Advertising and sales literature may include: * references to ratings, rankings, and financial publications and/or performance comparisons of Shares to certain indices; * charts, graphs and illustrations using the Funds' returns, or returns in general, that demonstrate investment concepts such as tax-deferred compounding, dollar-cost averaging and systematic investment; * 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 * information about the mutual fund industry from sources such as the Investment Company Institute. The Funds may compare their performance, or performance for the types of securities in which they invest, to a variety of other investments, including federally insured bank products such as bank savings accounts, certificates of deposit, and Treasury bills. The Funds may quote information from reliable sources regarding individual countries and regions, world stock exchanges, and economic and demographic statistics. You may use financial publications and/or indices to obtain a more complete view of Share performance. When comparing performance, you should consider all relevant factors such as the composition of the index used, prevailing market conditions, portfolio compositions of other funds, and methods used to value portfolio securities and compute offering price. The financial publications and/or indices which the Funds use in advertising may include: LIPPER ANALYTICAL SERVICES, INC. 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 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 Money, a monthly magazine, regularly ranks money market funds in various categories based on the latest available seven-day effective yield. SALOMON 30-DAY CD INDEX Salomon 30-Day CD Index compares rate levels of 30-day certificates of deposit from the top 10 prime representative banks. SALOMON 30-DAY TREASURY BILL INDEX Salomon 30-Day Treasury Bill Index is a weekly quote of the most representative yields for selected securities, issued by the U.S. Treasury, maturing in 30 days. DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES Discount Corporationof New York 30-Day Federal Agencies is a weekly quote of the average daily offering price for selected federal agency issues maturing in 30 days. BANK RATE MONITOR(C) NATIONAL INDEX Bank Rate Monitor(C) National Index, published weekly, is an average of the interest rates of personal money market deposit accounts at ten of the largest banks and thrifts in each of the five largest Standard Metropolitan Statistical Areas. If more than one rate is offered, the lowest rate is used. Account minimums and compounding methods may vary. Who is Federated Investors, Inc.? Federated is dedicated to meeting investor needs by making structured, straightforward and consistent investment decisions. Federated investment products have a history of competitive performance and have gained the confidence of thousands of financial institutions and individual investors. Federated's disciplined investment selection process is rooted in sound methodologies backed by fundamental and technical research. At Federated, success in investment management does not depend solely on the skill of a single portfolio manager. It is a fusion of individual talents and state- of-the-art industry tools and resources. Federated's investment process involves teams of portfolio managers and analysts, and investment decisions are executed by traders who are dedicated to specific market sectors and who handle trillions of dollars in annual trading volume. FEDERATED FUNDS OVERVIEW MUNICIPAL FUNDS In the municipal sector, as of December 31, 1998, Federated managed 10 bond funds with approximately $2.2 billion in assets and 23 money market funds with approximately $12.5 billion in total assets. In 1976, Federated introduced one of the first municipal bond mutual funds in the industry and is now one of the largest institutional buyers of municipal securities. The Funds may quote statistics from organizations including The Tax Foundation and the National Taxpayers Union regarding the tax obligations of Americans. EQUITY FUNDS In the equity sector, Federated has more than 28 years' experience. As of December 31, 1998, Federated managed 27 equity funds totaling approximately $14.9 billion in assets across growth, value, equity income, international, index and sector (i.e. utility) styles. Federated's value- oriented management style combines quantitative and qualitative analysis and features a structured, computer-assisted composite modeling system that was developed in the 1970s. CORPORATE BOND FUNDS In the corporate bond sector, as of December 31, 1998, Federated managed 9 money market funds and 15 bond funds with assets approximating $22.8 billion and $7.1 billion, respectively. Federated's corporate bond decision making-based on intensive, diligent credit analysis-is backed by over 26 years of experience in the corporate bond sector. In 1972, Federated introduced one of the first high-yield bond funds in the industry. In 1983, Federated was one of the first fund managers to participate in the asset backed securities market, a market totaling more than $209 billion. GOVERNMENT FUNDS In the government sector, as of December 31, 1998, Federated managed 9 mortgage backed, 5 government/agency and 19 government money market mutual funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively. Federated trades approximately $425 million in U.S. government and mortgage backed securities daily and places approximately $25 billion in repurchase agreements each day. Federated introduced the first U.S. government fund to invest in U.S. government bond securities in 1969. Federated has been a major force in the short- and intermediate-term government markets since 1982 and currently manages approximately $43.2 billion in government funds within these maturity ranges. MONEY MARKET FUNDS In the money market sector, Federated gained prominence in the mutual fund industry in 1974 with the creation of the first institutional money market fund. Simultaneously, the company pioneered the use of the amortized cost method of accounting for valuing shares of money market funds, a principal means used by money managers today to value money market fund shares. Other innovations include the first institutional tax-free money market fund. As of December 31, 1998, Federated managed more than $76.7 billion in assets across 52 money market funds, including 19 government, 9 prime and 23 municipal with assets approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively. The Chief Investment Officers responsible for oversight of the various investment sectors within Federated are: U.S. equity and high yield- J. Thomas Madden; U.S. fixed income-William D. Dawson, III; and global equities and fixed income-Henry A. Frantzen. The Chief Investment Officers are Executive Vice Presidents of the Federated advisory companies. MUTUAL FUND MARKET Thirty-seven percent of American households are pursuing their financial goals through mutual funds. These investors, as well as businesses and institutions, have entrusted over $5 trillion to the more than 7,300 funds available, according to the Investment Company Institute. FEDERATED CLIENTS OVERVIEW Federated distributes mutual funds through its subsidiaries for a variety of investment purposes. Specific markets include: INSTITUTIONAL CLIENTS Federated meets the needs of approximately 900 institutional clients nationwide by managing and servicing separate accounts and mutual funds for a variety of purposes, including defined benefit and defined contribution programs, cash management, and asset/liability management. Institutional clients include corporations, pension funds, tax exempt entities, foundations/endowments, insurance companies, and investment and financial advisers. The marketing effort to these institutional clients is headed by John B. Fisher, President, Institutional Sales Division, Federated Securities Corp. BANK MARKETING Other institutional clients include more than 1,600 banks and trust organizations. Virtually all of the trust divisions of the top 100 bank holding companies use Federated Funds in their clients' portfolios. The marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank Marketing & Sales. BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES Federated Funds are available to consumers through major brokerage firms nationwide-we have over 2,200 broker/dealer and bank broker/dealer relationships across the country-supported by more wholesalers than any other mutual fund distributor. Federated's service to financial professionals and institutions has earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for service quality measurement. The marketing effort to these firms is headed by James F. Getz, President, Broker/Dealer Sales Division, Federated Securities Corp. Financial Information The Financial Statements for the Funds for the fiscal year ended July 31, 1999 are incorporated herein by reference to the Annual Reports to Shareholders of the Funds dated July 31, 1999. Investment Ratings STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS An S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1-Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation. SP-2-Satisfactory capacity to pay principal and interest. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) COMMERCIAL PAPER RATINGS An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1-This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2-Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. LONG-TERM DEBT RATINGS Aaa-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. Aa-Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues only in small degree. A-Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. MOODY'S INVESTORS SERVICE SHORT-TERM MUNICIPAL OBLIGATION RATINGS Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1-This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing. MIG2-This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER RATINGS P-1-Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2-Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS AAA-Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA-Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A-Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR-Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)-The underlying issuer/obligor/guarantor has other outstanding debt rated AAA by S&P or Aaa by Moody's. NR(2)-The underlying issuer/obligor/guarantor has other outstanding debt rated AA by S&P or Aa by Moody's. NR(3)-The underlying issuer/obligor/guarantor has other outstanding debt rated A by S&P or Moody's. FITCH IBCA, INC. SHORT-TERM DEBT RATING DEFINITIONS F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1-Very Strong Credit Quality. Issues assigned this rating reflect an assurance for timely payment, only slightly less in degree than issues rated F-1+. F-2-Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. Addresses MONEY MARKET OBLIGATIONS TRUST Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund Institutional Shares Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 DISTRIBUTOR Federated Securities Corp. Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 INVESTMENT ADVISER Federated Investment Management Company Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 CUSTODIAN State Street Bank and Trust Company P.O. Box 8600 Boston, MA 02266-8600 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP 225 Franklin Street Boston, MA 02110-2812 INDEPENDENT AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, MA 02116-5072 PROSPECTUS Money Market Obligations Trust Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund INSTITUTIONAL SERVICE SHARES As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. OCTOBER 31, 1999 CONTENTS Risk/Return Summary 1 What are Each Fund's Fees and Expenses? 11 What are Each Fund's Investment Strategies? 15 What are the Principal Securities in Which the Funds Invest? 16 What are the Specific Risks of Investing in the Funds? 19 What Do Shares Cost? 20 How are the Funds Sold? 20 How to Purchase Shares 21 How to Redeem Shares 22 Account and Share Information 24 Who Manages the Funds? 25 Financial Information 26 Risk/Return Summary WHAT IS EACH FUND'S INVESTMENT OBJECTIVE? Each Fund is a money market fund that seeks to maintain a stable net asset value of $1.00 per Share.
FUND OBJECTIVE Government Obligations Fund (Government Fund) To provide current income consistent with stability of principal. Government Obligations Tax-Managed Fund (Government Tax-Managed Fund) To provide current income consistent with stability of principal and liquidity. Municipal Obligations Fund (Municipal Fund) To provide current income exempt from all federal regular income tax consistent with stability of principal. Prime Obligations Fund (Prime Fund) To provide current income consistent with stability of principal. Prime Cash Obligations Fund (Prime Cash Fund) To provide current income consistent with stability of principal and liquidity. Prime Value Obligations Fund (Prime Value Fund) To provide current income consistent with stability of principal and liquidity. Tax-Free Obligations Fund (Tax-Free Fund) To provide dividend income exempt from federal regular income tax consistent with stability of principal. Treasury Obligations Fund (Treasury Fund) To provide current income consistent with stability of principal.
While there is no assurance that a Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus. The investment objective of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund may be changed by the Funds' Trustees without shareholder approval. WHAT ARE EACH FUND'S MAIN INVESTMENT STRATEGIES? Each of the Funds invests in a portfolio of securities maturing in 397 days or less. The portfolio of each Fund will have a dollar-weighted maturity of 90 days or less. GOVERNMENT FUND The Government Fund invests primarily in U.S. Treasury and agency securities, including repurchase agreements collateralized fully by U.S. Treasury and agency securities. GOVERNMENT TAX-MANAGED FUND The Government Tax-Managed Fund invests primarily in U.S. Treasury and agency securities that pay interest exempt from state personal income tax. MUNICIPAL FUND The Municipal Fund invests primarily in high quality tax exempt securities. Under normal market conditions, the Municipal Fund will invest at least 80% of its total assets in tax exempt securities. At least 80% of the Municipal Fund's annual interest income will be exempt from federal regular income tax. Interest from the Municipal Fund's investments may be subject to the federal alternative minimum tax for individuals and corporations (AMT). PRIME FUND The Prime Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. PRIME CASH FUND The Prime Cash Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. PRIME VALUE FUND The Prime Value Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. TAX-FREE FUND The Tax-Free Fund invests primarily in high quality, tax exempt securities. At least 80% of the Tax-Free Fund's annual interest income will be exempt from federal regular income tax. Interest from the Tax- Free Fund's investments may be subject to AMT. TREASURY FUND The Treasury Fund invests primarily in U.S. Treasury securities, including repurchase agreements collateralized fully by U.S. Treasury securities. WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS? All mutual funds take investment risks. Therefore, even though the Funds are money market funds that seek to maintain a stable net asset value, it is possible to lose money by investing in a Fund. The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-end basis. The Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.48%. Within the periods shown in the Chart, the Fund's Institutional Service Shares highest quarterly return was 1.43% (quarter ended June 30, 1995). Its lowest quarterly return was 1.19% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.19% Start of Performance 1 5.23% 1 The Fund's Institutional Service Shares start of performance date was July 5, 1994. The Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.66%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-end basis. The Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.45%. Within the periods shown in the Chart, the Fund's Institutional Service Shares highest quarterly return was 1.30% (quarter ended December 31, 1997). Its lowest quarterly return was 1.19% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.11% Start of Performance 1 5.18% 1 The Fund's Institutional Service Shares start of performance date was May 30, 1995. The Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.69%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Service Shares of Municipal Obligations Fund (the "Former Fund") prior to its reorganization into the Municipal Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Municipal Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Service Shares total returns on a calendar year-end basis. The Former Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 2.25%. Within the periods shown in the Chart, the Former Fund's Institutional Service Shares highest quarterly return was 0.98% (quarter ended June 30, 1995). Its lowest quarterly return was 0.53% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 3.30% 5 Years 3.29% Start of Performance 1 3.14% 1 The Former Fund's Institutional Service Shares start of performance date was February 8, 1993. The Former Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 3.52%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-end basis. The Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.54%. Within the periods shown in the Chart, the Fund's Institutional Service Shares highest quarterly return was 1.44% (quarter ended June 30, 1995). Its lowest quarterly return was 1.24% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.26% Start of Performance 1 5.28% 1 The Fund's Institutional Service Shares start of performance date was July 5, 1994. The Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.82%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Service Shares of Prime Cash Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Cash Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Cash Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Service Shares total returns on a calendar year-end basis. The Former Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.55%. Within the periods shown in the Chart, the Former Fund's Institutional Service Shares highest quarterly return was 1.46% (quarter ended June 30, 1995). Its lowest quarterly return was 0.75% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.29% 5 Years 5.12% Start of Performance 1 4.98% 1 The Former Fund's Institutional Service Shares start of performance date was September 2, 1993. The Former Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.85%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Service Shares of Prime Value Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Value Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Value Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Service Shares total returns on a calendar year-end basis. The Former Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.57%. Within the periods shown in the Chart, the Former Fund's Institutional Service Shares highest quarterly return was 1.47% (quarter ended June 30, 1995). Its lowest quarterly return was 0.76% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.32% 5 Years 5.15% Start of Performance 1 5.02% 1 The Former Fund's Institutional Service Shares start of performance date was September 1, 1993. The Former Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.90%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-end basis. The Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 2.09%. Within the periods shown in the Chart, the Fund's Institutional Service Shares highest quarterly return was 0.94% (quarter ended June 30, 1995). Its lowest quarterly return was 0.73% (quarter ended March 31, 1997). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 3.12% Start of Performance 1 3.25% 1 The Fund's Institutional Service Shares start of performance date was July 5, 1994. The Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 3.33%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-end basis. The Fund's Institutional Service Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Fund's Institutional Service Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.37%. Within the periods shown in the Chart, the Fund's Institutional Service Shares highest quarterly return was 1.42% (quarter ended June 30, 1995). Its lowest quarterly return was 1.15% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Service Shares Average Annual Total Returns for the calendar periods ended December 31, 1998. CALENDAR PERIOD FUND 1 Year 5.11% Start of Performance 1 5.17% 1 The Fund's Institutional Service Shares start of performance date was July 5, 1994. The Fund's Institutional Service Shares 7-Day Net Yield as of December 31, 1998 was 4.50%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. What are Each Fund's Fees and Expenses? MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Service Shares of Government Obligations Fund and Government Obligations Tax-Managed Fund.
GOVERNMENT GOVERNMENT OBLIGATIONS OBLIGATIONS TAX-MANAGED SHAREHOLDER FEES FUND FUND Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None Exchange Fee None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% Distribution (12b-1) Fee None None Shareholder Services Fee 0.25% 0.25% Other Expenses 0.09% 0.10% Total Annual Fund Operating Expenses 0.54% 0.55% 1 Although not contractually obligated to do so, the adviser waived certain amounts. These amounts are shown below along with the net expenses the Funds actually paid for the fiscal year ended July 31, 1999. Total Waiver of Fund Expenses 0.09% 0.10% Total Actual Annual Fund Operating Expenses (after waivers) 0.45% 0.45% 2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The management fee paid by Government Obligations Fund and Government Obligations Tax-Managed Fund (after the voluntary waiver) was 0.11% and 0.10%, respectively, for the fiscal year ended July 31, 1999.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Service Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Service Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Service Shares operating expenses are BEFORE WAIVERS as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Government Obligations Fund $55 $173 $302 $677 Government Obligations Tax-Managed Fund $56 $176 $307 $689 MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Service Shares of Prime Obligations Fund, Tax-Free Obligations Fund and Treasury Obligations Fund.
PRIME TAX-FREE TREASURY OBLIGATIONS OBLIGATIONS OBLIGATIONS SHAREHOLDER FEES FUND FUND FUND Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) None None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None None Exchange Fee None None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% 0.20% Distribution (12b-1) Fee None None None Shareholder Services Fee 0.25% 0.25% 0.25% Other Expenses 0.10% 0.10% 0.09% Total Annual Fund Operating Expenses 0.55% 0.55% 0.54% 1 Although not contractually obligated to do so, the adviser waived certain amounts. These are shown below along with the net expenses the Funds actually paid for the fiscal year ended July 31, 1999. Total Waiver of Fund Expenses 0.10% 0.10% 0.09% Total Actual Annual Fund Operating Expenses (after waivers) 0.45% 0.45% 0.45% 2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The management fee paid by Prime Obligations Fund, Tax-Free Obligations Fund and Treasury Obligations Fund (after the voluntary waiver) was 0.10%, 0.10% and 0.11%, respectively, for the fiscal year ended July 31, 1999.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Service Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Service Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Service Shares operating expenses are BEFORE WAIVERS as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Prime Obligations Fund $56 $176 $307 $689 Tax-Free Obligations Fund $56 $176 $307 $689 Treasury Obligations Fund $55 $173 $302 $677 MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Service Shares of Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund.
PRIME PRIME MUNICIPAL CASH VALUE OBLIGATIONS OBLIGATIONS OBLIGATIONS SHAREHOLDER FEES FUND FUND FUND Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) None None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None None Exchange Fee None None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% 0.20% Distribution (12b-1) Fee None None None Shareholder Services Fee 0.25% 0.25% 0.25% Other Expenses 0.16% 0.11% 0.11% Total Annual Fund Operating Expenses 3 0.61% 0.56% 0.56% 1 Although not contractually obligated to do so, the adviser expects to waive certain amounts. These are shown below along with the net expenses the Funds expect to pay for the fiscal year ending July 31, 2000. Total Waiver of Fund Expenses 0.18% 0.13% 0.15% Total Actual Annual Fund Operating Expenses (after waivers) 0.43% 0.43% 0.41% 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 Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund (after the anticipated voluntary waiver) is expected to be 0.02%, 0.07%, and 0.05%, respectively, for the fiscal year ending July 31, 2000. 3 For the fiscal year ended January 31, 1999, prior to the reorganization of Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund, the Former Funds, as portfolios of Money Market Obligations Trust, had Total Annual Fund Operating Expenses and Total Actual Annual Fund Operating Expenses (after waivers) of 0.61% and 0.43%, 0.56% and 0.43% and 0.56% and 0.41%, respectively.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Service Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Service Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Service Shares operating expenses are BEFORE WAIVERS as estimated above in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Municipal Obligations Fund $62 $195 $340 $762 Prime Cash Obligations Fund $57 $179 $313 $701 Prime Value Obligations Fund $57 $179 $313 $701 What are Each Fund's Investment Strategies? Each Fund's investment strategy is described earlier under "What are Each Fund's Main Investment Strategies?" Following is additional information on the investment strategies for the Funds. The Adviser for each of the Funds targets a dollar-weighted average portfolio maturity range based upon its interest rate outlook. The Adviser formulates its interest rate outlook by analyzing a variety of factors, such as: * current U.S. economic activity and the economic outlook; * current short-term interest rates; * the Federal Reserve Board's policies regarding short-term interest rates; and * the potential effects of foreign economic activity on U.S. short-term interest rates. The Adviser generally shortens the portfolio's dollar-weighted average maturity when it expects interest rates to rise and extends the maturity when it expects interest rates to fall. The Adviser selects securities used to shorten or extend the portfolio's dollar-weighted average maturity by comparing the returns currently offered by different investments to their historical and expected returns. MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND The Adviser performs a fundamental credit analysis to develop an approved list of issuers and securities that meet the Adviser's standard for minimal credit risk. The Adviser monitors the credit risks of all portfolio securities on an ongoing basis by reviewing periodic financial data and ratings of nationally recognized statistical rating organizations (NRSROs). MUNICIPAL FUND AND TAX-FREE FUND In targeting a dollar-weighted average portfolio maturity range, the Adviser also will consider the tax exempt securities available. In addition, the Adviser may invest in securities subject to AMT in an attempt to enhance yield and provide diversification. INDUSTRY CONCENTRATION The Prime Fund may invest 25% or more of its assets in commercial paper issued by finance companies. The Prime Value Fund may invest 25% or more of its assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund and the Tax-Free Fund may temporarily depart from their principal investment strategies by investing their assets in securities subject to federal income tax. They may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Funds to receive and distribute taxable income to investors. What are the Principal Securities in Which the Funds Invest? GOVERNMENT FUND The Government Fund invests primarily in fixed income securities, including U.S. Treasury securities, agency securities and repurchase agreements. GOVERNMENT TAX-MANAGED FUND The Government Tax-Managed Fund invests primarily in fixed income securities, including U.S. Treasury securities and agency securities. MUNICIPAL FUND The Municipal Fund invests primarily in tax exempt securities, a type of fixed income security, including variable rate demand instruments and municipal notes. Certain of these tax exempt securities may be subject to credit enhancement. PRIME FUND The Prime Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. PRIME CASH FUND The Prime Cash Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. PRIME VALUE FUND The Prime Value Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. TAX-FREE FUND The Tax-Free Fund invests primarily in tax exempt securities, a type of fixed income security, including variable rate demand instruments and municipal notes. Certain of these tax exempt securities may be subject to credit enhancement. TREASURY FUND The Treasury Fund invests primarily in fixed income securities, including U.S. Treasury securities and repurchase agreements. FIXED INCOME SECURITIES Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically. In addition, the issuer of a fixed income security must repay the principal amount of the security, normally within a specified time. U.S. TREASURY SECURITIES U.S. Treasury securities are direct obligations of the federal government of the United States. AGENCY SECURITIES Agency securities are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority (a GSE). The United States supports some GSEs with its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. CORPORATE DEBT SECURITIES Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. The Prime Fund, the Prime Cash Fund and the Prime Value 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 less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. DEMAND INSTRUMENTS Demand instruments are corporate debt securities that the issuer must repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The Funds treats demand instruments as short-term securities, even though their stated maturity may extend beyond one year. BANK INSTRUMENTS Bank instruments are unsecured interest bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit and banker's acceptances. Yankee instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments are denominated in U.S. dollars and issued by non- U.S. branches of U.S. or foreign banks. ASSET BACKED SECURITIES Asset backed securities are payable from pools of obligations other than mortgages. Most asset backed securities involve consumer or commercial debts with maturities of less than 10 years. However, almost any type of fixed income assets (including other fixed income securities) may be used to create an asset backed security. Asset backed securities may take the form of commercial paper, notes or pass through certificates. TAX EXEMPT SECURITIES Tax exempt securities are fixed income securities that pay interest that is not subject to federal regular income taxes. Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment. VARIABLE RATE DEMAND INSTRUMENTS Variable rate demand instruments are tax exempt securities that require the issuer or a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The securities also pay interest at a variable rate intended to cause the securities to trade at their face value. The Funds treat demand instruments as short-term securities, because their variable interest rate adjusts in response to changes in market rates, even though their stated maturity may extend beyond 13 months. MUNICIPAL NOTES Municipal notes are short-term tax exempt securities. Many municipalities issue such notes to fund their current operations before collecting taxes or other municipal revenues. Municipalities may also issue notes to fund capital projects prior to issuing long-term bonds. The issuers typically repay the notes at the end of their fiscal year, either with taxes, other revenues or proceeds from newly issued notes or bonds. CREDIT ENHANCEMENT Credit enhancement consists of an arrangement in which a company agrees to pay amounts due on a fixed income security if the issuer defaults. In some cases the company providing credit enhancement makes all payments directly to the security holders and receives reimbursement from the issuer. Normally, the credit enhancer has greater financial resources and liquidity than the issuer. For this reason, the Adviser usually evaluates the credit risk of a fixed income security based solely upon its credit enhancement. Common types of credit enhancement include guarantees, letters of credit, bond insurance and surety bonds. Credit enhancement also includes arrangements where securities or other liquid assets secure payment of a fixed income security. If a default occurs, these assets may be sold and the proceeds paid to the security's holders. Either form of credit enhancement reduces credit risks by providing another source of payment for a fixed income security. REPURCHASE AGREEMENTS Repurchase agreements are transactions in which a Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. A Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser. Repurchase agreements are subject to credit risks. INVESTMENT RATINGS The money market instruments in which the Prime Fund, the Prime Cash Fund and the Tax-Free Fund invest must be rated in the highest short-term rating category by one or more NRSROs or be of comparable quality to securities having such ratings. The securities in which the Municipal Fund and the Prime Value Fund invest must be rated in one of the two highest short-term rating categories by one or more NRSROs or be of comparable quality to securities having such ratings. What are the Specific Risks of Investing in the Funds? Each of the Funds is subject to interest rate risks. In addition, each of the Funds (except the Government Tax-Managed Fund) is subject to credit risks. Finally, the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund are subject to sector risks. INTERESTS RATE RISKS Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Money market funds try to minimize this risk by purchasing short-term securities. CREDIT RISKS MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND Credit risk is the possibility that an issuer will default on a security by failing to pay interest or principal when due. If an issuer defaults, a Fund will lose money. Money market funds try to minimize this risk by purchasing higher quality securities. Many fixed income securities receive credit ratings from services such as Standard & Poor's and Moody's Investors Service. These services assign ratings to securities by assessing the likelihood of issuer default. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, a Fund must rely entirely on the Adviser's credit assessment. GOVERNMENT FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TREASURY FUND Credit risk includes the possibility that a party to a transaction involving a Fund will fail to meet its obligations. This could cause a Fund to lose the benefit of the transaction or prevent a Fund from selling or buying other securities to implement its investment strategy. SECTOR RISKS A substantial part of the portfolios of the Prime Fund and the Prime Value Fund may be comprised of securities issued by finance companies or the banking industry, respectively, or companies with similar characteristics. In addition, a substantial part of the portfolios of the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund may be comprised of securities credit enhanced by banks or companies with similar characteristics. As a result, the Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund will be more susceptible to any economic, business, political or other developments which generally affect these entities. What Do Shares Cost? You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is open. The Funds attempt to stabilize the net asset value (NAV) of their Shares at $1.00 by valuing the portfolio securities using the amortized cost method. A Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The Funds do not charge a front-end sales charge. The NAV of the Municipal Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund is determined at 12:00 noon and 3:00 p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The NAV of the Government Tax- Managed Fund is determined at 1:00 p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The NAV of the Government Fund, the Prime Fund and the Treasury Fund is determined at 5:00 p.m. (Eastern time) each day the NYSE is open. The required minimum initial investment for each Fund is $1,000,000. There is no required minimum subsequent investment amount. An account may be opened with a smaller amount as long as the $1,000,000 minimum is reached within one year. An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through investment professionals may be subject to a smaller minimum investment amount. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions. How are the Funds Sold? The Funds offer three share classes: Institutional Shares, Institutional Service Shares and Institutional Capital Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Service Shares. Each share class has different expenses, which affect their performance. Contact your investment professional or call 1-800-341-7400 for more information concerning the other classes. The Funds' Distributor, Federated Securities Corp., markets the Shares described in this prospectus to financial institutions, financial intermediaries and institutional investors, or to individuals, directly or through investment professionals. The Municipal Fund and the Tax-Free Fund may not be a suitable investment for retirement plans because they invest in municipal securities. The Distributor and its affiliates may pay out of their assets other amounts (including items of material value) to investment professionals for marketing and servicing Shares. The Distributor is a subsidiary of Federated Investors, Inc. (Federated). How to Purchase Shares You may purchase Shares through an investment professional or directly from the Funds. The Funds reserve the right to reject any request to purchase Shares. THROUGH AN INVESTMENT PROFESSIONAL * Establish an account with the investment professional; and * Submit your purchase order for Shares of the Government Tax-Managed Fund to the investment professional before 2:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 2:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. * Submit your purchase order for Shares of the Municipal Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund to the investment professional before 3:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 3:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. * Submit your purchase order for Shares of the Government Fund, the Prime Fund and the Treasury Fund to the investment professional before 5:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 5:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. Investment professionals should send payments according to the instructions in the sections "By Wire" or "By Check." DIRECTLY FROM THE FUNDS * Establish your account with a 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 incurred by the Fund or Federated Shareholder Services Company, the Funds' transfer agent. An institution may establish an account and place an order by calling the Fund and will become a shareholder after the Fund receives the order. BY WIRE Send your wire to: State Street Bank and Trust Company Boston, MA Dollar Amount of Wire ABA Number 011000028 Attention: EDGEWIRE Wire Order Number, Dealer Number or Group Number Nominee/Institution Name Fund Name and Number and Account Number You cannot purchase Shares by wire on holidays when wire transfers are restricted. BY CHECK Make your check payable to THE FEDERATED FUNDS, note your account number on the check, and mail it to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that requires a street address, mail it to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will not accept third-party checks (checks originally payable to someone other than you or The Federated Funds). Orders by mail are considered received when payment by check is converted into federal funds (normally the business day after the check is received) and Shares begin earning dividends the next day. BY INVEST-BY-PHONE Once you establish an account, you may use the Funds' Invest-By-Phone privilege for future Share purchases if you have an account with a bank that is an Automated Clearing House (ACH) member. To apply, call the Funds for an authorization form. You may use Invest-By-Phone to purchase Shares approximately two weeks from the date you file the form with Federated Shareholder Services Company. BY AUTOMATED CLEARING HOUSE 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 a Fund if you purchased Shares directly from the Fund. THROUGH AN INVESTMENT PROFESSIONAL Submit your redemption request to your investment professional by the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment professionals are responsible for promptly submitting redemption requests and providing proper written redemption instructions as outlined below. DIRECTLY FROM THE FUNDS BY TELEPHONE You may redeem Shares by calling a Fund at 1-800-341-7400 once you have completed the appropriate authorization form for telephone transactions. If you call before 12:00 noon (Eastern time) with respect to the Municipal Fund and the Tax-Free Fund, 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Government Fund, the Prime Fund and the Treasury Fund, your redemption will be wired to you the same day. You will not receive that day's dividend. If you call after 12:00 noon (Eastern time) with respect to the Municipal Fund and the Tax-Free Fund, 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Government Fund, the Prime Fund and the Treasury Fund, your redemption will be wired to you the following business day. You will receive that day's dividend. With respect to the Tax-Free Fund and the Government Tax-Managed Fund, under limited circumstances, arrangements may be made with the Distributor for same-day payment of redemption proceeds, without that day's dividend, for redemption requests received before 12:00 noon (Eastern time) and 2:00 p.m. (Eastern time), respectively. BY MAIL You may redeem Shares by mailing a written request to a Fund. Your redemption request will be processed on the day the Fund receives your written request in proper form. Dividends are paid up to and including the day that a redemption request is processed. Send requests by mail to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 All requests must include: * 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 Funds 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 30 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 each 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 a Fund's ability to manage its assets. You will not accrue interest or dividends on uncashed checks from a Fund if those checks are undeliverable and returned to the Fund. ADDITIONAL CONDITIONS TELEPHONE TRANSACTIONS The Funds will record your telephone instructions. If a Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. SHARE CERTIFICATES The Funds no longer issue share certificates. If you are redeeming Shares represented by certificates previously issued by a Fund, you must return the certificates with your written redemption request. For your protection, send your certificates by registered or certified mail, but do not endorse them. Account and Share Information ACCOUNT ACTIVITY You will receive periodic statements reporting all account activity, including dividends and capital gains paid. DIVIDENDS AND CAPITAL GAINS The Funds declare any dividends daily and pay them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after a Fund receives your check. In either case, you earn dividends through the day your redemption request is received. The Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Funds will pay any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments. ACCOUNTS WITH LOW BALANCES Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum. TAX INFORMATION The Funds send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. Fund distributions of dividends and capital gains are taxable to you whether paid in cash or reinvested in the Funds. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time a Fund holds its assets. Fund distributions are expected to be primarily dividends. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. The Municipal Fund and the Tax-Free Fund send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that distributions from the Municipal Fund and the Tax-Free Fund will be primarily dividends that are exempt from federal income tax, although a portion of each Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Funds. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. Who Manages the Funds? The Board of Trustees governs the Funds. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Funds' assets, including buying and selling portfolio securities. The Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The Adviser and other subsidiaries of Federated advise approximately 175 mutual funds and separate accounts, which totaled approximately $111 billion in assets as of December 31, 1998. Federated was established in 1955 and is one of the largest mutual fund investment managers in the United States with approximately 1,900 employees. More than 4,000 investment professionals make Federated Funds available to their customers. ADVISORY FEES The Adviser receives an annual investment advisory fee of 0.20% of each Fund's average daily net assets. The Adviser may voluntarily waive a portion of its fee or reimburse the Funds for certain operating expenses. YEAR 2000 READINESS The "Year 2000" problem is the potential for computer errors or failures because certain computer systems may be unable to interpret dates after December 31, 1999 or may experience other date-related problems. The Year 2000 problem may cause systems to process information incorrectly and could disrupt businesses, such as the Funds, that rely on computers. While it is impossible to determine in advance all of the risks to the Funds, the Funds could experience interruptions in basic financial and operational functions. Fund shareholders could experience errors or disruptions in Fund share transactions or Fund communications. The Funds' service providers are making changes to their computer systems to fix any Year 2000 problems. In addition, they are working to gather information from third-party providers to determine their Year 2000 readiness. Year 2000 problems would also increase the risks of the Funds' investments. To assess the potential effect of the Year 2000 problem, the Adviser is reviewing information regarding the Year 2000 readiness of issuers of securities the Funds may purchase. 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. The financial impact of these issues for the Funds is still being determined. There can be no assurance that potential Year 2000 problems would not have a material adverse effect on the Funds. Financial Information FINANCIAL HIGHLIGHTS The Financial Highlights will help you understand each Fund's financial performance for its past five fiscal years, or since inception, if the life of the Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains. This information has been audited by Arthur Andersen LLP and Ernst & Young LLP, whose reports, along with each Fund's audited financial statements, are included in the Annual Reports. Financial Highlights-Government Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 1 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 2 4.78% 5.33% 5.16% 5.29% 5.31% RATIOS TO AVERAGE NET ASSETS: Expenses 3 0.54% 0.55% 0.55% 0.56% 0.60% 4 Net investment income 3 4.58% 5.13% 4.96% 5.03% 5.48% 4 Expenses (after waivers) 0.45% 0.45% 0.45% 0.45% 0.45% 4 Net investment income (after waivers) 4.67% 5.23% 5.06% 5.14% 5.63% 4 SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $2,087,254 $1,672,417 $936,869 $702,274 $339,105
1 Reflects operations for the period from August 1, 1994 (date of initial public investment) to July 31, 1995. For the period from the Institutional Service Shares' effective date (July 5, 1994) to July 31, 1994, all net investment income was distributed to the Fund's Adviser. 2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 3 During the period, certain fees were voluntarily waived. If such voluntarily waivers had not occurred, the ratios would have been as indicated. 4 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Government Obligations Tax-Managed Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 1 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.01 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.01) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 2 4.74% 5.23% 5.09% 5.23% 0.95% RATIOS TO AVERAGE NET ASSETS: Expenses 3 0.55% 0.57% 0.58% 0.61% 0.85% 4 Net investment income 3 4.53% 4.99% 4.84% 4.81% 5.15% 4 Expense (after waivers) 0.45% 0.45% 0.45% 0.42% 0.45% 4 Net investment income (after waivers) 4.63% 5.11% 4.97% 5.00% 5.55% 4 SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $1,329,556 $830,652 $421,095 $322,698 $76,165
1 Reflects operations for the period from May 30, 1995 (date of initial public investment) to July 31, 1995. 2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 3 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 4 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Municipal Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.01 0.03 0.03 0.03 LESS DISTRIBUTIONS: Distributions from net investment income (0.01) (0.03) (0.03) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 1.47% 3.27% 3.43% 3.31% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.61% 5 0.59% 0.66% 0.64% Net investment income 4 2.80% 5 3.06% 3.25% 2.87% Expenses (after waivers) 0.43% 5 0.43% 0.43% 0.43% Net investment income (after waivers) 2.98% 5 3.22% 3.48% 3.08% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $106,684 $67,832 $41,216 $0.30
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 4.88% 5.37% 5.19% 5.32% 5.38% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.55% 0.55% 0.56% 0.56% 0.58% Net investment income 2 4.67% 5.14% 5.00% 5.02% 5.53% Expenses (after waivers) 0.45% 0.45% 0.45% 0.45% 0.45% Net investment income (after waivers) 4.77% 5.24% 5.11% 5.13% 5.66% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $4,215,510 $3,468,222 $2,236,997 $1,297,019 $500,954
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Cash Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.05 0.05 0.06 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 2.29% 5.23% 5.34% 5.11% 5.83% 4.21% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.56% 5 0.55% 0.55% 0.57% 0.50% 0.50% Net investment income 4 4.50% 5 4.97% 5.17% 4.88% 5.57% 3.92% Expenses (after waivers) 0.43% 5 0.43% 0.43% 0.43% 0.42% 0.37% Net investment income (after waivers) 4.63% 5 5.09% 5.29% 5.02% 5.65% 4.05% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $957,998 $894,851 $668,665 $412,762 $324,474 $342,673
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Value Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.05 0.05 0.06 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 2.31% 5.27% 5.41% 5.15% 5.84% 4.26% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.56% 5 0.56% 0.56% 0.57% 0.50% 0.50% Net investment income 4 4.49% 5 4.98% 5.15% 4.89% 5.60% 3.79% Expenses (after waivers) 0.41% 5 0.41% 0.39% 0.41% 0.42% 0.34% Net investment income (after waivers) 4.64% 5 5.13% 5.32% 5.05% 5.68% 3.95% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $707,737 $495,172 $325,390 $18,415 $20,372 $21,739
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Tax-Free Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.03 0.03 0.03 0.03 0.03 LESS DISTRIBUTIONS: Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 2.89% 3.25% 3.24% 3.29% 3.39% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.55% 0.55% 0.55% 0.56% 0.59% Net investment income 2 2.73% 3.10% 3.09% 3.11% 3.34% Expenses (after waivers) 0.45% 0.45% 0.45% 0.45% 0.45% Net investment income (after waivers) 2.83% 3.20% 3.19% 3.22% 3.48% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $1,055,650 $940,516 $587,983 $406,408 $252,016
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Treasury Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 1 4.65% 5.28% 5.10% 5.26% 5.23% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.54% 0.55% 0.55% 0.56% 0.56% Net investment income 2 4.45% 5.05% 4.93% 5.01% 5.42% Expenses (after waivers) 0.45% 0.45% 0.45% 0.45% 0.45% Net investment income (after waivers) 4.54% 5.15% 5.03% 5.12% 5.53% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $5,034,388 $5,045,428 $3,054,110 $1,516,839 $543,855
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. [Graphic] Federated World-Class Investment Manager PROSPECTUS Money Market Obligations Trust Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund INSTITUTIONAL SERVICE SHARES OCTOBER 31, 1999 A Statement of Additional Information (SAI) dated October 31, 1999, is incorporated by reference into this prospectus. Additional information about the Funds and their investments is contained in the Funds' SAI, Annual and Semi-Annual Reports to shareholders as they become available. The Annual Reports discuss market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year. To obtain the SAI, the Annual Report, the Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Funds at 1-800-341-7400. You can obtain information about the Funds (including the SAI) by writing to or visiting the Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees. [Graphic] Federated Money Market Obligations 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. 811-5950 Cusip 60934N807 Cusip 60934N849 Cusip 60934N641 Cusip 60934N708 Cusip 60934N617 Cusip 60934N575 Cusip 60934N880 Cusip 60934N872 G02705-02 (10/99) [Graphic] STATEMENT OF ADDITIONAL INFORMATION Money Market Obligations Trust Government Obligations Fund (Government Fund) Government Obligations Tax-Managed Fund (Government Tax-Managed Fund) Municipal Obligations Fund (Municipal Fund) Prime Obligations Fund (Prime Fund) Prime Cash Obligations Fund (Prime Cash Fund) Prime Value Obligations Fund (Prime Value Fund) Tax-Free Obligations Fund (Tax-Free Fund) Treasury Obligations Fund (Treasury Fund) INSTITUTIONAL SERVICE SHARES This Statement of Additional Information (SAI) is not a prospectus. Read this SAI in conjunction with the prospectus for Institutional Service Shares of the Funds, dated October 31, 1999. This SAI incorporates by reference the Funds' Annual Reports. Obtain the prospectus or the Annual Reports without charge by calling 1-800-341-7400. OCTOBER 31, 1999 [Graphic] Federated World-Class Investment Manager Money Market Obligations Trust Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor G02705-04 (10/99) [Graphic] CONTENTS How are the Funds Organized? 1 Securities in Which the Funds Invest 1 What Do Shares Cost? 5 How are the Funds Sold? 5 Subaccounting Services 5 Redemption in Kind 6 Massachusetts Partnership Law 6 Account and Share Information 6 Tax Information 6 Who Manages and Provides Services to the Funds? 7 How Do the Funds Measure Performance? 11 Who is Federated Investors, Inc.? 14 Financial Information 15 Investment Ratings 15 Addresses 17 How are the Funds Organized? Each Fund is a diversified portfolio of Money Market Obligations Trust (Trust). The Trust is an open-end, management investment company that was established under the laws of the Commonwealth of Massachusetts on October 3, 1988. The Trust may offer separate series of shares representing interests in separate portfolios of securities. The Municipal Fund and the Prime Value Fund, which were established on February 5, 1993, and the Prime Cash Fund, which was established on November 16, 1992, will be reorganized as portfolios of the Trust on November 1, 1999. The Board of Trustees (the Board) has established three classes of shares of the Funds, known as Institutional Shares, Institutional Service Shares and Institutional Capital Shares. This SAI relates to Institutional Service Shares (Shares). The Funds' investment adviser is Federated Investment Management Company (Adviser). Effective March 31, 1999, Federated Management, former adviser to the Funds (except the Government Tax-Managed Fund) and Federated Administrative Services, former adviser to the Government Tax-Managed Fund, became Federated Investment Management Company (formerly, Federated Advisers). Securities in Which the Funds Invest SECURITIES DESCRIPTIONS AND TECHNIQUES The Funds' principal securities are described in the prospectus. In pursuing their investment strategies, the Funds may invest in such securities, or the securities described below, for any purpose that is consistent with their investment objectives. ZERO COUPON SECURITIES Zero coupon securities do not pay interest or principal until final maturity unlike debt securities that provide periodic payments of interest (referred to as a coupon payment). Investors buy zero coupon securities at a price below the amount payable at maturity. The difference between the purchase price and the amount paid at maturity represents interest on the zero coupon security. Investors must wait until maturity to receive interest and principal, which increases the interest rate and credit risks of a zero coupon security. SPECIAL TRANSACTIONS DELAYED DELIVERY TRANSACTIONS Delayed delivery transactions, including when issued transactions, are arrangements in which a Fund buys securities for a set price, with payment and delivery of the securities scheduled for a future time. During the period between purchase and settlement, no payment is made by a Fund to the issuer and no interest accrues to a Fund. A Fund records the transaction when it agrees to buy the securities and reflects their value in determining the price of its shares. Settlement dates may be a month or more after entering into these transactions so that the market values of the securities bought may vary from the purchase prices. Therefore, delayed delivery transactions create interest rate risks for a Fund. Delayed delivery transactions also involve credit risks in the event of a counterparty default. SECURITIES LENDING A Fund may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, a Fund receives cash or liquid securities from the borrower as collateral. The borrower must furnish additional collateral if the market value of the loaned securities increases. Also, the borrower must pay a Fund the equivalent of any dividends or interest received on the loaned securities. A Fund will reinvest cash collateral in securities that qualify as an acceptable investment for a Fund. However, a Fund must pay interest to the borrower for the use of cash collateral. Loans are subject to termination at the option of a Fund or the borrower. A Fund will not have the right to vote on securities while they are on loan, but it will terminate a loan in anticipation of any important vote. A Fund may pay administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash collateral to a securities lending agent or broker. The Prime Fund has no present intention to engage in securities lending. ASSET COVERAGE In order to secure its obligations in connection with special transactions, a Fund will either own the underlying assets or set aside readily marketable securities with a value that equals or exceeds the Fund's obligations. Unless a Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without terminating a special transaction. This may cause a Fund to miss favorable trading opportunities or to realize losses on special transactions. INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES The Funds may invest their assets in securities of other investment companies, including the securities of affiliated money market funds, as an efficient means of carrying out its investment policies and managing its uninvested cash. In addition, a Fund may invest in the securities described below. PRIME FUND, PRIME CASH FUND AND PRIME VALUE FUND MUNICIPAL SECURITIES Municipal securities are issued by states, counties, cities and other political subdivisions and authorities. Although many municipal securities are exempt from federal income tax, the Funds may invest in taxable municipal securities. INSURANCE CONTRACTS Insurance contracts include guaranteed investment contracts, funding agreements and annuities. The Funds treat these contracts as fixed income securities. FOREIGN SECURITIES Foreign securities are securities of issuers based outside the United States. The Funds consider an issuer to be based outside the United States if: * it is organized under the laws of, or has a principal office located in, another country; * the principal trading market for its securities is in another country; or * 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. Along with the risks normally associated with domestic securities of the same type, foreign securities are subject to risks of foreign investing. The Prime Fund, the Prime Cash Fund and the Prime Value Fund also may invest in U.S. Treasury securities and agency securities, which are described in the prospectus. MUNICIPAL FUND AND TAX-FREE FUND GENERAL OBLIGATION BONDS General obligation bonds are supported by the issuer's power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer's authority to impose additional taxes may be limited by its charter or state law. SPECIAL REVENUE BONDS Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not collect from the municipality's general taxes or revenues. For example, a municipality may issue bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds. PRIVATE ACTIVITY BONDS Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds from its bonds to the company using the factory, and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company's loan payments, not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds. The interest on many types of private activity bonds is subject to the federal alternative minimum tax (AMT). The Funds may invest in bonds subject to AMT. MUNICIPAL LEASES Municipalities may enter into leases for equipment or facilities. In order to comply with state public financing laws, these leases are typically subject to annual appropriation. In other words, a municipality may end a lease, without penalty, by not providing for the lease payments in its annual budget. After the lease ends, the lessor can resell the equipment or facility but may lose money on the sale. The Funds may invest in securities supported by individual leases or pools of municipal leases. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund and the Tax-Free Fund may make temporary defensive investments in the following taxable securities, which are described in the prospectus or herein: U.S. Treasury securities, agency securities, bank instruments, corporate debt securities, commercial paper, repurchase agreements and reverse repurchase agreements. GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND REVERSE REPURCHASE AGREEMENTS 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 a Fund. Reverse repurchase agreements are subject to credit risks. In addition, reverse repurchase agreements create leverage risks because a Fund must repurchase the underlying security at a higher price, regardless of the market value of the security at the time of repurchase. INVESTMENT RATINGS The ratings categories of a nationally recognized statistical rating organization (NRSRO) are determined without regard for sub-categories and gradations. For example, securities rated SP-1 or SP-2 by Standard & Poor's (S&P), MIG-1 or MIG-2 by Moody's Investors Service (Moody's), or F-1+, F-1 or F-2 by Fitch IBCA, Inc. (Fitch) are all considered rated in one of the two highest short-term rating categories. The Funds will follow applicable regulations in determining whether a security rated by more than one rating service can be treated as being in the highest or one of the two highest short-term rating categories. See "Regulatory Compliance." INVESTMENT RISKS There are many factors which may affect an investment in the Funds. The Funds' principal risks are described in the prospectus. Additional risk factors are outlined below. GOVERNMENT TAX-MANAGED FUND CREDIT RISKS 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. MUNICIPAL FUND AND TAX-FREE FUND CREDIT RISKS Credit risk includes the possibility that a party to a transaction involving the Funds will fail to meet their obligations. This could cause the Funds to lose the benefit of the transaction or prevent a Fund from selling or buying other securities to implement its investment strategy. TAX RISKS In order to be tax exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by the Funds to shareholders to be taxable. Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall. PRIME FUND, PRIME CASH FUND AND PRIME VALUE FUND RISKS OF FOREIGN INVESTING Foreign securities pose additional risks because foreign economic or political conditions may be less favorable than those of the U.S. Securities in foreign markets may also be subject to taxation policies that reduce returns for U.S. investors. PREPAYMENT RISKS Unlike traditional fixed income securities, which pay a fixed rate of interest until maturity (when the entire principal amount is due), payments on asset backed securities include both interest and a partial payment of principal. Partial payment of principal may be comprised of scheduled principal payments as well as unscheduled payments from voluntary prepayment, refinancing, or foreclosure of the underlying loans. If a Fund receives unscheduled prepayments, it may have to reinvest the proceeds in other fixed income securities with lower interest rates, higher credit risks, or other less favorable characteristics. GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, MUNICIPAL FUND, PRIME FUND, PRIME CASH FUND, PRIME VALUE FUND AND TAX-FREE FUND LEVERAGE RISKS Leverage risk is created when an investment exposes the Funds to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain. FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES FUND OBJECTIVE Government Fund To provide current income consistent with stability of principal. Government Tax-Managed Fund To provide current income consistent with stability of principal and liquidity. Prime Fund To provide current income consistent with stability of principal. Tax-Free Fund To provide dividend income exempt from federal regular income tax consistent with stability of principal. Treasury Fund To provide current income consistent with stability of principal. The investment objective of each Fund may not be changed by the Fund's Trustees without shareholder approval. As a matter of investment policy which cannot be changed without shareholder approval, at least 80% of the Municipal Fund's and the Tax-Free Fund's annual interest income will be exempt from federal regular income tax. INVESTMENT LIMITATIONS DIVERSIFICATION OF INVESTMENTS With respect to securities comprising 75% of the value of its total assets, a Fund will not purchase securities of any one issuer (other than cash; cash items; securities issued or guaranteed by the government of the U.S. or its agencies or instrumentalities and repurchase agreements collateralized by such U.S. government securities; and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would be invested in securities of that issuer, or the Fund would own more than 10% of the outstanding voting securities of that issuer. ISSUING SENIOR SECURITIES AND BORROWING MONEY A Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under the 1940 Act. INVESTING IN REAL ESTATE A Fund may not purchase or sell real estate, provided that this restriction does not prevent the Fund from investing in issuers which invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein. A Fund may exercise its rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner. INVESTING IN COMMODITIES A Fund may not purchase or sell physical commodities, provided that the Fund may purchase securities of companies that deal in commodities. UNDERWRITING A Fund may not underwrite the securities of other issuers, except that the Fund may engage in transactions involving the acquisition, disposition or resale of its portfolio securities, under circumstances where it may be considered to be an underwriter under the Securities Act of 1933. LENDING CASH OR SECURITIES A Fund may not make loans, provided that this restriction does not prevent the Fund from purchasing debt obligations, entering into repurchase agreements, lending its assets to broker/dealers or institutional investors and investing in loans, including assignments and participation interests. CONCENTRATION OF INVESTMENTS A Fund (with the exception of the Prime Fund and the Prime Value Fund) will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. The Prime Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry, except that the Prime Fund may invest 25% or more of the value of its total assets in the commercial paper issued by finance companies. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. The Prime Value Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry, except that the Prime Value Fund may invest 25% or more of the value of its total assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND 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. PLEDGING ASSETS A Fund will not mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities. BUYING ON MARGIN A Fund will not purchase securities on margin, provided that a Fund may obtain short-term credits necessary for the clearance of purchases and sales of securities. INVESTING IN ILLIQUID SECURITIES A Fund will not purchase securities for which there is no readily available market, or enter into repurchase agreements or purchase time deposits maturing in more than seven days, if immediately after and as a result, the value of such securities would exceed, in the aggregate, 10% of a Fund's net assets. INVESTING IN RESTRICTED SECURITIES The Municipal Fund, the Prime Fund, the Prime Cash Fund, the Prime Value Fund and the Tax-Free Fund may invest in securities subject to restriction on resale under the federal securities laws. Except with respect to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such limitation. For purposes of the diversification limitation, the Funds consider certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings association having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be "cash items." To conform to the current view of the Securities and Exchange Commission (SEC) that only domestic bank instruments may be excluded from industry concentration limitations, as a matter of non-fundamental policy, the Funds will not exclude foreign bank instruments from industry concentration limits as long as the policy of the SEC remains in effect. As a non-fundamental operating policy, the Funds will consider concentration to be the investment of more than 25% of the value of its total assets in any one industry. For purposes of the concentration limitation (with the exception of the Prime Fund and the Prime Value Fund), (a) utility companies will be divided according to their services, for example, gas, gas transmission, electric and telephone will each be considered a separate industry; (b) financial service companies will be classified according to the end users of their services, for example, automobile finance, bank finance and diversified finance will each be considered a separate industry; and (c) asset-backed securities will be classified according to the underlying assets securing such securities. REGULATORY COMPLIANCE The Funds may follow non-fundamental operational policies that are more restrictive than their fundamental investment limitations, as set forth in the prospectus and this Statement of Additional Information, in order to comply with applicable laws and regulations, including the provisions of and regulations under the Investment Company Act of 1940. In particular, the Funds will comply with the various requirements of Rule 2a-7 (the Rule), which regulates money market mutual funds. The Funds will determine the effective maturity of their investments according to the Rule. The Funds may change these operational policies to reflect changes in the laws and regulations without the approval of their shareholders. DETERMINING MARKET VALUE OF SECURITIES The 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 is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on Shares of the Funds computed by dividing the annualized daily income on the Fund's portfolio by the net asset value computed as above may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the opposite may be true. The Funds' use of the amortized cost method of valuing portfolio instruments depends on its compliance with certain conditions in the Rule. Under the Rule, the Board must establish procedures reasonably designed to stabilize the net asset value per Share, as computed for purposes of distribution and redemption, at $1.00 per Share, taking into account current market conditions and each Fund's investment objective. The procedures include monitoring the relationship between the amortized cost value per Share and the net asset value per Share based upon available indications of market value. The 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 net asset value. What Do Shares Cost? The NAV for each class of Shares may differ due to the variance in daily net income realized by each class. Such variance will reflect only accrued net income to which the shareholders of a particular class are entitled. How are the Funds Sold? Under the Distributor's Contract with the Funds, the Distributor (Federated Securities Corp.) offers Shares on a continuous, best-efforts basis. SHAREHOLDER SERVICES The Funds may pay Federated Shareholder Services Company, a subsidiary of Federated Investors, Inc. (Federated), for providing shareholder services and maintaining shareholder accounts. Federated Shareholder Services Company may select others to perform these services for their customers and may pay them fees. SUPPLEMENTAL PAYMENTS Investment professionals may be paid fees out of the assets of the Distributor and/or Federated Shareholder Services Company (but not out of a Fund's assets). The Distributor and/or Federated Shareholder Services Company may be reimbursed by the Adviser or its affiliates. Investment professionals receive such fees for providing distribution- related or shareholder services such as sponsoring sales, providing sales literature, conducting training seminars for employees, and engineering sales-related computer software programs and systems. Also, investment professionals may be paid cash or promotional incentives, such as reimbursement of certain expenses relating to attendance at informational meetings about the Funds or other special events at recreational-type facilities, or items of material value. These payments will be based upon the amount of Shares the investment professional sells or may sell and/or upon the type and nature of sales or marketing support furnished by the investment professional. Subaccounting Services Certain investment professionals may wish to use the transfer agent's subaccounting system to minimize their internal recordkeeping requirements. The transfer agent may charge a fee based on the level of subaccounting services rendered. Investment professionals holding Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass through subaccounting fees as part of or in addition to normal trust or agency account fees. They may also charge fees for other services that may be related to the ownership of Shares. This information should, therefore, be read together with any agreement between the customer and the investment professional about the services provided, the fees charged for those services, and any restrictions and limitations imposed. Redemption in Kind Although the Funds intend to pay Share redemptions in cash, they reserve the right, as described below, to pay the redemption price in whole or in part by a distribution of a Fund's portfolio securities. Because the Funds have elected to be governed by Rule 18f-1 under the Investment Company Act of 1940, the Funds are obligated to pay Share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1% of the net assets represented by such Share class during any 90-day period. Any Share redemption payment greater than this amount will also be in cash unless the Funds' Board determines that payment should be in kind. In such a case, the Funds will pay all or a portion of the remainder of the redemption in portfolio securities, valued in the same way as the Funds determine their NAV. The portfolio securities will be selected in a manner that the Funds' Board deems fair and equitable and, to the extent available, such securities will be readily marketable. Redemption in kind is not as liquid as a cash redemption. If redemption is made in kind, shareholders receiving the portfolio securities and selling them before their maturity could receive less than the redemption value of the securities and could incur certain transaction costs. Massachusetts Partnership Law Under certain circumstances, shareholders may be held personally liable as partners under Massachusetts law for obligations of the Trust. To protect its shareholders, the Trust has filed legal documents with Massachusetts that expressly disclaim the liability of its shareholders for acts or obligations of the Trust. In the unlikely event a shareholder is held personally liable for the Trust's obligations, the Trust is required by the Declaration of Trust to use its property to protect or compensate the shareholder. On request, the Trust will defend any claim made and pay any judgment against a shareholder for any act or obligation of the Trust. Therefore, financial loss resulting from liability as a shareholder will occur only if the Trust itself cannot meet its obligations to indemnify shareholders and pay judgments against them. Account and Share Information VOTING RIGHTS Each Share of a Fund gives the shareholder one vote in Trustee elections and other matters submitted to shareholders for vote. All Shares of the Trust have equal voting rights, except that in matters affecting only a particular Fund or class, only Shares of that Fund or class are entitled to vote. Trustees may be removed by the Board or by shareholders at a special meeting. A special meeting of shareholders will be called by the Board upon the written request of shareholders who own at least 10% of a Trust's outstanding shares of all series entitled to vote. As of October 7, 1999, the following shareholders owned of record, beneficially, or both, 5% or more of outstanding Institutional Service Shares of the Funds: Citizens Bank of Rhode Island, Providence, Rhode Island, 13.47%, BancFirst, Oklahoma City, Oklahoma, 11.12%, Perry Baker & Co., Westerly, Rhode Island, 7.09% and Currier & Co., Salem, Massachusetts, 5.58% of the Government Tax-Managed Fund; The Mark Travel Corp., Milwaukee, Wisconsin, 27.39%, UBS AG Omnibus Account, New York, New York, 13.38% and Primevest Financial Services, St. Cloud, Minnesota, 7.07% of the Municipal Fund; Laba & Co., Chicago, Illinois, 29.19% and Peoples Bank, Bridgeport, Connecticut, 7.34% of the Prime Fund; Harris Trust and Savings Bank, Chicago, Illinois, 47.30%, Hare & Co., New York, New York, 13.19%, Kaw & Co., Charleston, West Virginia, 7.39% and First Union Capital Markets Corp., Charlotte, North Carolina, 5.43% of the Prime Cash Fund; Primevest Financial Services, St. Cloud, Minnesota, 10.71%, Thafnab & Co., Terre Haute, Indiana, 7.71% and Hare & Co., c/o Bank of New York, New York, New York, 6.53% of the Prime Value Fund; Naidot & Co., Woodbridge, New Jersey, 21.65%, Strafe & Co., Columbus, Ohio, 12.37% and Kaw & Co., Charleston, West Virginia, 5.83% of the Tax-Free Fund; The Chase Manhattan Bank, N.A., New York, New York, 9.17%, Plitt & Co., Baltimore, Maryland, 7.40% and Turtle & Co., Boston, Massachusetts, 5.78% of the Treasury Fund. Shareholders owning 25% or more of outstanding Shares may be in control and be able to affect the outcome of certain matters presented for a vote of shareholders. Tax Information FEDERAL INCOME TAX Each Fund intends to meet requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. If these requirements are not met, it will not receive special tax treatment and will pay federal income tax. Each Fund will be treated as a single, separate entity for federal income tax purposes so that income earned and capital gains and losses realized by the Trust's other portfolios will be separate from those realized by the Fund. Who Manages and Provides Services to the Funds? BOARD OF TRUSTEES The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. Information about each Board member is provided below and includes each person's: name, address, birth date, present position(s) held with the Trust, principal occupations for the past five years and positions held prior to the past five years, total compensation received as a Trustee from the Trust for its most recent fiscal year, and the total compensation received from the Federated Fund Complex for the most recent calendar year. The Trust is comprised of 21 funds and the Federated Fund Complex is comprised of 54 investment companies, whose investment advisers are affiliated with the Funds' Adviser. As of October 7, 1999, the Trust's Board and Officers as a group owned less than 1% of the Trust's outstanding Institutional Service Shares.
NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX JOHN F. DONAHUE*#+ Chief Executive Officer $0 $0 for the Trust and Birth Date: July 28, 1924 and Director or Trustee of 54 other investment Federated Investors Tower the Federated Fund companies in the 1001 Liberty Avenue Complex; Chairman and Fund Complex Pittsburgh, PA Director, Federated CHAIRMAN AND TRUSTEE Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling, and Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd. THOMAS G. BIGLEY Director or Trustee of $22,998.69 $113,860.22 for the Trust Birth Date: February 3, 1934 the Federated Fund and 54 other investment 15 Old Timber Trail Complex; Director, Member companies in the Pittsburgh, PA of Executive Committee, Fund Complex TRUSTEE Children's Hospital of Pittsburgh; Director, Robroy Industries, Inc. (coated steel conduits/ computer storage equipment); formerly: Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician practice management); Director, Member of Executive Committee, University of Pittsburgh. JOHN T. CONROY, JR. Director or Trustee of the $25,312.12 $125,264.48 for the Trust Birth Date: June 23, 1937 Federated Fund Complex; and 54 other investment Wood/Commercial Dept. President, Investment companies in the John R. Wood Associates, Inc. Realtors Properties Corporation; Fund Complex 3255 Tamiami Trail North Senior Vice President, Naples, FL John R. Wood and TRUSTEE Associates, Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest Florida; formerly: President, Naples Property Management, Inc. and Northgate Village Development Corporation. NICHOLAS CONSTANTAKIS++ Director or Trustee of the $3,686.46 $47,958.02 for the Trust Birth Date: September 3, 1939 Federated Fund Complex; and 29 other investment 175 Woodshire Drive formerly: Partner, companies in the Pittsburgh, PA Andersen Worldwide SC. Fund Complex TRUSTEE JOHN F. CUNNINGHAM++ Director or Trustee of some $12,056.51 $0 for the Trust Birth Date: March 5, 1943 of the Federated Fund and 46 other investment 353 El Brillo Way Complex; Chairman, companies in the Palm Beach, FL President and Chief Fund Complex TRUSTEE Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College; Director, Iperia Corp. (communications/software); formerly: Director, Redgate Communications and EMC Corporation (computer storage systems) . Previous Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc. J. CHRISTOPHER DONAHUE+ President or Executive $0 $0 for the Trust Birth Date: April 11, 1949 Vice President of the and 16 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Director or Trustee of some Fund Complex Pittsburgh, PA of the Funds in the PRESIDENT AND TRUSTEE Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; President and Trustee, Federated Investment Management Company; President and Trustee, Federated Investment Counseling, President and Director, Federated Global Investment Management Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. LAWRENCE D. ELLIS, M.D.* Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: October 11, 1932 Federated Fund Complex; and 54 other investment 3471 Fifth Avenue Professor of Medicine, companies in the Suite 1111 University of Pittsburgh; Fund Complex Pittsburgh, PA Medical Director, TRUSTEE University of Pittsburgh Medical Center-Downtown; Hematologist, Oncologist, and Internist, University of Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society of America. NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX PETER E. MADDEN Director or Trustee of the $20,158.88 $113,860.22 for the Trust Birth Date: March 16, 1942 Federated Fund Complex; and 54 other investment One Royal Palm Way formerly: Representative, companies in the 100 Royal Palm Way Commonwealth of Fund Complex Palm Beach, FL Massachusetts General TRUSTEE Court; President, State Street Bank and Trust Company and State Street Corporation. Previous Positions: Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. CHARLES F. MANSFIELD, JR.++ Director or Trustee of some $12,056.51 $0 for the Trust Birth Date: April 10, 1945 of the Federated Fund and 50 other investment 80 South Road Complex; Management companies in the Westhampton Beach, NY Consultant. Fund Complex TRUSTEE Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, Marine Midland Bank; Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University. JOHN E. MURRAY, JR., J.D., S.J.D.# Director or Trustee of $24,201.52 $113,860.22 for the Trust Birth Date: December 20, 1932 the Federated Fund and 54 other investment President, Duquesne University Complex; President, Law companies in the Pittsburgh, PA Professor, Duquesne Fund Complex TRUSTEE University; Consulting Partner, Mollica & Murray; Director, Michael Baker Corp. (engineering, construction, operations, and technical services). Previous Positions: Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law. MARJORIE P. SMUTS Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: June 21, 1935 Federated Fund Complex; and 54 other investment 4905 Bayard Street Public Relations/ companies in the Pittsburgh, PA Marketing/Conference Fund Complex TRUSTEE Planning. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; business owner. JOHN S. WALSH++ Director or Trustee of some $12,056.51 $0 for the Trust and Birth Date: November 28, 1957 of the Federated Fund 48 other investment 2007 Sherwood Drive Complex; President and companies in the Valparaiso, IN Director, Heat Wagon, Inc. Fund Complex TRUSTEE (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc. (heavy highway contractor); formerly: Vice President, Walsh & Kelly, Inc. EDWARD C. GONZALES Trustee or Director of some $0 $0 for the Trust and Birth Date: October 22, 1930 of the Funds in the 1 other investment Federated Investors Tower Federated Fund Complex; company in the 1001 Liberty Avenue President, Executive Vice Fund Complex Pittsburgh, PA President and Treasurer of EXECUTIVE VICE PRESIDENT some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice President, Federated Investment Management Company and Federated Investment Counseling, Federated Global Investment Management Corp. and Passport Research, Ltd.; Executive Vice President and Director, Federated Securities Corp.; Trustee, Federated Shareholder Services Company. JOHN W. MCGONIGLE Executive Vice President $0 $0 for the Trust and Birth Date: October 26, 1938 and Secretary of the 54 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Executive Vice President, Fund Complex Pittsburgh, PA Secretary and Director, EXECUTIVE VICE PRESIDENT Federated Investors, Inc.; AND SECRETARY Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. RICHARD J. THOMAS Treasurer of the Federated $0 $0 for the Trust and Birth Date: June 17, 1954 Fund Complex; Vice 54 other investment Federated Investors Tower President - Funds companies in the 1001 Liberty Avenue Financial Services Fund Complex Pittsburgh, PA Division, Federated TREASURER Investors, Inc.; formerly: various management positions within Funds Financial Services Division of Federated Investors, Inc. RICHARD B. FISHER President or Vice $0 $0 for the Trust and Birth Date: May 17, 1923 President of some of the 6 other investment Federated Investors Tower Funds in the Federated Fund companies in the 1001 Liberty Avenue Complex; Director or Fund Complex Pittsburgh, PA Trustee of some of the VICE PRESIDENT Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Chairman and Director, Federated Securities Corp. NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX WILLIAM D. DAWSON, III Chief Investment Officer $0 $0 for the Trust and Birth Date: March 3, 1949 of this Fund and various 41 other investment Federated Investors Tower other Funds in the companies in the 1001 Liberty Avenue Federated Fund Complex; Fund Complex Pittsburgh, PA Executive Vice President, CHIEF INVESTMENT OFFICER Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company 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 Investment Management Company and Passport Research, Ltd. DEBORAH A. CUNNINGHAM Deborah A. Cunningham is $0 $0 for the Trust and Birth Date: September 15, 1959 Vice President of the 6 other investment Federated Investors Tower Trust. Ms. Cunningham companies in the 1001 Liberty Avenue joined Federated in 1981 Fund Complex Pittsburgh, PA and has been a Senior VICE PRESIDENT Portfolio Manager and a Senior Vice President of the Funds' Adviser since 1997. Ms. Cunningham served as a Portfolio Manager and a Vice President of the Adviser from 1993 until 1996. Ms. Cunningham is a Chartered Financial Analyst and received her M.B.A. in Finance from Robert Morris College. MARY JO OCHSON Mary Jo Ochson is Vice $0 $0 for the Trust and Birth Date: September 12, 1953 President of the Trust. 7 other investment Federated Investors Tower Ms. Ochson joined companies in the 1001 Liberty Avenue Federated in 1982 and has Fund Complex Pittsburgh, PA been a Senior Portfolio VICE PRESIDENT Manager and a Senior Vice President of the Funds' Adviser since 1996. From 1988 through 1995, Ms. Ochson served as a Portfolio Manager and a Vice President of the Funds' Adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A. in Finance from the University of Pittsburgh.
* An asterisk denotes a Trustee who is deemed to be an interested person as defined in the Investment Company Act of 1940. # A pound sign denotes a Member of the Board's Executive Committee, which handles the Board's responsibilities between its meetings. + Mr. Donahue is the father of J. Christopher Donahue, President of the Trust. ++ Messrs. Cunningham, Mansfield and Walsh became members of the Board on January 1, 1999. Mr. Constantakis became a member of the Board on October 1, 1999. Messrs. Cunningham, Mansfield and Walsh did not earn any fees for serving the Federated Fund Complex since these fees are reported as of the end of the last calendar year. INVESTMENT ADVISER The Adviser conducts investment research and makes investment decisions for the Funds. The Adviser is a wholly owned subsidiary of Federated. The Adviser shall not be liable to the Trust or any Fund shareholder for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Trust. OTHER RELATED SERVICES Affiliates of the Adviser may, from time to time, provide certain electronic equipment and software to institutional customers in order to facilitate the purchase of Fund Shares offered by the Distributor. BROKERAGE TRANSACTIONS When selecting brokers and dealers to handle the purchase and sale of portfolio instruments, the Adviser looks for prompt execution of the order at a favorable price. The Adviser will generally use those who are recognized dealers in specific portfolio instruments, except when a better price and execution of the order can be obtained elsewhere. In selecting among firms believed to meet these criteria, the Adviser may give consideration to those firms which have sold or are selling Shares of the Funds and other funds distributed by the Distributor and its affiliates. The Adviser makes decisions on portfolio transactions and selects brokers and dealers subject to review by the Funds' Board. Investment decisions for the Funds are made independently from those of other accounts managed by the Adviser. When a Fund and one or more of those accounts invests in, or disposes of, the same security, available investments or opportunities for sales will be allocated among the Funds and the account(s) in a manner believed by the Adviser to be equitable. While the coordination and ability to participate in volume transactions may benefit the Funds, it is possible that this procedure could adversely impact the price paid or received and/or the position obtained or disposed of by the Funds. ADMINISTRATOR Federated Services Company, a subsidiary of Federated, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Funds. Federated Services Company provides these at the following annual rate of the average aggregate daily net assets of all Federated Funds as specified below: MAXIMUM AVERAGE AGGREGATE DAILY ADMINISTRATIVE FEE NET ASSETS OF THE 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 Funds for expenses. Federated Services Company also provides certain accounting and recordkeeping services with respect to the Funds' portfolio investments for a fee based on Fund assets plus out-of-pocket expenses. CUSTODIAN State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the securities and cash of the Funds. Foreign instruments purchased by the Funds are held by foreign banks participating in a network coordinated by State Street Bank. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Services Company, through its registered transfer agent subsidiary, Federated Shareholder Services Company, maintains all necessary shareholder records. The Funds pay the transfer agent a fee based on the size, type and number of accounts and transactions made by shareholders. INDEPENDENT PUBLIC ACCOUNTANTS The independent public accountants for the Government Fund, the Government Tax-Managed Fund, the Prime Fund, the Tax-Free Fund and the Treasury Fund, Arthur Andersen LLP, plans and performs its audit so that it may provide an opinion as to whether the Funds' financial statements and financial highlights are free of material misstatement. INDEPENDENT AUDITORS The independent auditors for the Municipal Fund, the Prime Cash Fund and the Prime Value Fund, Ernst & Young LLP, plans and performs its audit so that it may provide an opinion as to whether the Funds' financial statements and financial highlights are free of material misstatement. FEES PAID BY THE FUNDS FOR SERVICES
ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JULY 31 1999 1998 1997 1999 1998 1997 1999 Government Fund $ 12,594,895 $ 9,364,290 $ 6,777,523 $ 4,748,275 $ 3,531,785 $ 2,559,413 $ 4,433,875 5,748,147 4,778,285 3,522,148 Government Tax-Managed Fund 4,442,958 2,869,299 1,452,990 1,674,995 1,082,093 548,677 2,950,939 2,187,791 1,725,248 923,964 Prime Fund 18,192,962 14,305,445 10,030,131 6,858,747 5,395,419 3,787,706 9,353,421 9,378,326 7,090,763 5,562,429 Tax-Free Fund 7,008,989 5,174,140 4,284,365 2,642,389 1,951,404 1,617,952 2,567,781 3,652,002 2,661,895 2,116,877 Treasury Fund 22,626,298 19,318,524 13,886,919 8,530,115 7,285,996 5,244,250 12,980,684 9,896,725 9,537,113 6,879,101 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JANUARY 31 1999 1998 1997 1 1999 1998 1997 1999 Municipal Fund $ 803,037 $ 447,960 $ 76,352 $ 302,822 $ 190,864 $ 19,609 $ 157,723 636,478 447,960 76,352 Prime Cash Fund 4,676,382 3,485,448 911,504 1,762,996 1,315,415 30,284 1,803,553 2,853,923 2,107,753 505,519 Prime Value Fund 3,264,534 1,821,778 202,835 1,230,729 687,478 78,894 960,721 2,420,288 1,553,105 166,441 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE PERIOD ENDED JULY 31 1999 2 1999 2 1999 2 Municipal Fund $ 516,311 $ 194,649 $ 101,418 446,031 Prime Cash Fund 3,622,592 1,365,717 1,144,130 2,260,468 Prime Value Fund 2,380,186 897,330 676,637 1,769,715
1 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 2 The Fund has changed its fiscal year-end from January 31 to July 31. For the fiscal years ended January 31, 1999, 1998 and 1997, fees paid by the Municipal Fund, the Prime Cash Fund and the Prime Value Fund for services are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999. Fees are allocated among classes based on their pro rata share of Fund assets, except for shareholder services fees, which are borne only by the applicable class of Shares. How Do the Funds Measure Performance? The Funds may advertise Share performance by using the Securities and Exchange Commission's (SEC) standard method for calculating performance applicable to all mutual funds. The SEC also permits this standard performance information to be accompanied by non-standard performance information. The performance of Shares depends upon such variables as: portfolio quality; average portfolio maturity; type and value of portfolio securities; changes in interest rates; changes or differences in the Funds' or any class of Shares' expenses; and various other factors. Share performance fluctuates on a daily basis largely because net earnings fluctuate daily. Both net earnings and offering price per Share are factors in the computation of yield and total return. AVERAGE ANNUAL TOTAL RETURNS AND YIELD Total returns are given for the one-year, five-year or Start of Performance periods ended July 31, 1999. Yield, Effective Yield and Tax-Equivalent Yield are given for the 7-day period ended July 31, 1999. Performance of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund shown are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999.
START OF PERFORMANCE GOVERNMENT FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON JULY 5, 1994 Total Return - 4.78% 5.17% 5.16% Yield 4.67% - - - Effective Yield 4.78% - - - START OF PERFORMANCE GOVERNMENT TAX-MANAGED FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON MAY 30, 1995 Total Return - 4.74% - 5.09% Yield 4.60% - - - Effective Yield 4.71% - - - START OF PERFORMANCE MUNICIPAL FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON FEBRUARY 8, 1993 Total Return - 3.10% 3.37% 3.12% Yield 2.97% - - - Effective Yield 3.02% - - - Tax-Equivalent Yield 4.92% - - - START OF PERFORMANCE PRIME FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON JULY 5, 1994 Total Return - 4.88% 5.23% 5.21% Yield 4.76% - - - Effective Yield 4.87% - - - START OF PERFORMANCE PRIME CASH FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON SEPTEMBER 2, 1993 Total Return - 4.89% 5.26% 4.95% Yield 4.71% - - - Effective Yield 4.82% - - - START OF PERFORMANCE PRIME VALUE FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON SEPTEMBER 1, 1993 Total Return - 4.93% 5.29% 4.99% Yield 4.74% - - - Effective Yield 4.86% - - - START OF PERFORMANCE TAX-FREE FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON JULY 5, 1994 Total Return - 2.89% 3.21% 3.20% Yield 2.75% - - - Effective Yield 2.79% - - - Tax-Equivalent Yield 4.55% - - - START OF PERFORMANCE TREASURY FUND 7-DAY PERIOD 1 YEAR 5 YEARS ON JULY 5, 1994 Total Return - 4.65% 5.10% 5.09% Yield 4.54% - - - Effective Yield 4.64% - - -
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, EFFECTIVE YIELD AND TAX-EQUIVALENT YIELD The yield of Shares is based upon the seven days ending on the day of the calculation, called the "base period." This yield is calculated by: determining the net change in the value of a hypothetical account with a balance of one Share at the beginning of the base period, with the net change excluding capital changes but including the value of any additional Shares purchased with dividends earned from the original one Share and all dividends declared on the original and any purchased Shares; dividing the net change in the account's value by the value of the account at the beginning of the base period to determine the base period return; and multiplying the base period return by 365/7. The effective yield is calculated by compounding the unannualized base-period return by: adding one to the base-period return, raising the sum to the 365/7th power; and subtracting one from the result. The tax-equivalent yield of Shares is calculated similarly to the yield, but is adjusted to reflect the taxable yield that Shares would have had to earn to equal the actual yield, assuming a specific tax rate. To the extent investment professionals and broker/dealers charge fees in connection with services provided in conjunction with an investment in Shares, the Share performance is lower for shareholders paying those fees. TAX EQUIVALENCY TABLE With regard to the Municipal Fund and the Tax-Free Fund, set forth below is a sample of a tax-equivalency table that may be used in advertising and sales literature. This table is for illustrative purposes only and is not representative of past or future performance of the Municipal Fund or the Tax-Free Fund. The interest earned by the municipal securities owned by the Municipal Fund or the Tax-Free Fund generally remains free from federal regular income tax and is often free from state and local taxes as well. However, some of the Municipal Fund's and the Tax-Free Fund's income may be subject to the federal alternative minimum tax and state and/or local taxes. TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60% Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 OVER $283,150 Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 OVER $283,150 TAX-EXEMPT YIELD: TAXABLE YIELD EQUIVALENT: 1.00% 1.18% 1.39% 1.45% 1.56% 1.66% 1.50% 1.76% 2.08% 2.17% 2.34% 2.48% 2.00% 2.35% 2.78% 2.90% 3.13% 3.31% 2.50% 2.94% 3.47% 3.62% 3.91% 4.14% 3.00% 3.53% 4.17% 4.35% 4.69% 4.97% 3.50% 4.12% 4.86% 5.07% 5.47% 5.79% 4.00% 4.71% 5.56% 5.80% 6.25% 6.62% 4.50% 5.29% 6.25% 6.52% 7.03% 7.45% 5.00% 5.88% 6.94% 7.25% 7.81% 8.28% 5.50% 6.47% 7.64% 7.97% 8.59% 9.11% 6.00% 7.06% 8.33% 8.70% 9.38% 9.93% 6.50% 7.65% 9.03% 9.42% 10.16% 10.76% 7.00% 8.24% 9.72% 10.14% 10.94% 11.59% 7.50% 8.82% 10.42% 10.87% 11.72% 12.42% 8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in calculating the taxable yield equivalent. PERFORMANCE COMPARISONS Advertising and sales literature may include: * references to ratings, rankings, and financial publications and/or performance comparisons of Shares to certain indices; * charts, graphs and illustrations using the Funds' returns, or returns in general, that demonstrate investment concepts such as tax-deferred compounding, dollar-cost averaging and systematic investment; * 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 * information about the mutual fund industry from sources such as the Investment Company Institute. The Funds may compare their performance, or performance for the types of securities in which they invest, to a variety of other investments, including federally insured bank products such as bank savings accounts, certificates of deposit, and Treasury bills. The Funds may quote information from reliable sources regarding individual countries and regions, world stock exchanges, and economic and demographic statistics. You may use financial publications and/or indices to obtain a more complete view of Share performance. When comparing performance, you should consider all relevant factors such as the composition of the index used, prevailing market conditions, portfolio compositions of other funds, and methods used to value portfolio securities and compute offering price. The financial publications and/or indices which the Funds use in advertising may include: LIPPER ANALYTICAL SERVICES, INC. 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 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 Money, a monthly magazine, regularly ranks money market funds in various categories based on the latest available seven-day effective yield. SALOMON 30-DAY CD INDEX Salomon 30-Day CD Index compares rate levels of 30-day certificates of deposit from the top ten prime representative banks. SALOMON 30-DAY TREASURY BILL INDEX Salomon 30-Day Treasury Bill Index is a weekly quote of the most representative yields for selected securities, issued by the U.S. Treasury, maturing in 30 days. DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES Discount Corporation of New York 30-Day Federal Agencies is a weekly quote of the average daily offering price for selected federal agency issues maturing in 30 days. BANK RATE MONITOR(C) NATIONAL INDEX Bank Rate Monitor(C) National Index, published weekly, is an average of the interest rates of personal money market deposit accounts at ten of the largest banks and thrifts in each of the five largest Standard Metropolitan Statistical Areas. If more than one rate is offered, the lowest rate is used. Account minimums and compounding methods may vary. Who is Federated Investors, Inc.? Federated is dedicated to meeting investor needs by making structured, straightforward and consistent investment decisions. Federated investment products have a history of competitive performance and have gained the confidence of thousands of financial institutions and individual investors. Federated's disciplined investment selection process is rooted in sound methodologies backed by fundamental and technical research. At Federated, success in investment management does not depend solely on the skill of a single portfolio manager. It is a fusion of individual talents and state- of-the-art industry tools and resources. Federated's investment process involves teams of portfolio managers and analysts, and investment decisions are executed by traders who are dedicated to specific market sectors and who handle trillions of dollars in annual trading volume. FEDERATED FUNDS OVERVIEW MUNICIPAL FUNDS In the municipal sector, as of December 31, 1998, Federated managed 10 bond funds with approximately $2.2 billion in assets and 23 money market funds with approximately $12.5 billion in total assets. In 1976, Federated introduced one of the first municipal bond mutual funds in the industry and is now one of the largest institutional buyers of municipal securities. The Funds may quote statistics from organizations including The Tax Foundation and the National Taxpayers Union regarding the tax obligations of Americans. EQUITY FUNDS In the equity sector, Federated has more than 28 years' experience. As of December 31, 1998, Federated managed 27 equity funds totaling approximately $14.9 billion in assets across growth, value, equity income, international, index and sector (i.e. utility) styles. Federated's value- oriented management style combines quantitative and qualitative analysis and features a structured, computer-assisted composite modeling system that was developed in the 1970s. CORPORATE BOND FUNDS In the corporate bond sector, as of December 31, 1998, Federated managed 9 money market funds and 15 bond funds with assets approximating $22.8 billion and $7.1 billion, respectively. Federated's corporate bond decision making-based on intensive, diligent credit analysis-is backed by over 26 years of experience in the corporate bond sector. In 1972, Federated introduced one of the first high-yield bond funds in the industry. In 1983, Federated was one of the first fund managers to participate in the asset backed securities market, a market totaling more than $209 billion. GOVERNMENT FUNDS In the government sector, as of December 31, 1998, Federated managed 9 mortgage backed, 5 government/agency and 19 government money market mutual funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively. Federated trades approximately $425 million in U.S. government and mortgage backed securities daily and places approximately $25 billion in repurchase agreements each day. Federated introduced the first U.S. government fund to invest in U.S. government bond securities in 1969. Federated has been a major force in the short- and intermediate-term government markets since 1982 and currently manages approximately $43.2 billion in government funds within these maturity ranges. MONEY MARKET FUNDS In the money market sector, Federated gained prominence in the mutual fund industry in 1974 with the creation of the first institutional money market fund. Simultaneously, the company pioneered the use of the amortized cost method of accounting for valuing shares of money market funds, a principal means used by money managers today to value money market fund shares. Other innovations include the first institutional tax-free money market fund. As of December 31, 1998, Federated managed more than $76.7 billion in assets across 52 money market funds, including 19 government, 9 prime and 23 municipal with assets approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively. The Chief Investment Officers responsible for oversight of the various investment sectors within Federated are: U.S. equity and high yield- J. Thomas Madden; U.S. fixed income-William D. Dawson, III; and global equities and fixed income-Henry A. Frantzen. The Chief Investment Officers are Executive Vice Presidents of the Federated advisory companies. MUTUAL FUND MARKET Thirty-seven percent of American households are pursuing their financial goals through mutual funds. These investors, as well as businesses and institutions, have entrusted over $5 trillion to the more than 7,300 funds available, according to the Investment Company Institute. FEDERATED CLIENTS OVERVIEW Federated distributes mutual funds through its subsidiaries for a variety of investment purposes. Specific markets include: INSTITUTIONAL CLIENTS Federated meets the needs of approximately 900 institutional clients nationwide by managing and servicing separate accounts and mutual funds for a variety of purposes, including defined benefit and defined contribution programs, cash management, and asset/liability management. Institutional clients include corporations, pension funds, tax exempt entities, foundations/endowments, insurance companies, and investment and financial advisers. The marketing effort to these institutional clients is headed by John B. Fisher, President, Institutional Sales Division, Federated Securities Corp. BANK MARKETING Other institutional clients include more than 1,600 banks and trust organizations. Virtually all of the trust divisions of the top 100 bank holding companies use Federated Funds in their clients' portfolios. The marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank Marketing & Sales. BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES Federated Funds are available to consumers through major brokerage firms nationwide-we have over 2,200 broker/dealer and bank broker/dealer relationships across the country-supported by more wholesalers than any other mutual fund distributor. Federated's service to financial professionals and institutions has earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for service quality measurement. The marketing effort to these firms is headed by James F. Getz, President, Broker/Dealer Sales Division, Federated Securities Corp. Financial Information The Financial Statements for the Funds for the fiscal year ended July 31, 1999 are incorporated herein by reference to the Annual Reports to Shareholders of the Funds dated July 31, 1999. Investment Ratings STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS An S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1-Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation. SP-2-Satisfactory capacity to pay principal and interest. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) COMMERCIAL PAPER RATINGS An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1-This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2-Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. LONG-TERM DEBT RATINGS AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA-Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues only in small degree. A-Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. MOODY'S INVESTORS SERVICE SHORT-TERM MUNICIPAL OBLIGATION RATINGS Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1-This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing. MIG2-This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER RATINGS P-1-Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2-Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS AAA-Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA-Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A-Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR-Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)-The underlying issuer/obligor/guarantor has other outstanding debt rated AAA by S&P or Aaa by Moody's. NR(2)-The underlying issuer/obligor/guarantor has other outstanding debt rated AA by S&P or Aa by Moody's. NR(3)-The underlying issuer/obligor/guarantor has other outstanding debt rated A by S&P or Moody's. FITCH IBCA, INC. SHORT-TERM DEBT RATING DEFINITIONS F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1-Very Strong Credit Quality. Issues assigned this rating reflect an assurance for timely payment, only slightly less in degree than issues rated F-1+. F-2-Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. Addresses MONEY MARKET OBLIGATIONS TRUST Government Obligations Fund Government Obligations Tax-Managed Fund Municipal Obligations Fund Prime Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Tax-Free Obligations Fund Treasury Obligations Fund Institutional Service Shares Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 DISTRIBUTOR Federated Securities Corp. Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 INVESTMENT ADVISER Federated Investment Management Company Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 CUSTODIAN State Street Bank and Trust Company P.O. Box 8600 Boston, MA 02266-8600 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP 225 Franklin Street Boston, MA 02110-2812 INDEPENDENT AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, MA 02116-5072 PROSPECTUS Money Market Obligations Trust Municipal Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Treasury Obligations Fund INSTITUTIONAL CAPITAL SHARES As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. OCTOBER 31, 1999 CONTENTS Risk/Return Summary 1 What are Each Fund's Fees and Expenses? 6 What are Each Fund's Investment Strategies? 9 What are the Principal Securities in Which the Funds Invest? 10 What are the Specific Risks of Investing in the Funds? 12 What Do Shares Cost? 13 How are the Funds Sold? 13 How to Purchase Shares 13 How to Redeem Shares 15 Account and Share Information 16 Who Manages the Funds? 17 Financial Information 18 Risk/Return Summary WHAT IS EACH FUND'S INVESTMENT OBJECTIVE? Each Fund is a money market fund that seeks to maintain a stable net asset value of $1.00 per Share.
FUND Objective Municipal Obligations Fund To provide current income (Municipal Fund) exempt from all federal regular income tax consistent with stability of principal. Prime Cash Obligations Fund To provide current income (Prime Cash Fund) consistent with stability of principal and liquidity. Prime Value Obligations Fund To provide current income (Prime Value Fund) consistent with stability of principal and liquidity. Treasury Obligations Fund To provide current income (Treasury Fund) consistent with stability of principal.
While there is no assurance that a Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus. The investment objective of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund may be changed by the Funds' Trustees without shareholder approval. WHAT ARE EACH FUND'S MAIN INVESTMENT STRATEGIES? Each of the Funds invests in a portfolio of securities maturing in 397 days or less. The portfolio of each Fund will have a dollar-weighted maturity of 90 days or less. MUNICIPAL FUND The Municipal Fund invests primarily in high quality tax exempt securities. Under normal market conditions, the Municipal Fund will invest at least 80% of its total assets in tax exempt securities. At least 80% of the Municipal Fund's annual interest income will be exempt from federal regular income tax. Interest from the Municipal Fund's investments may be subject to the federal alternative minimum tax for individuals and corporations (AMT). PRIME CASH FUND The Prime Cash Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. PRIME VALUE FUND The Prime Value Fund invests primarily in high quality fixed income securities issued by banks, corporations and the U.S. government. TREASURY FUND The Treasury Fund invests primarily in U.S. Treasury securities, including repurchase agreements collateralized fully by U.S. Treasury securities. WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS? All mutual funds take investment risks. Therefore, even though the Funds are money market funds that seek to maintain a stable net asset value, it is possible to lose money by investing in a Fund. The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Capital Shares of Municipal Obligations Fund (the "Former Fund") prior to its reorganization into the Municipal Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Municipal Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Capital Shares total returns on a calendar year-end basis. The Former Fund's Institutional Capital Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Capital Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 2.35%. Within the periods shown in the Chart, the Former Fund's Institutional Capital Shares highest quarterly return was 1.00% (quarter ended June 30, 1995). Its lowest quarterly return was 0.56% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Capital Shares Average Annual Total Returns for the calendar periods ended December 31, 1998.
CALENDAR PERIOD FUND 1 Year 3.44% 5 Years 3.41% Start of Performance 1 3.25%
1 The Former Fund's Institutional Capital Shares start of performance date was February 8, 1993. The Former Fund's Institutional Capital Shares 7-Day Net Yield as of December 31, 1998 was 3.65%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Capital Shares of Prime Cash Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Cash Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Cash Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Capital Shares total returns on a calendar year-end basis. The Former Fund's Institutional Capital Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Capital Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.65%. Within the periods shown in the Chart, the Former Fund's Institutional Capital Shares highest quarterly return was 1.49% (quarter ended June 30, 1995). Its lowest quarterly return was 1.27% (quarter ended March 31, 1997). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Capital Shares Average Annual Total Returns for the calendar periods ended December 31, 1998.
CALENDAR PERIOD FUND 1 Year 5.43% Start of Performance 1 5.49%
1 The Former Fund's Institutional Capital Shares start of performance date was October 6, 1994. The Former Fund's Institutional Capital Shares 7-Day Net Yield as of December 31, 1998 was 4.98%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE The Bar Chart and Performance Table below reflect historical performance data for Institutional Capital Shares of Prime Value Obligations Fund (the "Former Fund") prior to its reorganization into the Prime Value Obligations Fund, which is a newly created portfolio of Money Market Obligations Trust. On the date of the reorganization, November 1, 1999, the Former Fund will be dissolved and its net assets (inclusive of liabilities recorded on the Former Fund's records) will be transferred to the Prime Value Obligations Fund. [Graphic] Historically, the Former Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Former Fund's Institutional Capital Shares total returns on a calendar year-end basis. The Former Fund's Institutional Capital Shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value. The Former Fund's Institutional Capital Shares total return for the nine-month period from January 1, 1999 to September 30, 1999 was 3.67%. Within the periods shown in the Chart, the Former Fund's Institutional Capital Shares highest quarterly return was 1.49% (quarter ended June 30, 1995). Its lowest quarterly return was 0.78% (quarter ended March 31, 1994). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Former Fund's Institutional Capital Shares Average Annual Total Returns for the calendar periods ended December 31, 1998.
CALENDAR PERIOD FUND 1 Year 5.46% 5 Years 5.27% Start of Performance 1 4.94%
1 The Former Fund's Institutional Capital Shares start of peformance date was February 8, 1993. The Former Fund's Institutional Capital Shares 7-Day Net Yield as of December 31, 1998 was 5.03%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. RISK/RETURN BAR CHART AND TABLE [Graphic] Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Capital Shares total returns on a calendar year-end basis. The Fund's Institutional Capital Shares are not sold subject to a sales charge (load). The total return displayed above is based upon net asset value. The Fund's Institutional Capital Shares total return for the nine- month period from January 1, 1999 to September 30, 1999 was 3.49%. Within the period shown in the Chart, the Fund's Institutional Capital Shares highest quarterly return was 1.35% (quarter ended June 30, 1998). Its lowest quarterly return was 1.19% (quarter ended December 31, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the Fund's Institutional Capital Shares Average Annual Total Returns for the calendar periods ended December 31, 1998.
CALENDAR PERIOD FUND 1 Year 5.26% Start of Performance 1 5.33%
1 The Fund's Institutional Capital Shares start of performance date was April 14, 1997. The Fund's Institutional Capital Shares 7-Day Net Yield as of December 31, 1998 was 4.65%. Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day Net Yield. Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns. What are Each Fund's Fees and Expenses? MONEY MARKET OBLIGATIONS TRUST FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Capital Shares of Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund.
Prime Prime Municipal Cash Value Obligations Obligations Obligations SHAREHOLDER FEES Fund Fund Fund Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) None None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) None None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None None Exchange Fee None None None ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted From Fund Assets (as a percentage of average net assets) Management Fee 2 0.20% 0.20% 0.20% Distribution (12b-1) Fee None None None Shareholder Services Fee 3 0.25% 0.25% 0.25% Other Expenses 0.18% 0.13% 0.13% Total Annual Fund Operating Expenses 4 0.63% 0.58% 0.58% 1 Although not contractually obligated to do so, the adviser and shareholder services provider expect to waive certain amounts. These are shown below along with the net expenses the Funds expect to pay for the fiscal year ending July 31, 2000. Total Waiver of Fund Expenses 0.33% 0.28% 0.30% Total Actual Annual Fund Operating Expenses (after waivers) 0.30% 0.30% 0.28% 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 Municipal Obligations Fund, Prime Cash Obligations Fund, and Prime Value Obligations Fund (after the anticipated voluntary waiver) is expected to be 0.02%, 0.07% and 0.05%, respectively, for the fiscal year ending July 31, 2000. 3 The shareholder services provider expects to voluntarily waive a portion of the shareholder services fee. The shareholder services provider can terminate this anticipated voluntary waiver at any time. The shareholder services fee paid by the Funds' Institutional Capital Shares (after the anticipated voluntary waiver) is expected to be 0.10% for the fiscal year ending July 31, 2000. 4 For the fiscal year ended July 31, 1999, prior to the reorganization of Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund, the Former Funds, as portfolios of Money Market Obligations Trust, had Total Annual Fund Operating Expenses and Total Actual Annual Fund Operating Expenses (after waivers) of 0.63% and 0.30%, 0.58%, and 0.30% and 0.58% and 0.28%, respectively.
EXAMPLE This Example is intended to help you compare the cost of investing in the Funds' Institutional Capital Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Funds' Institutional Capital Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' Institutional Capital Shares operating expenses are BEFORE WAIVERS as estimated in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Municipal Fund $64 $202 $351 $786 Prime Cash Fund $59 $186 $324 $726 Prime Value Fund $59 $186 $324 $726
TREASURY OBLIGATIONS FUND FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Institutional Capital Shares of Treasury Obligations Fund.
SHAREHOLDER FEES Fees Paid Directly From Your Investment Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or 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 Fee 2 0.20% Distribution (12b-1) Fee None Shareholder Services Fee 3 0.25% Other Expenses 0.09% Total Annual Fund Operating Expenses 0.54% 1 Although not contractually obligated to do so, the adviser and shareholder services provider waived certain amounts. These are shown below along with the net expenses the Fund actually paid for the fiscal year ended July 31, 1999. Total Waiver of Fund Expenses 0.24% Total Actual Annual Fund Operating Expenses (after waivers) 0.30% 2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The management fee paid by the Fund (after the voluntary waiver) was 0.11% for the fiscal year ended July 31, 1999. 3 The shareholder services fee has been voluntarily waived. This voluntary waiver can be terminated at any time. The shareholder services fee paid by the Fund's Institutional Capital Shares (after the voluntary waiver) was 0.10% for the fiscal year ended July 31, 1999.
EXAMPLE This Example is intended to help you compare the cost of investing in the Fund's Institutional Capital Shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund's Institutional Capital Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's Institutional Capital Shares operating expenses are before waivers as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 Year $ 55 3 Years $ 173 5 Years $ 302 10 Years $ 677
What are Each Fund's Investment Strategies? Each Fund's investment strategy is described earlier under "What are Each Fund's Main Investment Strategies?" Following is additional information on the investment strategies for the Funds. The Adviser for each of the Funds targets a dollar-weighted average portfolio maturity range based upon its interest rate outlook. The Adviser formulates its interest rate outlook by analyzing a variety of factors, such as: * current U.S. economic activity and the economic outlook, * current short-term interest rates, * the Federal Reserve Board's policies regarding short-term interest rates, and * the potential effects of foreign economic activity on U.S. short-term interest rates. The Adviser generally shortens the portfolio's dollar-weighted average maturity when it expects interest rates to rise and extends the maturity when it expects interest rates to fall. The Adviser selects securities used to shorten or extend the portfolio's dollar-weighted average maturity by comparing the returns currently offered by different investments to their historical and expected returns. MUNICIPAL FUND, PRIME CASH FUND AND PRIME VALUE FUND The Adviser performs a fundamental credit analysis to develop an approved list of issuers and securities that meet the Adviser's standard for minimal credit risk. The Adviser monitors the credit risks of all portfolio securities on an ongoing basis by reviewing periodic financial data and ratings of nationally recognized statistical rating organizations (NRSROs). MUNICIPAL FUND In targeting a dollar-weighted average portfolio maturity range, the Adviser also will consider the tax exempt securities available. In addition, the Adviser may invest in securities subject to AMT in an attempt to enhance yield and provide diversification. INDUSTRY CONCENTRATION The Prime Value Fund may invest 25% or more of its assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund may temporarily depart from its principal investment strategy by investing its assets in securities subject to federal income tax. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to receive and distribute taxable income to investors. What are the Principal Securities in Which the Funds Invest? MUNICIPAL FUND The Municipal Fund invests primarily in tax exempt securities, a type of fixed income security, including variable rate demand instruments and municipal notes. Certain of these tax exempt securities may be subject to credit enhancement. PRIME CASH FUND The Prime Cash Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. PRIME VALUE FUND The Prime Value Fund invests primarily in fixed income securities, including corporate debt securities, commercial paper, demand instruments, bank instruments, asset backed securities and repurchase agreements. Certain of these fixed income securities may be subject to credit enhancement. TREASURY FUND The Treasury Fund invests primarily in fixed income securities, including U.S. Treasury securities and repurchase agreements. FIXED INCOME SECURITIES Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically. In addition, the issuer of a fixed income security must repay the principal amount of the security, normally within a specified time. U.S. TREASURY SECURITIES U.S. Treasury securities are direct obligations of the federal government of the United States. 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 Prime Cash Fund and Prime Value 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 less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. DEMAND INSTRUMENTS Demand instruments are corporate debt securities that the issuer must repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The Funds treats demand instruments as short-term securities, even though their stated maturity may extend beyond one year. BANK INSTRUMENTS Bank instruments are unsecured interest bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit and banker's acceptances. Yankee instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments are denominated in U.S. dollars and issued by non- U.S. branches of U.S. or foreign banks. ASSET BACKED SECURITIES Asset backed securities are payable from pools of obligations other than mortgages. Most asset backed securities involve consumer or commercial debts with maturities of less than 10 years. However, almost any type of fixed income assets (including other fixed income securities) may be used to create an asset backed security. Asset backed securities may take the form of commercial paper, notes or pass through certificates. TAX EXEMPT SECURITIES Tax exempt securities are fixed income securities that pay interest that is not subject to federal regular income taxes. Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment. VARIABLE RATE DEMAND INSTRUMENTS Variable rate demand instruments are tax exempt securities that require the issuer or a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The securities also pay interest at a variable rate intended to cause the securities to trade at their face value. The Funds treat demand instruments as short-term securities, because their variable interest rate adjusts in response to changes in market rates, even though their stated maturity may extend beyond 13 months. MUNICIPAL NOTES Municipal notes are short-term tax exempt securities. Many municipalities issue such notes to fund their current operations before collecting taxes or other municipal revenues. Municipalities may also issue notes to fund capital projects prior to issuing long-term bonds. The issuers typically repay the notes at the end of their fiscal year, either with taxes, other revenues or proceeds from newly issued notes or bonds. CREDIT ENHANCEMENT Credit enhancement consists of an arrangement in which a company agrees to pay amounts due on a fixed income security if the issuer defaults. In some cases the company providing credit enhancement makes all payments directly to the security holders and receives reimbursement from the issuer. Normally, the credit enhancer has greater financial resources and liquidity than the issuer. For this reason, the Adviser usually evaluates the credit risk of a fixed income security based solely upon its credit enhancement. Common types of credit enhancement include guarantees, letters of credit, bond insurance and surety bonds. Credit enhancement also includes arrangements where securities or other liquid assets secure payment of a fixed income security. If a default occurs, these assets may be sold and the proceeds paid to the security's holders. Either form of credit enhancement reduces credit risks by providing another source of payment for a fixed income security. REPURCHASE AGREEMENTS Repurchase agreements are transactions in which a Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. A Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser. Repurchase agreements are subject to credit risks. INVESTMENT RATINGS The money market instruments in which the Prime Cash Fund invests must be rated in the highest short-term rating category by one or more NRSROs or be of comparable quality to securities having such ratings. The securities in which the Municipal Fund and the Prime Value Fund invest must be rated in one of the two highest short-term rating categories by one or more NRSROs or be of comparable quality to securities having such ratings. What are the Specific Risks of Investing in the Funds? Each of the Funds is subject to interest rate risks and credit risks. In addition, each of the Funds (except the Treasury Fund) is subject to sector risks. INTEREST RATE RISKS Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as the demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Money market funds try to minimize this risk by purchasing short-term securities. CREDIT RISKS MUNICIPAL FUND, PRIME CASH FUND AND PRIME VALUE FUND Credit risk is the possibility that an issuer will default on a security by failing to pay interest or principal when due. If an issuer defaults, a Fund will lose money. Money market funds try to minimize this risk by purchasing higher quality securities. Many fixed income securities receive credit ratings from services such as Standard & Poor's and Moody's Investors Service. These services assign ratings to securities by assessing the likelihood of issuer default. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, a Fund must rely entirely on the Adviser's credit assessment. PRIME CASH FUND, PRIME VALUE FUND AND TREASURY FUND Credit risk includes the possibility that a party to a transaction involving a Fund will fail to meet its obligations. This could cause a Fund to lose the benefit of the transaction or prevent a Fund from selling or buying other securities to implement its investment strategy. SECTOR RISKS A substantial part of the portfolio of the Prime Value Fund may be comprised of securities issued by the banking industry or companies with similar characteristics. A substantial part of the portfolios of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund may be comprised of securities credit enhanced by banks or companies with similar characteristics. As a result, the Municipal Fund, the Prime Cash Fund and the Prime Value Fund will be more susceptible to any economic, business, political or other developments which generally affect these entities. What Do Shares Cost? You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is open. The Funds attempt to stabilize the net asset value (NAV) of their Shares at $1.00 by valuing the portfolio securities using the amortized cost method. A Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The Funds do not charge a front-end sales charge. The NAV of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund is determined at 12:00 noon and 3:00 p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The NAV of the Treasury Fund is determined at 5:00 p.m. (Eastern time) each day the NYSE is open. The required minimum initial investment for each Fund is $1,000,000. There is no required minimum subsequent investment amount. An account may be opened with a smaller amount as long as the $1,000,000 minimum is reached within one year. An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through investment professionals may be subject to a smaller minimum investment amount. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions. How are the Funds Sold? The Funds offer three share classes: Institutional Shares, Institutional Service Shares and Institutional Capital Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Capital Shares. Each share class has different expenses, which affect their performance. Contact your investment professional or call 1-800-341-7400 for more information concerning the other classes. The Funds' Distributor, Federated Securities Corp., markets the Shares described in this prospectus to entities holding Shares in an agency or fiduciary capacity, financial institutions, financial intermediaries and institutional investors, 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 Funds. The Funds reserve 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 for Shares of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund to the investment professional before 3:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 3:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. * Submit your purchase order for Shares of the Treasury Fund to the investment professional before 5:00 p.m. (Eastern time). You will receive that day's dividend if the investment professional forwards the order to the Fund and the Fund receives payment by 5:00 p.m. (Eastern time). You will become the owner of Shares and receive dividends when the Fund receives your payment. Investment professionals should send payments according to the instructions in the sections "By Wire" or "By Check." DIRECTLY FROM THE FUNDS * Establish your account with a 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 incurred by the Fund or Federated Shareholder Services Company, the Funds' transfer agent. An institution may establish an account and place an order by calling the Fund and will become a shareholder after the Fund receives the order. BY WIRE Send your wire to: State Street Bank and Trust Company Boston, MA Dollar Amount of Wire ABA Number 011000028 Attention: EDGEWIRE Wire Order Number, Dealer Number or Group Number Nominee/Institution Name Fund Name and Number and Account Number You cannot purchase Shares by wire on holidays when wire transfers are restricted. BY CHECK Make your check payable to THE FEDERATED FUNDS, note your account number on the check, and mail it to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that requires a street address, mail it to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will not accept third-party checks (checks originally payable to someone other than you or The Federated Funds). Orders by mail are considered received when payment by check is converted into federal funds (normally the business day after the check is received) and Shares begin earning dividends the next day. BY INVEST-BY-PHONE Once you establish an account, you may use the Funds' Invest-By-Phone privilege for future Share purchases if you have an account with a bank that is an Automated Clearing House (ACH) member. To apply, call the Funds for an authorization form. You may use Invest-By-Phone to purchase Shares approximately two weeks from the date you file the form with Federated Shareholder Services Company. BY AUTOMATED CLEARING HOUSE 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 a Fund if you purchased Shares directly from the Fund. THROUGH AN INVESTMENT PROFESSIONAL Submit your redemption request to your investment professional by the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment professionals are responsible for promptly submitting redemption requests and providing proper written redemption instructions as outlined below. DIRECTLY FROM THE FUNDS BY TELEPHONE You may redeem Shares by calling a Fund at 1-800-341-7400 once you have completed the appropriate authorization form for telephone transactions. If you call before 12:00 noon (Eastern time) with respect to the Municipal Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Treasury Fund, your redemption will be wired to you the same day. You will not receive that day's dividend. If you call after 12:00 noon (Eastern time) with respect to the Municipal Fund, 3:00 p.m. (Eastern time) with respect to the Prime Cash Fund and the Prime Value Fund and 5:00 p.m. (Eastern time) with respect to the Treasury Fund, 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 a Fund. Your redemption request will be processed on the day the Fund receives your written request in proper form. Dividends are paid up to and including the day that a redemption request is processed. Send requests by mail to: Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to: Federated Shareholder Services Company 1099 Hingham Street Rockland, MA 02370-3317 All requests must include: * 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 Funds 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 30 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 each 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 a Fund's ability to manage its assets. You will not accrue interest or dividends on uncashed checks from a Fund if those checks are undeliverable and returned to the Fund. ADDITIONAL CONDITIONS TELEPHONE TRANSACTIONS The Funds will record your telephone instructions. If a Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. SHARE CERTIFICATES The Funds no longer issue share certificates. If you are redeeming Shares represented by certificates previously issued by a Fund, you must return the certificates with your written redemption request. For your protection, send your certificates by registered or certified mail, but do not endorse them. Account and Share Information ACCOUNT ACTIVITY You will receive periodic statements reporting all account activity, including dividends and capital gains paid. DIVIDENDS AND CAPITAL GAINS The Funds declare any dividends daily and pay them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after a Fund receives your check. In either case, you earn dividends through the day your redemption request is received. The Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Funds will pay any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments. ACCOUNTS WITH LOW BALANCES Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum. TAX INFORMATION The Funds send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. Fund distributions of dividends and capital gains are taxable to you whether paid in cash or reinvested in the Funds. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time a Fund holds its assets. Fund distributions are expected to be primarily dividends. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. The Municipal Fund sends an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that distributions from the Municipal Fund will be primarily dividends that are exempt from federal income tax, although a portion of the Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Fund. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability. Who Manages the Funds? The Board of Trustees governs the Funds. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Funds' assets, including buying and selling portfolio securities. The Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The Adviser and other subsidiaries of Federated advise approximately 175 mutual funds and separate accounts, which totaled approximately $111 billion in assets as of December 31, 1998. Federated was established in 1955 and is one of the largest mutual fund investment managers in the United States with approximately 1,900 employees. More than 4,000 investment professionals make Federated Funds available to their customers. ADVISORY FEES The Adviser receives an annual investment advisory fee of 0.20% of each Fund's average daily net assets. The Adviser may voluntarily waive a portion of its fee or reimburse the Funds for certain operating expenses. YEAR 2000 READINESS The "Year 2000" problem is the potential for computer errors or failures because certain computer systems may be unable to interpret dates after December 31, 1999 or may experience other date-related problems. The Year 2000 problem may cause systems to process information incorrectly and could disrupt businesses, such as the Funds, that rely on computers. While it is impossible to determine in advance all of the risks to the Funds, the Funds could experience interruptions in basic financial and operational functions. Fund shareholders could experience errors or disruptions in Fund share transactions or Fund communications. The Funds' service providers are making changes to their computer systems to fix any Year 2000 problems. In addition, they are working to gather information from third-party providers to determine their Year 2000 readiness. Year 2000 problems would also increase the risks of the Funds' investments. To assess the potential effect of the Year 2000 problem, the Adviser is reviewing information regarding the Year 2000 readiness of issuers of securities the Funds may purchase. 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. The financial impact of these issues for the Funds is still being determined. There can be no assurance that potential Year 2000 problems would not have a material adverse effect on the Funds. Financial Information FINANCIAL HIGHLIGHTS The Financial Highlights will help you understand each Fund's financial performance for its past five fiscal years, or since inception, if the life of the Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains. This information has been audited by Arthur Andersen LLP and Ernst & Young LLP, whose reports, along with each Fund's audited financial statements, are included in the Annual Reports. Financial Highlights-Municipal Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.03 0.04 0.03 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.03) (0.04) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 1.53% 3.40% 3.56% 3.42% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.63% 5 0.61% 0.68% 0.65% Net investment income 4 2.67% 5 3.09% 3.15% 2.55% Expenses (after waivers) 0.30% 5 0.30% 0.30% 0.30% Net investment income (after waivers) 3.00% 5 3.40% 3.53% 2.90% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $74,609 $114,535 $17,701 $0.30
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Cash Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 1996 1995 3 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.05 0.05 0.06 0.02 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 4 2.36% 5.37% 5.48% 5.23% 5.94% 1.66% RATIOS TO AVERAGE NET ASSETS: Expenses 5 0.58% 6 0.57% 0.56% 0.50% 0.40% 0.39% 6 Net investment income 5 4.36% 6 4.91% 5.20% 4.82% 5.67% 4.03% 6 Expenses (after waivers) 0.30% 6 0.30% 0.30% 0.32% 0.32% 0.27% 6 Net investment income (after waivers) 4.64% 6 5.18% 5.46% 5.00% 5.75% 4.15% 6 SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $245,815 $230,193 $391,159 $48,910 $11,811 $8,318
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Reflects operations for the period from October 6, 1994 (date of initial public investment) to January 31, 1995. 4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 5 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 6 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Prime Value Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD ENDED JULY 31, YEAR ENDED JANUARY 31, 1999 1 1999 1998 1997 2 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.05 0.05 0.05 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.05) (0.05) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 3 2.38% 5.40% 5.55% 5.26% RATIOS TO AVERAGE NET ASSETS: Expenses 4 0.58% 5 0.58% 0.59% 0.59% Net investment income 4 4.46% 5 4.93% 5.29% 4.86% Expenses (after waivers) 0.28% 5 0.28% 0.27% 0.28% Net investment income (after waivers) 4.76% 5 5.23% 5.61% 5.17% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $275,756 $200,098 $67,064 $20,006
1 The Fund has changed its fiscal year-end from January 31 to July 31. 2 Federated Investment Management, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 4 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 5 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. Financial Highlights-Treasury Obligations Fund (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED JULY 31 1999 1998 1997 1 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.05 0.05 0.02 LESS DISTRIBUTIONS: Distributions from net investment income (0.05) (0.05) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN 2 4.81% 5.43% 1.58% RATIOS TO AVERAGE NET ASSETS: Expenses 3 0.54% 0.55% 0.55% 4 Net investment income 3 4.37% 5.05% 5.17% 4 Expenses (after waivers) 0.30% 0.30% 0.30% 4 Net investment income (after waivers) 4.61% 5.30% 5.42% 4 SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $462,807 $31,703 $42,505
1 Reflects operations for the period from April 14, 1997 (date of initial public investment) to July 31, 1997. 2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 3 During the period, certain fees were voluntarily waived. If such voluntary waivers had not occurred, the ratios would have been as indicated. 4 Computed on an annualized basis. Further information about the Fund's performance is contained in the Fund's Annual Report, dated July 31, 1999, which can be obtained free of charge. [Graphic] Federated World-Class Investment Manager PROSPECTUS Money Market Obligations Trust Municipal Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Treasury Obligations Fund INSTITUTIONAL CAPITAL SHARES OCTOBER 31, 1999 A Statement of Additional Information (SAI) dated October 31, 1999, is incorporated by reference into this prospectus. Additional information about the Funds and their investments is contained in the Funds' SAI, Annual and Semi-Annual Reports to shareholders as they become available. The Annual Reports discuss market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year. To obtain the SAI, the Annual Report, the Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Funds at 1-800-341-7400. You can obtain information about the Funds (including the SAI) by writing to or visiting the Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942- 8090 for information on the Public Reference Room's operations and copying fees. [Graphic] Federated Money Market Obligations 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. 811-5950 Cusip 60934N633 Cusip 60934N591 Cusip 60934N567 Cusip 60934N823 G02705-05 (10/99) [Graphic] STATEMENT OF ADDITIONAL INFORMATION Money Market Obligations Trust Municipal Obligations Fund (Municipal Fund) Prime Cash Obligations Fund (Prime Cash Fund) Prime Value Obligations Fund (Prime Value Fund) Treasury Obligations Fund (Treasury Fund) A Portfolio of Money Market Obligations Trust INSTITUTIONAL CAPITAL SHARES This Statement of Additional Information (SAI) is not a prospectus. Read this SAI in conjunction with the prospectus for Institutional Capital Shares of the Funds, dated October 31, 1999. This SAI incorporates by reference the Funds' Annual Reports. Obtain the prospectus or the Annual Reports without charge by calling 1-800-341-7400. OCTOBER 31, 1999 [Graphic] Federated World-Class Investment Manager Money Market Obligations Trust Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor G02705-06 (10/99) [Graphic] CONTENTS How are the Funds Organized? 1 Securities in Which the Funds Invest 1 What Do Shares Cost? 5 How are the Funds Sold? 5 Subaccounting Services 5 Redemption in Kind 5 Massachusetts Partnership Law 6 Account and Share Information 6 Tax Information 6 Who Manages and Provides Services to the Funds? 7 How Do the Funds Measure Performance? 11 Who is Federated Investors, Inc.? 13 Financial Information 14 Investment Ratings 14 Addresses 16 How are the Funds Organized? Each Fund is a diversified portfolio of Money Market Obligations Trust (Trust). The Trust is an open-end, management investment company that was established under the laws of the Commonwealth of Massachusetts on October 3, 1988. The Trust may offer separate series of shares representing interests in separate portfolios of securities. The Municipal Fund and the Prime Value Fund, which were established on February 5, 1993, and the Prime Cash Fund, which was established on November 16, 1992, will be reorganized as portfolios of the Trust on November 1, 1999. The Board of Trustees (the Board) has established three classes of shares of the Funds, known as Institutional Shares, Institutional Service Shares and Institutional Capital Shares (Shares). This SAI relates to Institutional Capital Shares (Shares). The Funds' investment adviser is Federated Investment Management Company (Adviser). Effective March 31, 1999, Federated Management, former adviser to the became Federated Investment Management Company (formerly, Federated Advisers). Securities in Which the Funds Invest SECURITIES DESCRIPTIONS AND TECHNIQUES ZERO COUPON SECURITIES Zero coupon securities do not pay interest or principal until final maturity unlike debt securities that provide periodic payments of interest (referred to as a coupon payment). Investors buy zero coupon securities at a price below the amount payable at maturity. The difference between the purchase price and the amount paid at maturity represents interest on the zero coupon security. Investors must wait until maturity to receive interest and principal, which increases the interest rate and credit risks of a zero coupon security. SPECIAL TRANSACTIONS DELAYED DELIVERY TRANSACTIONS Delayed delivery transactions, including when issued transactions, are arrangements in which a Fund buys securities for a set price, with payment and delivery of the securities scheduled for a future time. During the period between purchase and settlement, no payment is made by a Fund to the issuer and no interest accrues to a Fund. A Fund records the transaction when it agrees to buy the securities and reflects their value in determining the price of its shares. Settlement dates may be a month or more after entering into these transactions so that the market values of the securities bought may vary from the purchase prices. Therefore, delayed delivery transactions create interest rate risks for a Fund. Delayed delivery transactions also involve credit risks in the event of a counterparty default. SECURITIES LENDING A Fund may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, a Fund receives cash or liquid securities from the borrower as collateral. The borrower must furnish additional collateral if the market value of the loaned securities increases. Also, the borrower must pay a Fund the equivalent of any dividends or interest received on the loaned securities. A Fund will reinvest cash collateral in securities that qualify as an acceptable investment for a Fund. However, a Fund must pay interest to the borrower for the use of cash collateral. Loans are subject to termination at the option of a Fund or the borrower. A Fund will not have the right to vote on securities while they are on loan, but it will terminate a loan in anticipation of any important vote. A Fund may pay administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash collateral to a securities lending agent or broker. ASSET COVERAGE In order to secure its obligations in connection with special transactions, a Fund will either own the underlying assets or set aside readily marketable securities with a value that equals or exceeds the Fund's obligations. Unless a Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without terminating a special transaction. This may cause a Fund to miss favorable trading opportunities or to realize losses on special transactions. INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES The Funds may invest their assets in securities of other investment companies, including the securities of affiliated money market funds, as an efficient means of carrying out its investment policies and managing its uninvested cash. In addition, a Fund may invest in the securities described below. PRIME CASH FUND AND PRIME VALUE FUND MUNICIPAL SECURITIES Municipal securities are issued by states, counties, cities and other political subdivisions and authorities. Although many municipal securities are exempt from federal income tax, the Funds may invest in taxable municipal securities. INSURANCE CONTRACTS Insurance contracts include guaranteed investment contracts, funding agreements and annuities. The Funds treat these contracts as fixed income securities. FOREIGN SECURITIES Foreign securities are securities of issuers based outside the United States. The Funds consider an issuer to be based outside the United States if: * it is organized under the laws of, or has a principal office located in, another country; * the principal trading market for its securities is in another country; or * 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. Along with the risks normally associated with domestic securities of the same type, foreign securities are subject to risks of foreign investing. The Prime Cash Fund and the Prime Value Fund also may invest in U.S. Treasury securities, which are described in the prospectus, and agency securities which are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority. MUNICIPAL FUND GENERAL OBLIGATION BONDS General obligation bonds are supported by the issuer's power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer's authority to impose additional taxes may be limited by its charter or state law. SPECIAL REVENUE BONDS Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not collect from the municipality's general taxes or revenues. For example, a municipality may issue bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds. PRIVATE ACTIVITY BONDS Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds from its bonds to the company using the factory, and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company's loan payments, not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds. The interest on many types of private activity bonds is subject to the federal alternative minimum tax (AMT). The Fund may invest in bonds subject to AMT. MUNICIPAL LEASES Municipalities may enter into leases for equipment or facilities. In order to comply with state public financing laws, these leases are typically subject to annual appropriation. In other words, a municipality may end a lease, without penalty, by not providing for the lease payments in its annual budget. After the lease ends, the lessor can resell the equipment or facility but may lose money on the sale. The Fund may invest in securities supported by individual leases or pools of municipal leases. TEMPORARY DEFENSIVE INVESTMENTS The Municipal Fund may make temporary defensive investments in the following taxable securities, which are described in the prospectus or herein: U.S. Treasury securities, agency securities, bank instruments, corporate debt securities, commercial paper, repurchase agreements and reverse repurchase agreements. MUNICIPAL FUND, PRIME CASH FUND AND PRIME VALUE FUND REVERSE REPURCHASE AGREEMENTS 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 a Fund. Reverse repurchase agreements are subject to credit risks. In addition, reverse repurchase agreements create leverage risks because a Fund must repurchase the underlying security at a higher price, regardless of the market value of the security at the time of repurchase. INVESTMENT RATINGS The ratings categories of a nationally recognized statistical rating organization (NRSRO) are determined without regard for sub-categories and gradations. For example, securities rated SP-1 or SP-2 by Standard & Poor's (S&P), MIG-1 or MIG-2 by Moody's Investors Service (Moody's), or F-1+, F-1 or F-2 by Fitch IBCA, Inc. (Fitch) are all considered rated in one of the two highest short-term rating categories. The Funds will follow applicable regulations in determining whether a security rated by more than one rating service can be treated as being in the highest or one of the two highest short-term rating categories. See "Regulatory Compliance." INVESTMENT RISKS There are many factors which may affect an investment in the Funds. The Funds' principal risks are described in its prospectus. Additional risk factors are outlined below. MUNICIPAL FUND CREDIT RISKS 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. TAX RISKS In order to be tax exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by the Fund to shareholders to be taxable. Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall. PRIME CASH FUND AND PRIME VALUE FUND RISKS OF FOREIGN INVESTING Foreign securities pose additional risks because foreign economic or political conditions may be less favorable than those of the U.S. Securities in foreign markets may also be subject to taxation policies that reduce returns for U.S. investors. PREPAYMENT RISKS Unlike traditional fixed income securities, which pay a fixed rate of interest until maturity (when the entire principal amount is due), payments on asset backed securities include both interest and a partial payment of principal. Partial payment of principal may be comprised of scheduled principal payments as well as unscheduled payments from voluntary prepayment, refinancing, or foreclosure of the underlying loans. If a Fund receives unscheduled prepayments, it may have to reinvest the proceeds in other fixed income securities with lower interest rates, higher credit risks, or other less favorable characteristics. MUNICIPAL FUND, PRIME CASH FUND AND PRIME VALUE FUND LEVERAGE RISKS Leverage risk is created when an investment exposes the Funds to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain. FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICY The investment objective of the Treasury Fund is current income consistent with stability of principal. The investment objective may not be changed by the Fund's Trustees without shareholder approval. As a matter of investment policy which cannot be changed without shareholder approval, at least 80% of the Municipal Fund's annual interest income will be exempt from federal regular income tax. INVESTMENT LIMITATIONS DIVERSIFICATION OF INVESTMENTS With respect to securities comprising 75% of the value of its total assets, a Fund will not purchase securities of any one issuer (other than cash; cash items; securities issued or guaranteed by the government of the U.S. or its agencies or instrumentalities and repurchase agreements collateralized by such U.S. government securities; and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would be invested in securities of that issuer, or the Fund would own more than 10% of the outstanding voting securities of that issuer. ISSUING SENIOR SECURITIES AND BORROWING MONEY A Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under the 1940 Act. INVESTING IN REAL ESTATE A Fund may not purchase or sell real estate, provided that this restriction does not prevent the Fund from investing in issuers which invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein. A Fund may exercise its rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner. INVESTING IN COMMODITIES A Fund may not purchase or sell physical commodities, provided that the Fund may purchase securities of companies that deal in commodities. UNDERWRITING A Fund may not underwrite the securities of other issuers, except that the Fund may engage in transactions involving the acquisition, disposition or resale of its portfolio securities, under circumstances where it may be considered to be an underwriter under the Securities Act of 1933. LENDING CASH OR SECURITIES A Fund may not make loans, provided that this restriction does not prevent the Fund from purchasing debt obligations, entering into repurchase agreements, lending its assets to broker/dealers or institutional investors and investing in loans, including assignments and participation interests. CONCENTRATION OF INVESTMENTS A Fund (with the exception of the Prime Value Fund) will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. The Prime Value Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry, except that the Prime Value Fund may invest 25% or more of the value of its total assets in obligations of issuers in the banking industry or in obligations, such as repurchase agreements, secured by such obligations. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND 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. PLEDGING ASSETS A Fund will not mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities. BUYING ON MARGIN A Fund will not purchase securities on margin, provided that a Fund may obtain short-term credits necessary for the clearance of purchases and sales of securities. INVESTING IN ILLIQUID SECURITIES A Fund will not purchase securities for which there is no readily available market, or enter into repurchase agreements or purchase time deposits maturing in more than seven days, if immediately after and as a result, the value of such securities would exceed, in the aggregate, 10% of a Fund's net assets. INVESTING IN RESTRICTED SECURITIES The Municipal Fund, the Prime Cash Fund and the Prime Value Fund may invest in securities subject to restriction on resale under the federal securities laws. Except with respect to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such limitation. For purposes of the diversification limitation, the Funds consider certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings association having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be "cash items." To conform to the current view of the Securities and Exchange Commission (SEC) that only domestic bank instruments may be excluded from industry concentration limitations, as a matter of non-fundamental policy, the Funds will not exclude foreign bank instruments from industry concentration limits as long as the policy of the SEC remains in effect. As a non-fundamental operating policy, the Funds will consider concentration to be the investment of more than 25% of the value of its total assets in any one industry. For purposes of the concentration limitation (with the exception of the Prime Value Fund), (a) utility companies will be divided according to their services, for example, gas, gas transmission, electric and telephone will each be considered a separate industry; (b) financial service companies will be classified according to the end users of their services, for example, automobile finance, bank finance and diversified finance will each be considered a separate industry; and (c) asset-backed securities will be classified according to the underlying assets securing such securities. REGULATORY COMPLIANCE The Funds may follow non-fundamental operational policies that are more restrictive than 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 Funds will comply with the various requirements of Rule 2a-7 (the "Rule"), which regulates money market mutual funds. The Funds will determine the effective maturity of its investments according to the Rule. The Funds 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 is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on Shares of the Funds computed by dividing the annualized daily income on the Fund's portfolio by the net asset value computed as above may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the opposite may be true. The Funds' use of the amortized cost method of valuing portfolio instruments depends on its compliance with certain conditions in the Rule. Under the Rule, the Board must establish procedures reasonably designed to stabilize the net asset value per Share, as computed for purposes of distribution and redemption, at $1.00 per Share, taking into account current market conditions and each Fund's investment objective. The procedures include monitoring the relationship between the amortized cost value per Share and the net asset value per Share based upon available indications of market value. The 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 net asset value. What Do Shares Cost? The NAV for each class of Shares may differ due to the variance in daily net income realized by each class. Such variance will reflect only accrued net income to which the shareholders of a particular class are entitled. How are the Funds Sold? Under the Distributor's Contract with the Funds, the Distributor (Federated Securities Corp.) offers Shares on a continuous, best-efforts basis. SHAREHOLDER SERVICES The Funds may pay Federated Shareholder Services Company, a subsidiary of Federated Investors, Inc. (Federated), for providing shareholder services and maintaining shareholder accounts. Federated Shareholder Services Company may select others to perform these services for their customers and may pay them fees. SUPPLEMENTAL PAYMENTS Investment professionals may be paid fees out of the assets of the Distributor and/or Federated Shareholder Services Company (but not out of a Fund's assets). The Distributor and/or Federated Shareholder Services Company may be reimbursed by the Adviser or its affiliates. Investment professionals receive such fees for providing distribution-related or shareholder services such as sponsoring sales, providing sales literature, conducting training seminars for employees, and engineering sales-related computer software programs and systems. Also, investment professionals may be paid cash or promotional incentives, such as reimbursement of certain expenses relating to attendance at informational meetings about the Funds or other special events at recreational-type facilities, or items of material value. These payments will be based upon the amount of Shares the investment professional sells or may sell and/or upon the type and nature of sales or marketing support furnished by the investment professional. Subaccounting Services Certain investment professionals may wish to use the transfer agent's subaccounting system to minimize their internal recordkeeping requirements. The transfer agent may charge a fee based on the level of subaccounting services rendered. Investment professionals holding Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass through subaccounting fees as part of or in addition to normal trust or agency account fees. They may also charge fees for other services that may be related to the ownership of Shares. This information should, therefore, be read together with any agreement between the customer and the investment professional about the services provided, the fees charged for those services, and any restrictions and limitations imposed. Redemption in Kind Although the Funds intend to pay Share redemptions in cash, they reserve the right, as described below, to pay the redemption price in whole or in part by a distribution of a Fund's portfolio securities. Because the Funds have elected to be governed by Rule 18f-1 under the Investment Company Act of 1940, the Funds are obligated to pay Share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1% of the net assets represented by such Share class during any 90-day period. Any Share redemption payment greater than this amount will also be in cash unless the Funds' Board determines that payment should be in kind. In such a case, the Funds will pay all or a portion of the remainder of the redemption in portfolio securities, valued in the same way as the Funds determine their NAV. The portfolio securities will be selected in a manner that the Funds' Board deems fair and equitable and, to the extent available, such securities will be readily marketable. Redemption in kind is not as liquid as a cash redemption. If redemption is made in kind, shareholders receiving the portfolio securities and selling them before their maturity could receive less than the redemption value of the securities and could incur certain transaction costs. Massachusetts Partnership Law Under certain circumstances, shareholders may be held personally liable as partners under Massachusetts law for obligations of the Trust. To protect its shareholders, the Trust has filed legal documents with Massachusetts that expressly disclaim the liability of its shareholders for acts or obligations of the Trust. In the unlikely event a shareholder is held personally liable for the Trust's obligations, the Trust is required by the Declaration of Trust to use its property to protect or compensate the shareholder. On request, the Trust will defend any claim made and pay any judgment against a shareholder for any act or obligation of the Trust. Therefore, financial loss resulting from liability as a shareholder will occur only if the Trust itself cannot meet its obligations to indemnify shareholders and pay judgments against them. Account and Share Information VOTING RIGHTS Each Share of a Fund gives the shareholder one vote in Trustee elections and other matters submitted to shareholders for vote. All Shares of the Trust have equal voting rights, except that in matters affecting only a particular Fund or class, only Shares of that Fund or class are entitled to vote. Trustees may be removed by the Board or by shareholders at a special meeting. A special meeting of shareholders will be called by the Board upon the written request of shareholders who own at least 10% of a Trust's outstanding Share of all series entitled to vote. As of October 20, 1999, the following shareholder owned of record, beneficially, or both, 5% or more of outstanding Institutional Capital Shares of the Municipal Fund: Laciba & Co., Warsaw, Indiana, 12.73%. As of October 7, 1999, the following shareholder owned of record, beneficially, or both, 5% or more of outstanding Institutional Capital Shares of the Funds: Var & Co., St. Paul, Minnesota, 21.02%, Hearst Special Trust Account, New York, New York, 15.91%, Elite Information Group, Los Angeles, California, 13.03%, PNC Securities Corp., Pittsburgh, Pennsylvania, 11.35%, Pizzuti, Inc., Columbus, Ohio, 5.53% and Bayban, New York, New York, 5.32% of the Prime Cash Fund; Summit Bank, Hackensack, New Jersery, 26.32%, Norwest Investment Services, Inc., Minneapolis, Minnesota, 12.72%, First Union National Bank, Charlotte, North Carolina, 11.84%, Kaiser Foundation Health Plan of Texas, Oakland, California, 8.79%, Prairie Farms Dairy, Carlinville, Illinois, 6.73% and A.G. Edwards & Sons, Inc., St. Louis, Missouri, 5.23% of the Prime Value Fund; D.C. Financial Responsibility Authority Principal #17, Washington, D.C., 21.01%, D.C. Financial Responsibility Authority Escrow Account #5, Washington, D.C., 17.66%, D.C. Financial Responsibility Authority Escrow Account #13, Washington, D.C., 13.87%, D.C., Financial Responsibility and Management Escrow Account #99, Washington, D.C., 10.80%, D.C. Financial Responsibility Account Escrow Account #9, Washington, D.C., 7.15% and D.C. Financial Responsibility and Management Escrow Account #4, Washington, D.C., 5.40% of the Treasury Fund. Shareholders owning 25% or more of outstanding Shares may be in control and be able to affect the outcome of certain matters presented for a vote of shareholders. Tax Information FEDERAL INCOME TAX Each Fund intends to meet requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. If these requirements are not met, it will not receive special tax treatment and will pay federal income tax. Each Fund will be treated as a single, separate entity for federal income tax purposes so that income earned and capital gains and losses realized by the Trust's other portfolios will be separate from those realized by the Fund. Who Manages and Provides Services to the Funds? BOARD OF TRUSTEES The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. Information about each Board member is provided below and includes each person's: name, address, birth date, present position(s) held with the Trust, principal occupations for the past five years and positions held prior to the past five years, total compensation received as a Trustee from the Trust for its most recent fiscal year, and the total compensation received from the Federated Fund Complex for the most recent calendar year. The Trust is comprised of 21 funds and the Federated Fund Complex is comprised of 54 investment companies, whose investment advisers are affiliated with the Funds' Adviser. As of October 7, 1999, the Trust's Board and Officers as a group owned less than 1% of the Trust's outstanding Shares.
NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX JOHN F. DONAHUE*#+ Chief Executive Officer $0 $0 for the Trust and Birth Date: July 28, 1924 and Director or Trustee of 54 other investment Federated Investors Tower the Federated Fund companies in the 1001 Liberty Avenue Complex; Chairman and Fund Complex Pittsburgh, PA Director, Federated CHAIRMAN AND TRUSTEE Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling, and Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd. THOMAS G. BIGLEY Director or Trustee of $22,998.69 $113,860.22 for the Trust Birth Date: February 3, 1934 the Federated Fund and 54 other investment companies in the 15 Old Timber Trail Complex; Director, Member Fund Complex Pittsburgh, PA of Executive Committee, TRUSTEE Children's Hospital of Pittsburgh; Director, Robroy Industries, Inc. (coated steel conduits/ computer storage equipment); formerly: Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician practice management); Director, Member of Executive Committee, University of Pittsburgh. JOHN T. CONROY, JR. Director or Trustee of the $25,312.12 $125,264.48 for the Trust Birth Date: June 23, 1937 Federated Fund Complex; and 54 other investment companies in the Wood/Commercial Dept. President, Investment Fund Complex John R. Wood Associates, Inc. Realtors Properties Corporation; 3255 Tamiami Trail North Senior Vice President, Naples, FL John R. Wood and TRUSTEE Associates, Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest Florida; formerly: President, Naples Property Management, Inc. and Northgate Village Development Corporation. NICHOLAS CONSTANTAKIS++ Director or Trustee of the $3,686.46 $47,958.02 for the Trust Birth Date: September 3, 1939 Federated Fund Complex; and 29 other investment companies in the 175 Woodshire Drive formerly: Partner, Fund Complex Pittsburgh, PA Andersen Worldwide SC. TRUSTEE JOHN F. CUNNINGHAM++ Director or Trustee of some $12,056.51 $0 for the Trust Birth Date: March 5, 1943 of the Federated Fund and 46 other investment 353 El Brillo Way Complex; Chairman, companies in the Palm Beach, FL President and Chief Fund Complex TRUSTEE Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College; Director, Iperia Corp. (communications/software); formerly: Director, Redgate Communications and EMC Corporation (computer storage systems). Previous Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc. J. CHRISTOPHER DONAHUE+ President or Executive $0 $0 for the Trust Birth Date: April 11, 1949 Vice President of the and 16 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Director or Trustee of some Fund Complex Pittsburgh, PA of the Funds in the PRESIDENT AND TRUSTEE Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; President and Trustee, Federated Investment Management Company; President and Trustee, Federated Investment Counseling, President and Director, Federated Global Investment Management Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. LAWRENCE D. ELLIS, M.D.* Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: October 11, 1932 Federated Fund Complex; and 54 other investment companies in the 3471 Fifth Avenue Professor of Medicine, Fund Complex Suite 1111 University of Pittsburgh; Pittsburgh, PA Medical Director, TRUSTEE University of Pittsburgh Medical Center-Downtown; Hematologist, Oncologist, and Internist, University of Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society of America. NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX PETER E. MADDEN Director or Trustee of the $20,158.88 $113,860.22 for the Trust Birth Date: March 16, 1942 Federated Fund Complex; and 54 other investment companies in the One Royal Palm Way formerly: Representative, Fund Complex 100 Royal Palm Way Commonwealth of Palm Beach, FL Massachusetts General TRUSTEE Court; President, State Street Bank and Trust Company and State Street Corporation. Previous Positions: Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. CHARLES F. MANSFIELD, JR. ++ Director or Trustee of some $12,056.51 $0 for the Trust Birth Date: April 10, 1945 of the Federated Fund and 50 other investment 80 South Road Complex; Management companies in the Westhampton Beach, NY Consultant. Fund Complex TRUSTEE Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, Marine Midland Bank; Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University. JOHN E. MURRAY, JR., J.D., S.J.D.# Director or Trustee of $24,201.52 $113,860.22 for the Trust Birth Date: December 20, 1932 the Federated Fund and 54 other investment companies in the President, Duquesne University Complex; President, Law Fund Complex Pittsburgh, PA Professor, Duquesne TRUSTEE University; Consulting Partner, Mollica & Murray; Director, Michael Baker Corp. (engineering, construction, operations, and technical services). Previous Positions: Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law. MARJORIE P. SMUTS Director or Trustee of the $22,998.69 $113,860.22 for the Trust Birth Date: June 21, 1935 Federated Fund Complex; and 54 other investment companies in the 4905 Bayard Street Public Relations/ Fund Complex Pittsburgh, PA Marketing/Conference TRUSTEE Planning. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; business owner. JOHN S. WALSH++ Director or Trustee of some $12,056.51 $0 for the Trust Birth Date: November 28, 1957 of the Federated Fund and 48 other investment 2007 Sherwood Drive Complex; President and companies in the Valparaiso, IN Director, Heat Wagon, Inc. Fund Complex TRUSTEE (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc. (heavy highway contractor); formerly: Vice President, Walsh & Kelly, Inc. EDWARD C. GONZALES Trustee or Director of some $0 $0 for the Trust Birth Date: October 22, 1930 of the Funds in the and 1 other investment Federated Investors Tower Federated Fund Complex; company in the 1001 Liberty Avenue President, Executive Vice Fund Complex Pittsburgh, PA President and Treasurer of EXECUTIVE VICE PRESIDENT some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice President, Federated Investment Management Company and Federated Investment Counseling, Federated Global Investment Management Corp. and Passport Research, Ltd.; Executive Vice President and Director, Federated Securities Corp.; Trustee, Federated Shareholder Services Company. JOHN W. MCGONIGLE Executive Vice President $0 $0 for the Trust Birth Date: October 26, 1938 and Secretary of the and 54 other investment Federated Investors Tower Federated Fund Complex; companies in the 1001 Liberty Avenue Executive Vice President, Fund Complex Pittsburgh, PA Secretary and Director, EXECUTIVE VICE PRESIDENT Federated Investors, Inc.; and SECRETARY Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. RICHARD J. THOMAS Treasurer of the Federated $0 $0 for the Trust Birth Date: June 17, 1954 Fund Complex; Vice and 54 other investment Federated Investors Tower President-Funds Financial companies in the 1001 Liberty Avenue Services Division, Fund Complex Pittsburgh, PA Federated Investors, Inc.; TREASURER formerly: various management positions within Funds Financial Services Division of Federated Investors, Inc. RICHARD B. FISHER President or Vice $0 $0 for the Trust Birth Date: May 17, 1923 President of some of the and 6 other investment Federated Investors Tower Funds in the Federated Fund companies in the 1001 Liberty Avenue Complex; Director or Fund Complex Pittsburgh, PA Trustee of some of the VICE PRESIDENT Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Chairman and Director, Federated Securities Corp. NAME TOTAL BIRTH DATE AGGREGATE COMPENSATION ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX WILLIAM D. DAWSON, III Chief Investment Officer $0 $0 for the Trust Birth Date: March 3, 1949 of this Fund and various and 41 other investment Federated Investors Tower other Funds in the companies in the 1001 Liberty Avenue Federated Fund Complex; Fund Complex Pittsburgh, PA Executive Vice President, CHIEF INVESTMENT OFFICER Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company 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 Investment Management Company and Passport Research, Ltd. DEBORAH A. CUNNINGHAM Deborah A. Cunningham is $0 $0 for the Trust Birth Date: September 15, 1959 Vice President of the and 6 other investment Federated Investors Tower Trust. Ms. Cunningham companies in the 1001 Liberty Avenue joined Federated in 1981 Fund Complex Pittsburgh, PA and has been a Senior VICE PRESIDENT Portfolio Manager and a Senior Vice President of the Funds' Adviser since 1997. Ms. Cunningham served as a Portfolio Manager and a Vice President of the Adviser from 1993 until 1996. Ms. Cunningham is a Chartered Financial Analyst and received her M.B.A. in Finance from Robert Morris College. MARY JO OCHSON Mary Jo Ochson is Vice $0 $0 for the Trust Birth Date: September 12, 1953 President of the Trust. and 7 other investment Federated Investors Tower Ms. Ochson joined companies in the 1001 Liberty Avenue Federated in 1982 and has Fund Complex Pittsburgh, PA been a Senior Portfolio VICE PRESIDENT Manager and a Senior Vice President of the Funds' Adviser since 1996. From 1988 through 1995, Ms. Ochson served as a Portfolio Manager and a Vice President of the Funds' Adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A. in Finance from the University of Pittsburgh.
* An asterisk denotes a Trustee who is deemed to be an interested person as defined in the Investment Company Act of 1940. # A pound sign denotes a Member of the Board's Executive Committee, which handles the Board's responsibilities between its meetings. + Mr. Donahue is the father of J. Christopher Donahue, President of the Trust. ++ Messrs. Cunningham, Mansfield and Walsh became members of the Board on January 1, 1999. Mr. Constantakis became a member of the Board on October 1, 1999. Messrs. Cunningham, Mansfield and Walsh did not earn any fees for serving the Federated Fund Complex since these fees are reported as of the end of the last calendar year. INVESTMENT ADVISER The Adviser conducts investment research and makes investment decisions for the Funds. The Adviser is a wholly owned subsidiary of Federated. The Adviser shall not be liable to the Trust or any Fund shareholder for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Trust. OTHER RELATED SERVICES Affiliates of the Adviser may, from time to time, provide certain electronic equipment and software to institutional customers in order to facilitate the purchase of Fund Shares offered by the Distributor. BROKERAGE TRANSACTIONS When selecting brokers and dealers to handle the purchase and sale of portfolio instruments, the Adviser looks for prompt execution of the order at a favorable price. The Adviser will generally use those who are recognized dealers in specific portfolio instruments, except when a better price and execution of the order can be obtained elsewhere. In selecting among firms believed to meet these criteria, the Adviser may give consideration to those firms which have sold or are selling Shares of the Funds and other funds distributed by the Distributor and its affiliates. The Adviser makes decisions on portfolio transactions and selects brokers and dealers subject to review by the Funds' Board. Investment decisions for the Funds are made independently from those of other accounts managed by the Adviser. When a Fund and one or more of those accounts invests in, or disposes of, the same security, available investments or opportunities for sales will be allocated among the Funds and the account(s) in a manner believed by the Adviser to be equitable. While the coordination and ability to participate in volume transactions may benefit the Funds, it is possible that this procedure could adversely impact the price paid or received and/or the position obtained or disposed of by the Funds. ADMINISTRATOR Federated Services Company, a subsidiary of Federated, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Funds. Federated Services Company provides these at the following annual rate of the average aggregate daily net assets of all Federated Funds as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY ADMINISTRATIVE FEE NET ASSETS OF THE 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 Funds for expenses. Federated Services Company also provides certain accounting and recordkeeping services with respect to the Funds' portfolio investments for a fee based on Fund assets plus out-of-pocket expenses. CUSTODIAN State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the securities and cash of the Funds. Foreign instruments purchased by the Funds are held by foreign banks participating in a network coordinated by State Street Bank. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Services Company, through its registered transfer agent subsidiary, Federated Shareholder Services Company, maintains all necessary shareholder records. The Fund pays the transfer agent a fee based on the size, type and number of accounts and transactions made by shareholders. INDEPENDENT PUBLIC ACCOUNTANTS The independent public accountants for the Treasury Fund, Arthur Andersen LLP, plans and performs its audit so that it may provide an opinion as to whether the Fund's financial statements and financial highlights are free of material misstatement. INDEPENDENT AUDITORS The independent auditors for the Municipal Fund, the Prime Cash Fund and the Prime Value Fund, Ernst & Young LLP, plans and performs its audit so that it may provide an opinion as to whether the Funds' financial statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUND FOR SERVICES ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JANUARY 31 1999 1998 1997 1 1999 1998 1997 1 1999 Municipal Fund $ 803,037 $ 447,960 $ 76,352 $ 302,822 $ 190,864 $ 19,609 $ 69,567 636,478 447,960 76,352 Prime Cash Fund 4,676,382 3,485,448 911,504 1,762,996 1,315,415 30,284 236,964 2,853,923 2,107,753 505,519 Prime Value Fund 3,264,534 1,821,778 202,835 1,230,729 687,478 78,894 117,109 2,420,288 1,553,105 166,441 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE PERIOD ENDED JULY 31 1999 2 1999 2 1999 2 Municipal Fund $ 516,311 $ 194,649 $ 37,680 446,031 Prime Cash Fund 3,622,592 1,365,717 251,979 2,260,468 Prime Value Fund 2,380,186 897,330 120,975 1,769,715 ADVISORY FEE SHAREHOLDER ADVISORY FEE REDUCTION ADMINISTRATIVE FEE SERVICES FEE FOR THE YEAR ENDED JULY 31 1999 1998 1997 1999 1998 1997 1999 Treasury Fund $ 22,626,298 $ 19,318,524 $ 13,886,919 $ 8,530,115 $ 7,285,996 $ 5,244,250 $345,415 9,896,725 13,886,919 6,879,101
1 Federated Investment Management Company, formerly Federated Management, became the Fund's investment adviser on November 15, 1996. Prior to November 15, 1996, Lehman Brothers Global Asset Management served as the Fund's investment adviser. 2 The Fund has changed its fiscal year-end from January 31 to July 31. For the fiscal years ended January 31, 1999, 1998 and 1997, fees paid by the Municipal Fund, the Prime Cash Fund and the Prime Value Fund for services are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999. Fees are allocated among classes based on their pro rata share of Fund assets, except for shareholder services fees, which are borne only by the applicable class of Shares. How Do the Funds Measure Performance? The Funds may advertise Share performance by using the SEC standard method for calculating performance applicable to all mutual funds. The SEC also permits this standard performance information to be accompanied by non-standard performance information. The performance of Shares depends upon such variables as: portfolio quality; average portfolio maturity; type and value of portfolio securities; changes in interest rates; changes or differences in the Funds' or any class of Shares' expenses; and various other factors. Share performance fluctuates on a daily basis largely because net earnings fluctuate daily. Both net earnings and offering price per Share are factors in the computation of yield and total return. AVERAGE ANNUAL TOTAL RETURNS AND YIELD Total returns are given for the one-year, five-year and Start of Performance periods ended July 31, 1999. Yield and Effective Yield are given for the 7-day period ended July 31, 1999. Performance of the Municipal Fund, the Prime Cash Fund and the Prime Value Fund shown are prior to the Funds' reorganization as portfolios of the Trust on November 1, 1999.
START OF PERFORMANCE ON 7-DAY PERIOD 1 YEAR 5 YEAR FEBRUARY 8, 1993 MUNICIPAL FUND Total Return - 3.23% 3.49% 3.24% Yield 3.10% - - - Effective Yield 3.15% - - - Tax-Equivalent Yield 5.13% - - - START OF PERFORMANCE ON 7-DAY PERIOD 1 YEAR OCTOBER 6, 1994 PRIME CASH FUND Total Return - 5.03% 5.41% Yield 4.84% - - Effective Yield 4.96% - - START OF PERFORMANCE ON 7-DAY PERIOD 1 YEAR 5 YEAR FEBRUARY 8, 1993 PRIME VALUE FUND Total Return - 5.06% 5.42% 4.93% Yield 4.87% - - - Effective Yield 4.99% - - - START OF PERFORMANCE ON 7-DAY PERIOD 1 YEAR APRIL 14, 1997 TREASURY FUND Total Return - 4.81% 5.15% 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, EFFECTIVE YIELD AND TAX-EQUIVALENT YIELD The yield of Shares is based upon the seven days ending on the day of the calculation, called the "base period." This yield is calculated by: determining the net change in the value of a hypothetical account with a balance of one Share at the beginning of the base period, with the net change excluding capital changes but including the value of any additional Shares purchased with dividends earned from the original one Share and all dividends declared on the original and any purchased Shares; dividing the net change in the account's value by the value of the account at the beginning of the base period to determine the base period return; and multiplying the base period return by 365/7. The effective yield is calculated by compounding the unannualized base-period return by: adding one to the base-period return, raising the sum to the 365/7th power; and subtracting one from the result. The tax-equivalent yield of Shares is calculated similarly to the yield, but is adjusted to reflect the taxable yield that Shares would have had to earn to equal the actual yield, assuming a specific tax rate. To the extent investment professionals and broker/dealers charge fees in connection with services provided in conjunction with an investment in Shares, the Share performance is lower for shareholders paying those fees. TAX EQUIVALENCY TABLE With regard to the Municipal Fund and the Tax-Free Fund, set forth below is a sample of a tax-equivalency table that may be used in advertising and sales literature. This table is for illustrative purposes only and is not representative of past or future performance of the Municipal Fund or the Tax-Free Fund. The interest earned by the municipal securities owned by the Municipal Fund or the Tax-Free Fund generally remains free from federal regular income tax and is often free from state and local taxes as well. However, some of the Municipal Fund's and the Tax-Free Fund's income may be subject to the federal alternative minimum tax and state and/or local taxes. TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60% Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 Over 283,150 Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 Over 283,150 TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT: 1.00% 1.18% 1.39% 1.45% 1.56% 1.66% 1.50% 1.76% 2.08% 2.17% 2.34% 2.48% 2.00% 2.35% 2.78% 2.90% 3.13% 3.31% 2.50% 2.94% 3.47% 3.62% 3.91% 4.14% 3.00% 3.53% 4.17% 4.35% 4.69% 4.97% 3.50% 4.12% 4.86% 5.07% 5.47% 5.79% 4.00% 4.71% 5.56% 5.80% 6.25% 6.62% 4.50% 5.29% 6.25% 6.52% 7.03% 7.45% 5.00% 5.88% 6.94% 7.25% 7.81% 8.28% 5.50% 6.47% 7.64% 7.97% 8.59% 9.11% 6.00% 7.06% 8.33% 8.70% 9.38% 9.93% 6.50% 7.65% 9.03% 9.42% 10.16% 10.76% 7.00% 8.24% 9.72% 10.14% 10.94% 11.59% 7.50% 8.82% 10.42% 10.87% 11.72% 12.42% 8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in calculating the taxable yield equivalent. PERFORMANCE COMPARISONS Advertising and sales literature may include: * references to ratings, rankings, and financial publications and/or performance comparisons of Shares to certain indices; * charts, graphs and illustrations using the Funds' returns, or returns in general, that demonstrate investment concepts such as tax-deferred compounding, dollar-cost averaging and systematic investment; * 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 * information about the mutual fund industry from sources such as the Investment Company Institute. The Funds may compare their performance, or performance for the types of securities in which they invest, to a variety of other investments, including federally insured bank products such as bank savings accounts, certificates of deposit, and Treasury bills. The Funds may quote information from reliable sources regarding individual countries and regions, world stock exchanges, and economic and demographic statistics. You may use financial publications and/or indices to obtain a more complete view of Share performance. When comparing performance, you should consider all relevant factors such as the composition of the index used, prevailing market conditions, portfolio compositions of other funds, and methods used to value portfolio securities and compute offering price. The financial publications and/or indices which the Funds use in advertising may include: LIPPER ANALYTICAL SERVICES, INC. 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 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 Money, a monthly magazine, regularly ranks money market funds in various categories based on the latest available seven-day effective yield. SALOMON 30-DAY CD INDEX Salomon 30-Day CD Index compares rate levels of 30-day certificates of deposit from the top ten prime representative banks. SALOMON 30-DAY TREASURY BILL INDEX Salomon 30-Day Treasury Bill Index is a weekly quote of the most representative yields for selected securities, issued by the U.S. Treasury, maturing in 30 days. DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES Discount Corporation of New York 30-Day Federal Agencies is a weekly quote of the average daily offering price for selected federal agency issues maturing in 30 days. BANK RATE MONITOR(C) NATIONAL INDEX Bank Rate Monitor(C) National Index, published weekly, is an average of the interest rates of personal money market deposit accounts at ten of the largest banks and thrifts in each of the five largest Standard Metropolitan Statistical Areas. If more than one rate is offered, the lowest rate is used. Account minimums and compounding methods may vary. Who is Federated Investors, Inc.? Federated is dedicated to meeting investor needs by making structured, straightforward and consistent investment decisions. Federated investment products have a history of competitive performance and have gained the confidence of thousands of financial institutions and individual investors. Federated's disciplined investment selection process is rooted in sound methodologies backed by fundamental and technical research. At Federated, success in investment management does not depend solely on the skill of a single portfolio manager. It is a fusion of individual talents and state- of-the-art industry tools and resources. Federated's investment process involves teams of portfolio managers and analysts, and investment decisions are executed by traders who are dedicated to specific market sectors and who handle trillions of dollars in annual trading volume. FEDERATED FUNDS OVERVIEW MUNICIPAL FUNDS In the municipal sector, as of December 31, 1998, Federated managed 10 bond funds with approximately $2.2 billion in assets and 23 money market funds with approximately $12.5 billion in total assets. In 1976, Federated introduced one of the first municipal bond mutual funds in the industry and is now one of the largest institutional buyers of municipal securities. The Funds may quote statistics from organizations including The Tax Foundation and the National Taxpayers Union regarding the tax obligations of Americans. EQUITY FUNDS In the equity sector, Federated has more than 28 years' experience. As of December 31, 1998, Federated managed 27 equity funds totaling approximately $14.9 billion in assets across growth, value, equity income, international, index and sector (i.e. utility) styles. Federated's value- oriented management style combines quantitative and qualitative analysis and features a structured, computer-assisted composite modeling system that was developed in the 1970s. CORPORATE BOND FUNDS In the corporate bond sector, as of December 31, 1998, Federated managed 9 money market funds and 15 bond funds with assets approximating $22.8 billion and $7.1 billion, respectively. Federated's corporate bond decision making-based on intensive, diligent credit analysis-is backed by over 26 years of experience in the corporate bond sector. In 1972, Federated introduced one of the first high-yield bond funds in the industry. In 1983, Federated was one of the first fund managers to participate in the asset backed securities market, a market totaling more than $209 billion. GOVERNMENT FUNDS In the government sector, as of December 31, 1998, Federated managed 9 mortgage backed, 5 government/agency and 19 government money market mutual funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively. Federated trades approximately $425 million in U.S. government and mortgage backed securities daily and places approximately $25 billion in repurchase agreements each day. Federated introduced the first U.S. government fund to invest in U.S. government bond securities in 1969. Federated has been a major force in the short- and intermediate-term government markets since 1982 and currently manages approximately $43.2 billion in government funds within these maturity ranges. MONEY MARKET FUNDS In the money market sector, Federated gained prominence in the mutual fund industry in 1974 with the creation of the first institutional money market fund. Simultaneously, the company pioneered the use of the amortized cost method of accounting for valuing shares of money market funds, a principal means used by money managers today to value money market fund shares. Other innovations include the first institutional tax-free money market fund. As of December 31, 1998, Federated managed more than $76.7 billion in assets across 52 money market funds, including 19 government, 9 prime and 23 municipal with assets approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively. The Chief Investment Officers responsible for oversight of the various investment sectors within Federated are: U.S. equity and high yield- J. Thomas Madden; U.S. fixed income-William D. Dawson, III; and global equities and fixed income-Henry A. Frantzen. The Chief Investment Officers are Executive Vice Presidents of the Federated advisory companies. MUTUAL FUND MARKET Thirty-seven percent of American households are pursuing their financial goals through mutual funds. These investors, as well as businesses and institutions, have entrusted over $5 trillion to the more than 7,300 funds available, according to the Investment Company Institute. FEDERATED CLIENTS OVERVIEW Federated distributes mutual funds through its subsidiaries for a variety of investment purposes. Specific markets include: INSTITUTIONAL CLIENTS Federated meets the needs of approximately 900 institutional clients nationwide by managing and servicing separate accounts and mutual funds for a variety of purposes, including defined benefit and defined contribution programs, cash management, and asset/liability management. Institutional clients include corporations, pension funds, tax exempt entities, foundations/endowments, insurance companies, and investment and financial advisers. The marketing effort to these institutional clients is headed by John B. Fisher, President, Institutional Sales Division, Federated Securities Corp. BANK MARKETING Other institutional clients include more than 1,600 banks and trust organizations. Virtually all of the trust divisions of the top 100 bank holding companies use Federated Funds in their clients' portfolios. The marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank Marketing & Sales. BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES Federated Funds are available to consumers through major brokerage firms nationwide-we have over 2,200 broker/dealer and bank broker/dealer relationships across the country-supported by more wholesalers than any other mutual fund distributor. Federated's service to financial professionals and institutions has earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for service quality measurement. The marketing effort to these firms is headed by James F. Getz, President, Broker/Dealer Sales Division, Federated Securities Corp. Financial Information The Financial Statements for the Funds for the fiscal year ended July 31, 1999 are incorporated herein by reference to the Annual Reports to Shareholders of the Funds dated July 31, 1999. Investment Ratings STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market access risks unique to notes. SP-1-Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation. SP-2-Satisfactory capacity to pay principal and interest. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) COMMERCIAL PAPER RATINGS An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1-This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2-Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. LONG-TERM DEBT RATINGS AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA-Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues only in small degree. A-Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. MOODY'S INVESTORS SERVICE SHORT-TERM MUNICIPAL OBLIGATION RATINGS Moody's Investors Service, Inc. (Moody's) short-term ratings are designated Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1-This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing. MIG2-This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES AND TENDER OPTION BONDS RATINGS Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER RATINGS P-1-Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2-Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS AAA-Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa-Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A-Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR-Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)-The underlying issuer/obligor/guarantor has other outstanding debt rated AAA by S&P or Aaa by Moody's. NR(2)-The underlying issuer/obligor/guarantor has other outstanding debt rated AA by S&P or Aa by Moody's. NR(3)-The underlying issuer/obligor/guarantor has other outstanding debt rated A by S&P or Moody's. FITCH IBCA, INC. SHORT-TERM DEBT RATING DEFINITIONS F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1-Very Strong Credit Quality. Issues assigned this rating reflect an assurance for timely payment, only slightly less in degree than issues rated F-1+. F-2-Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. Addresses MONEY MARKET OBLIGATIONS TRUST Municipal Obligations Fund Prime Cash Obligations Fund Prime Value Obligations Fund Treasury Obligations Fund Institutional Capital Shares Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 DISTRIBUTOR Federated Securities Corp. Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 INVESTMENT ADVISER Federated Investment Management Company Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 CUSTODIAN State Street Bank and Trust Company P.O. Box 8600 Boston, MA 02266-8600 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Federated Shareholder Services Company P.O. Box 8600 Boston, MA 02266-8600 INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP 225 Franklin Street Boston, MA 02110-2812 INDEPENDENT AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, MA 02116-5072 PART C. OTHER INFORMATION. Item 23 Exhibits: (a) (i) Conformed copy of Declaration of Trust of the Registrant; (12) (ii) Conformed copy of Amendment No. 1 to the Declaration of Trust of the Registrant; (12) (iii) Conformed copy of Amendment No. 2 to the Declaration of Trust of the Registrant; (17) (iv) Conformed copy of Amendment No. 3 to the Declaration of Trust of the Registrant; (17) (v) Conformed copy of Amendment No. 4 to the Declaration of Trust of the Registrant; (17) (vi) Conformed copy of Amendment No. 5 to the Declaration of Trust of the Registrant; (17) (vii) Conformed copy of Amendment No. 6 to the Declaration of Trust of the Registrant; (17) (viii) Conformed copy of Amendment No. 8 to the Declaration of Trust of the Registrant; (10) (ix) Conformed copy of Amendment No. 9 to the Declaration of Trust of the Registrant; (15) (x) Conformed copy of Amendment No. 10 to the Declaration of Trust of the Registrant; (16) (xi) Conformed copy of Amendment No. 11 to the Declaration of Trust of the Registrant; (21) (xii) Conformed copy of Amendment No. 12 to the Declaration of Trust of the Registrant; (21) (xiii) Conformed copy of Amendment No. 13 to the Declaration of Trust of the Registrant; + (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) + All exhibits filed electronically. 8. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 8 on Form N-1A filed June 1, 1994. (File Nos. 33-31602 and 811-5950). 10. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 12 on Form N-1A filed February 21, 1995. (File Nos. 33-31602 and 811-5950). 12. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602 and 811-5950). 15. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 20 on Form N-1A filed September 23, 1996. (File Nos. 33-31602 and 811-5950). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602 and 811-5950). 17. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 24 on Form N-1A filed September 28, 1998. (File Nos. 33-31602 and 811-5950). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602 and 811-5950). (ii) Copies of Specimen Certificates for Shares of Beneficial Interest of Automated Cash ...Management Trust - Cash II Shares and Institutional Service Shares; (16) (iii)Copies of Specimen Certificates for Shares of Beneficial Interest of Treasury Obligations .....Fund - Institutional Capital Shares; (16) (d) (i) Conformed copy of Investment Advisory Contract of the Registrant; (12) (ii) Conformed copy of Exhibit A to the Investment Advisory Contract of the Registrant; (12) (iii) Conformed copy of Exhibit B to the Investment Advisory Contract of the Registrant; (12) (iv) Conformed copy of Exhibit D to the Investment Advisory Contract of the Registrant; (12) (v) Conformed copy of Exhibit E to the Investment Advisory Contract of the Registrant; (12) (vi) Conformed copy of Exhibit G to the Investment Advisory Contract of the Registrant; (12) (vii) Conformed copy of Exhibit H to the Investment Advisory Contract of the Registrant; (21) (viii) Conformed copy of Exhibit I to the Investment Advisory Contract of the Registrant; (21) (ix) Conformed copy of Exhibit J to the Investment Advisory Contract of the Registrant; (21) (x) Conformed copy of Exhibit K to the Investment Advisory Contract of the Registrant; (21) (xi) Conformed copy of Exhibit L to the Investment Advisory Contract of the Registrant; (21) (xii) Conformed copy of Exhibit M to the Investment Advisory Contract of the Registrant; (21) (xiii) Conformed copy of Exhibit N to the Investment Advisory Contract of the Registrant; (21) (xiv) Conformed copy of Exhibit O to the Investment Advisory Contract of the Registrant; (21) (xv) Conformed copy of Exhibit P to the Investment Advisory Contract of the Registrant; (21) (xvi) Conformed copy of Exhibit Q to the Investment Advisory Contract of the Registrant; (21) (xvii) Conformed copy of Exhibit R to the Investment Advisory Contract of the Registrant; (21) (xviii) Conformed copy of Exhibit S to the Investment Advisory Contract of the Registrant; + (e) (i) Conformed copy of Distributor's Contract of the Registrant; (7) (ii) Conformed copy of Exhibit A to the Distributor's Contract of the Registrant; (21) (iii) Conformed copy of Exhibit C to the Distributor's Contract of the Registrant; (21) + All exhibits 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). 12. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602 and 811-5950). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602 and 811-5950). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602 and 811-5950). (iv) Conformed copy of Exhibit D to the Distributor's Contract of the Registrant; (15) (v) Conformed copy of Exhibit E to the Distributor's Contract of the Registrant; (16) (vi) Conformed copy of Exhibit F to the Distributor's Contract of the Registrant; (16) (vii)Conformed copy of Exhibit G to the Distributor's Contract of the Registrant; (21) (viii) Conformed copy of Exhibit H to the Distributor's Contract of the Registrant; (21) (ix) Conformed copy of Exhibit I to the Distributor's Contract of the Registrant; (21) (x) Conformed copy of Exhibit J to the Distributor's Contract of the Registrant; + (xi) Conformed copy of Distributor's Contract of the Registrant (Liberty U.S. Government Money Market Trust - Class B Shares); + (xii) The Registrant hereby incorporates the conformed copy of the specimen Mutual Funds Sales and Service Agreement; Mutual Funds Service Agreement; and Plan Trustee/ Mutual Funds Service Agreement from Item 24(b)(6) of the Cash Trust Series II Registration Statement on Form N-1A filed with the Commission on July 24, 1995. (File Nos. 33-38550 and 811-6269). (f) Not applicable; (g) (i) Conformed copy of Custodian Agreement of the Registrant; (8) (ii) Conformed copy of Custodian Fee Schedule; (17) (h) (i) Conformed copy of Amended and Restated Agreement for Fund Accounting Services, Administrative Services, Transfer Agency Services and Custody Services Procurement; (21) (ii) Conformed copy of Amended and Restated Shareholder Services Agreement of the Registrant; (21) (iii)Conformed copy of Principal Shareholder Services Agreement (Liberty U.S. Government Money Market Trust - Class B Shares);+ + All exhibits filed electronically. 8. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 8 on Form N-1A filed June 1, 1994. (File Nos. 33-31602 and 811-5950). 15. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 20 on Form N-1A filed September 23, 1996. (File Nos. 33-31602 and 811-5950). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602 and 811-5950). 17. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 24 on Form N-1A filed September 28, 1998. (File Nos. 33-31602 and 811-5950). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602 and 811-5950). (iv) Conformed copy of Shareholder Services Agreement (Liberty U.S. Government Money Market Trust - Class B Shares);+ (v) The responses described in Item 23(e)(xii) are hereby incorporated by reference. (vi) 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) (i) Conformed copy of Consent of Arthur Andersen LLP for: (a) Automated Cash Management Trust; (22) (b) Federated Short-Term U.S. Government Trust; (19) (c) Government Obligations Fund; + (d) Government Obligations Tax-Managed Fund; + (e) Prime Obligations Fund; + (f) Tax-Free Obligations Fund; + (g) Treasury Obligations Fund; + (h) Trust for Government Cash Reserves; (19) (ii) Conformed copy of Consent of Ernst & Young LLP for: (a) Automated Government Cash Reserves; (21) (b) Automated Treasury Cash Reserves; (21) (c) Municipal Obligations Fund; + (d) Prime Cash Obligations Fund; + (e) Prime Value Obligations Fund; + (f) U.S. Treasury Cash Reserves; (21) (g) Trust for U.S. Treasury Obligations; (22) (iii) Conformed copy of Consent of Deloitte & Touche LLP for: (a) Automated Government Money Trust; (22) (b) Federated Master Trust; (19) (c) Liquid Cash Trust; (20) (d) Trust for Short-Term U.S. Government Securities (19) (k) Not applicable; (l) Conformed copy of Initial Capital Understanding; (12) + All exhibits filed electronically. 12. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602 and 811-5950). 19. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 26 on Form N-1A filed April 26, 1999. (File Nos. 33-31602 and 811-5950). 20. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 28 on Form N-1A filed May 25, 1999. (File Nos. 33-31602 and 811-5950). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602 and 811-5950). 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 35 on Form N-1A filed September 28, 1999. (File Nos. 33-31602 and 811-5950). (m) (i) Conformed copy of Distribution Plan of the Registrant; (16) (ii) Conformed copy of Exhibit A to the Distribution Plan of the Registrant; (16) (iii) Conformed copy of Exhibit B to the Distribution Plan of the Registrant; (21) (iv) The responses described in Item 23(e)(xii) are hereby incorporated by reference. (n) The Registrant hereby incorporates the conformed copy of the specimen Multiple Class Plan from Item 24(b)(18) of the World Investment Series, Inc. Registration Statement on Form N-1A, filed with the Commission on January 26, 1996. (File Nos. 33-52149 and 811-07141). (o) (i) Conformed copy of Power of Attorney of the Registrant; + (ii) Conformed copy of Power of Attorney of Chief Investment Officer of the Registrant; + (iii) Conformed copy of Power of Attorney of Treasurer of the Registrant; (18) (iv) Conformed copy of Power of Attorney of Trustee of the Registrant; + (v) Conformed copy of Power of Attorney of Trustee of the Registrant; + (vi) Conformed copy of Power of Attorney of Trustee of the Registrant; + Item 24. Persons Controlled by or Under Common Control with the Fund: None Item 25. Indemnification: (1) + All exhibits filed electronically. 1. Response is incorporated by reference to Registrant's Initial Registration Statement on Form N-1A filed October 20, 1989. (File Nos. 33-31602 and 811-5950). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602 and 811-5950). 18. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 25 on Form N-1A filed February 12, 1999. (File Nos. 33-31602 and 811-5950). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602 and 811-5950). Item 26. Business and Other Connections of the Investment Adviser: For a description of the other business of the investment adviser, see the section entitled "Who Manages the Fund?" in Part A. The affiliations with the Registrant of four of the Trustees and one of the Officers of the investment adviser are included in Part B of this Registration Statement under "Who Manages and Provides Services to the Fund?" The remaining Trustee of the investment adviser, his position with the investment adviser, and, in parentheses, his principal occupation is: Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown, Delaware 19947. The remaining Officers of the investment adviser are: Executive Vice Presidents: William D. Dawson, III Henry A. Frantzen J. Thomas Madden Senior Vice Presidents: Joseph M. Balestrino David A. Briggs Drew J. Collins Jonathan C. Conley Deborah A. Cunningham Mark E. Durbiano Jeffrey A. Kozemchak Sandra L. McInerney Susan M. Nason Mary Jo Ochson Robert J. Ostrowski Vice Presidents: Todd A. Abraham J. Scott Albrecht Arthur J. Barry Randall S. Bauer G. Andrew Bonnewell Micheal W. Casey Robert E. Cauley Alexandre de Bethmann B. Anthony Delserone, Jr. Michael P. Donnelly Linda A. Duessel Donald T. Ellenberger Kathleen M. Foody-Malus Thomas M. Franks James E. Grefenstette Marc Halperin Patricia L. Heagy Susan R. Hill William R. Jamison Constantine J. Kartsonas Robert M. Kowit Richard J. Lazarchic Steven Lehman Marian R. Marinack William M. Painter Jeffrey A. Petro Keith J. Sabol Frank Semack Aash M. Shah Michael W. Sirianni, Jr. Christopher Smith Edward J. Tiedge Leonardo A. Vila Paige M. Wilhelm George B. Wright Assistant Vice Presidents: Arminda Aviles Nancy J. Belz Lee R. Cunningham, II James H. Davis, II Jacqueline A. Drastal Paul S. Drotch Salvatore A. Esposito Donna M. Fabiano Gary E. Farwell Eamonn G. Folan John T. Gentry John W. Harris Nathan H. Kehm John C. Kerber Grant K. McKay Christopher Matyszewski Natalie F. Metz Thomas Mitchell Joseph M. Natoli Trent Neville Ihab Salib Roberto Sanchez-Dahl, Sr. James W. Schaub John Sheehy John Sidawi Matthew K. Stapen Diane Tolby Timothy G. Trebilcock Steven J. Wagner Lori A. Wolff Secretary: G. Andrew Bonnewell Treasurer: Thomas R. Donahue Assistant Secretaries: C. Grant Anderson Karen M. Brownlee Leslie K. Ross Assistant Treasurer: Dennis McAuley, III The business address of each of the Officers of the investment adviser is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. These individuals are also officers of a majority of the investment advisers to the investment companies in the Federated Fund Complex described in Part B of this Registration Statement. Item 27. Principal Underwriters: (a)......Federated Securities Corp. the Distributor for shares of the Registrant, acts as principal underwriter for the following .............open-end investment companies, including the Registrant: Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust; Federated Income Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance Series; Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia Funds; Independence One Mutual Funds; Intermediate Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.; Managed Series Trust; Marshall Funds, Inc.; Money Market Management, Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money Market Trust; Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds; Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia Municipal Funds; Vision Group of Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust; Investment Series Trust; Star Funds; Targeted Duration Trust; The Virtus Funds; Trust for Financial Institutions; Federated Securities Corp. also acts as principal underwriter for the following closed-end investment company: Liberty Term Trust, Inc.- 1999.
(b) (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant Richard B. Fisher Chairman, Chief Executive Vice President Federated Investors Tower Officer, Chief Operating 1001 Liberty Avenue Officer Pittsburgh, PA 15222-3779 Federated Securities Corp. Arthur L. Cherry Director -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 John B. Fisher President-Institutional Sales -- Federated Investors Tower and Director 1001 Liberty Avenue Federated Securities Corp. Pittsburgh, PA 15222-3779 Thomas R. Donahue Director, Assistant Secretary -- Federated Investors Tower and Treasurer 1001 Liberty Avenue Federated Securities Corp. Pittsburgh, PA 15222-3779 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant James F. Getz President-Broker/Dealer and -- Federated Investors Tower Director 1001 Liberty Avenue Federated Securities Corp. Pittsburgh, PA 15222-3779 David M. Taylor Executive Vice President -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mark W. Bloss Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Richard W. Boyd Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Laura M. Deger Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Theodore Fadool, Jr. Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Bryant R. Fisher Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Christopher T. Fives Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 James S. Hamilton Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 James M. Heaton Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 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 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant Ronald M. Petnuch Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Timothy C. Pillion Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Thomas E. Territ Senior Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Ernest G. Anderson Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Teresa M. Antoszyk Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 John B. Bohnet Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Jane E. Broeren-Lambesis Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Matthew W. Brown Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 David J. Callahan Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mark Carroll Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Steven R. Cohen Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mary J. Combs Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant R. Edmond Connell, Jr. Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 R. Leonard Corton, Jr. Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Kevin J. Crenny Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Daniel T. Culbertson Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 G. Michael Cullen Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Marc C. Danile Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Robert J. Deuberry Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 William C. Doyle Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Jill Ehrenfeld Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mark D. Fisher Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mark A. Gessner Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Joseph D. Gibbons Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant John K. Goettlicher Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Craig S. Gonzales Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 G. Tad Gullickson Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Dayna C. Haferkamp Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Bruce E. Hastings Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 James E. Hickey Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Charlene H. Jennings Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 H. Joseph Kennedy Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Michael W. Koenig Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Dennis M. Laffey Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Christopher A. Layton Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Michael H. Liss Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant Michael R. Manning Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Amy Michalisyn Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Mark J. Miehl Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Richard C. Mihm Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Alec H. Neilly Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Thomas A. Peters III Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Robert F. Phillips Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Richard A. Recker Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Eugene B. Reed Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Paul V. Riordan Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 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 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant Thomas S. Schinabeck Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Larry Sebbens Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Edward J. Segura Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Edward L. Smith Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 David W. Spears Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 John A. Staley Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Colin B. Starks Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Jeffrey A. Stewart Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 William C. Tustin Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Paul A. Uhlman Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 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 (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Distributor With Registrant Richard B. Watts Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Edward J. Wojnarowski Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Michael P. Wolff Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Robert W. Bauman Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Edward R. Bozek Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Beth C. Dell Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 David L. Immonen Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 John T. Glickson Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Ernest L. Linane Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Renee L. Martin Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Timothy S. Johnson Secretary, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Dennis McAuley Assistant Treasurer, -- Federated Investors Tower Federated Securities Corp. 1001 Liberty Avenue Pittsburgh, PA 15222-3779 (c) Not applicable
Item 28. Location of Accounts and Records: All accounts and records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated thereunder are maintained at one of the following locations: Registrant Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 (Notices should be sent to the Agent for Service at the above address) Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 Federated Shareholder P.O. Box 8600 Services Company Boston, MA 02266-8600 ("Transfer Agent and Dividend Disbursing Agent") Federated Services Company Federated Investors Tower ("Administrator") 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Federated Investment Federated Investors Tower Management Company 1001 Liberty Avenue ("Adviser") Pittsburgh, PA 15222-3779 State Street Bank and P.O. Box 8600 Trust Company Boston, MA 02266-8600 ("Custodian") Item 29. Management Services: Not applicable. Item 30. Undertakings: Registrant hereby undertakes to comply with the provisions of Section 16(c) of the 1940 Act with respect to the removal of Trustees and the calling of special shareholder meetings by shareholders. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, MONEY MARKET OBLIGATIONS TRUST, certifies that it meets all of the requirements for effectiveness of this Amendment to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the 29th day of October, 1999. MONEY MARKET OBLIGATIONS TRUST BY: /s/ Leslie K. Ross Leslie K. Ross, Assistant Secretary Attorney in Fact for John F. Donahue October 29, 1999 Pursuant to the requirements of the Securities Act of 1933, this Amendment to its Registration Statement has been signed below by the following person in the capacity and on the date indicated:
NAME TITLE DATE By: /s/ Leslie K. Ross Leslie K. Ross Attorney In Fact October 29, 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 Nicholas P. Constantakis* Trustee John F. Cunningham* Trustee Lawrence D. Ellis, M.D.* Trustee Peter E. Madden* Trustee Charles F. Mansfield, Jr.* Trustee John E. Murray, Jr., J.D., S.J.D.* Trustee Marjorie P. Smuts* Trustee John S. Walsh* Trustee *By Power of Attorney
EX-99.DECTRUSTEX 2 Exhibit (a)(xiii) under Form N-1A Exhibit 3(i) under Item 601/Reg. S-K MONEY MARKET OBLIGATIONS TRUST Amendment No. 13 DECLARATION OF TRUST dated October 3, 1988 Effective September 1, 1999, this Declaration of Trust is amended as follows: Strike the first paragraph of Section 5 of Article III from the Declaration of Trust and substitute in its place the following: "Section 5. Establishment and Designation of Series or Class." Without limiting the authority of the Trustees set forth herein, to establish and designate any additional series or class or to modify the rights or preferences of any existing series or class, the series and classes have been established and designated as: Alabama Municipal Cash Trust Arizona Municipal Cash Trust Automated Cash Management Trust Cash II Shares Institutional Service Shares Automated Government Cash Reserves Automated Government Money Trust Automated Treasury Cash Reserves California Municipal Cash Trust Connecticut Municipal Cash Trust Federated Master Trust Federated Short-Term U.S. Government Trust Federated Tax-Free Trust Florida Municipal Cash Trust Cash II Shares Institutional Shares Georgia Municipal Cash Trust Government Obligations Fund Institutional Shares Institutional Service Shares Government Obligations Tax Managed Fund Institutional Shares Institutional Service Shares Liberty U.S. Government Money Market Trust Class A Shares Class B. Shares Liquid Cash Trust Maryland Municipal Cash Trust Massachusetts Municipal Cash Trust Michigan Municipal Cash Trust Minnesota Municipal Cash Trust Cash Series Shares Money Market Management, Inc. Money Market Trust Municipal Obligations Fund New Jersey Municipal Cash Trust Institutional Shares New York Municipal Cash Trust Cash II Shares Institutional Service Shares North Carolina Municipal Cash Trust Ohio Municipal Cash Trust Cash II Shares Pennsylvania Municipal Cash Trust Cash Series Shares Prime Cash Obligations Fund Prime Obligations Fund Institutional Shares Institutional Service Shares Prime Value Obligations Fund Tax-Free Instruments Trust Tax-Free Obligations Fund Institutional Shares Institutional Service Shares Tennessee Municipal Cash Trust Treasury Obligations Fund Institutional Shares Institutional Service Shares Institutional Capital Shares Trust for Government Cash Reserves Trust for Short-Term U.S. Government Securities Trust for U.S. Treasury Obligations U.S. Treasury Cash Reserves Institutional Service Shares Institutional Shares Virginia Municipal Cash Trust The establishment and designation of any series or class of shares in addition to those established and designated above shall be effective upon the execution by a majority of the then Trustees, without the need for Shareholder approval, of an amendment tot his Declaration of Trust, taking the form of a complete restatement or otherwise, setting forth such establishment and designation and the relative rights and preferences of any such series or class, or as otherwise provided in such instrument. The undersigned hereby certify that the above-stated Amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Board of Trustees on the 19th day of May, 1999. WITNESS the due execution hereof this 19th day of August, 1999. /s/ John F. Donahue /s/ Peter E. Madden John F. Donahue Peter E. Madden /s/ Thomas G. Bigley /s/ Charles F. Mansfield, Jr. Thomas G. Bigley Charles F. Mansfield, Jr. /s/ John T. Conroy, Jr. /s/ John E. Murray, Jr. John T. Conroy, Jr. John E. Murray, Jr. /s/ John F. Cunningham /s/ Marjorie P. Smuts John F. Cunningham Marjorie P. Smuts /s/ Lawrence D. Ellis, M.D. /s/ John S. Walsh Lawrence D. Ellis, M.D. John S. Walsh EX-99.ADVISORKEX 3 Exhibit (d)(xviii) under Form N-1A Exhibit 10 under Item 601/Reg. S-K EXHIBIT S FEDERATED TAX-FREE TRUST For all services rendered by Adviser hereunder, the above-named Fund of the Trust shall pay to Adviser and Adviser agrees to accept as full compensation for all services rendered hereunder, an annual investment advisory fee equal to .40 of 1% of the average daily net assets of the Fund. The portion of the fee based upon the average daily net assets of the Fund shall be accrued daily at the rate of 1/365th of .40 of 1% applied to the daily net assets of the Fund. The advisory fee so accrued shall be paid to Adviser daily. Adviser shall reimburse the Fund (limited to the amount of the gross investment advisory fee computed in accordance with the provisions of this Exhibit S) in any fiscal year or portion thereof, the amount, if any, by which the aggregate normal operating expenses of the Fund, including the gross 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 for such fiscal year or portion thereof exceed .45 of 1% (or in the case of a portion of a fiscal year, .0375 of 1% multiplied by the number of calendar months in such period) of the average daily net assets of the Fund for such period. This obligation does not include any expenses incurred by shareholders who choose to avail themselves of the Transfer Agent's sub-accounting facilities. Such reimbursement will be accounted for and adjusted annually in accordance with generally accepted accounting principles and any Rules and Regulations of the Securities and Exchange Commission applicable thereto. Witness the due execution hereof this 1st day of September, 1999. FEDERATED INVESTMENT MANAGEMENT COMPANY By: /s/ G. Andrew Bonnewell Name: G. Andrew Bonnewell Title: Vice President MONEY MARKET OBLIGATIONS TRUST By: /s/ Richard B. Fisher Name: Richard B. Fisher Title: Vice President EX-99.DISTRIBKEX 4 Exhibit (e)(x) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit J to the Distributor's Contract Money Market Obligations Trust Federated Tax-Free Trust In consideration of the mutual covenants set forth in the Distributor's Contract dated March 1, 1994, between Money Market Obligations Trust and Federated Securities Corp., Money Market Obligations Trust executes and delivers this Exhibit on behalf of the Fund set forth above. Witness the due execution hereof this 1st day of September, 1999. Money Market Obligations Trust By: /s/ Richard B. Fisher Name: Richard B. Fisher Title: Vice President Federated Securities Corp. By: /s/ David M. Taylor Name: David M. Taylor Title: Executive Vice President EX-99.DISTRIBKEX 5 Exhibit (e)(xi) under Form N-1A Exhibit 1 under Item 601/Reg. S-K DISTRIBUTOR'S CONTRACT AGREEMENT made this 24th day of October, 1997, by and between those Investment Companies on behalf of the Portfolios and Classes of Shares listed on Schedule A to Exhibit 1, as may be amended from time to time, having their principal place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of Agreement, and FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania Corporation. Each of the Exhibits hereto is incorporated herein in its entirety and made a part hereof. In the event of any inconsistency between the terms of this Agreement and the terms of any applicable Exhibit, the terms of the applicable Exhibit shall govern. In consideration of the mutual covenants hereinafter contained, it is hereby agreed by and between the parties hereto as follows: 1. Each of the Investment Companies hereby appoint FSC as agent to sell and distribute shares of the Investment Companies which may be offered in one or more series (the "Funds") consisting of one or more classes (the "Classes") of shares (the "Shares"), as described and set forth on one or more exhibits to this Agreement, at the current offering price thereof as described and set forth in the current Prospectuses of the Funds. FSC hereby accepts such appointment and agrees to provide such other services for the Investment Companies, if any, and accept such compensation from the Investment Companies, if any, as set forth in the applicable exhibits to this Agreement. 2. The sale of any Shares may be suspended without prior notice whenever in the judgment of the applicable Investment Company it is in its best interest to do so. 3. Neither FSC nor any other person is authorized by the Investment Companies to give any information or to make any representation relative to any Shares other than those contained in the Registration Statement, Prospectuses, or Statements of Additional Information ("SAIs") filed with the Securities and Exchange Commission, as the same may be amended from time to time, or in any supplemental information to said Prospectuses or SAIs approved by the Investment Companies. FSC agrees that any other information or representations other than those specified above which it or any dealer or other person who purchases Shares through FSC may make in connection with the offer or sale of Shares, shall be made entirely without liability on the part of the Investment Companies. No person or dealer, other than FSC, is authorized to act as agent for the Investment Companies for any purpose. FSC agrees that in offering or selling Shares as agent of the Investment Companies, it will, in all respects, duly conform to all applicable state and federal laws and the rules and regulations of the National Association of Securities Dealers, Inc., including its Rules of Fair Practice. FSC will submit to the Investment Companies copies of all sales literature before using the same and will not use such sales literature if disapproved by the Investment Companies. 4. This Agreement is effective with respect to each Class as of the date of execution of the applicable exhibit and shall continue in effect with respect to each Class presently set forth on an exhibit and any subsequent Classes added pursuant to an exhibit during the initial term of this Agreement for one year from the date set forth above, and thereafter for successive periods of one year if such continuance is approved at least annually by the Trustees/Directors of the Investment Companies including a majority of the members of the Board of Trustees/Directors of the Investment Companies who are not interested persons of the Investment Companies and have no direct or indirect financial interest in the operation of any Distribution Plan relating to the Investment Companies or in any related documents to such Plan ("Disinterested Trustees/Directors") cast in person at a meeting called for that purpose. If a Class is added after the first annual approval by the Trustees/Directors as described above, this Agreement will be effective as to that Class upon execution of the applicable exhibit and will continue in effect until the next annual approval of this Agreement by the Trustees/Directors and thereafter for successive periods of one year, subject to approval as described above. 5. This Agreement may be terminated with regard to a particular Fund or Class at any time, without the payment of any penalty, by the vote of a majority of the Disinterested Trustees/Directors or by a majority of the outstanding voting securities of the particular Fund or Class on not more than sixty (60) days' written notice to any other party to this Agreement. 6. This Agreement may not be assigned by FSC and shall automatically terminate in the event of an assignment by FSC as defined in the Investment Company Act of 1940, as amended, provided, however, that FSC may employ such other person, persons, corporation or corporations as it shall determine in order to assist it in carrying out its duties under this Agreement. 7. FSC shall not be liable to the Investment Companies 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 by this Agreement. 8. This Agreement may be amended at any time by mutual agreement in writing of all the parties hereto, provided that such amendment is approved by the Trustees/Directors of the Investment Companies including a majority of the Disinterested Trustees/Directors of the Investment Companies cast in person at a meeting called for that purpose. 9. This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. 10. (a) Subject to the conditions set forth below, the Investment Companies agree to indemnify and hold harmless FSC and each person, if any, who controls FSC within the meaning of Section 15 of the Securities Act of 1933 and Section 20 of the Securities Act of 1934, as amended, against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectuses or SAIs (as from time to time amended and supplemented) or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Investment Companies about FSC by or on behalf of FSC expressly for use in the Registration Statement, any Prospectuses and SAIs or any amendment or supplement thereof. If any action is brought against FSC or any controlling person thereof with respect to which indemnity may be sought against any Investment Company pursuant to the foregoing paragraph, FSC shall promptly notify the Investment Company in writing of the institution of such action and the Investment Company shall assume the defense of such action, including the employment of counsel selected by the Investment Company and payment of expenses. FSC or any such controlling person thereof shall have the right to employ separate counsel in any such case, but the fees and expenses of such counsel shall be at the expense of FSC or such controlling person unless the employment of such counsel shall have been authorized in writing by the Investment Company in connection with the defense of such action or the Investment Company shall not have employed counsel to have charge of the defense of such action, in any of which events such fees and expenses shall be borne by the Investment Company. Anything in this paragraph to the contrary notwithstanding, the Investment Companies shall not be liable for any settlement of any such claim of action effected without their written consent. The Investment Companies agree promptly to notify FSC of the commencement of any litigation or proceedings against the Investment Companies or any of their officers or Trustees/Directors or controlling persons in connection with the issue and sale of Shares or in connection with the Registration Statement, Prospectuses, or SAIs. (b) FSC agrees to indemnify and hold harmless the Investment Companies, each of its Trustees/Directors, each of its officers who have signed the Registration Statement and each other person, if any, who controls the Investment Companies within the meaning of Section 15 of the Securities Act of 1933, but only with respect to statements or omissions, if any, made in the Registration Statement or any Prospectus, SAI, or any amendment or supplement thereof in reliance upon, and in conformity with, information furnished to the Investment Companies about FSC by or on behalf of FSC expressly for use in the Registration Statement or any Prospectus, SAI, or any amendment or supplement thereof. In case any action shall be brought against any Investment Company or any other person so indemnified based on the Registration Statement or any Prospectus, SAI, or any amendment or supplement thereof, and with respect to which indemnity may be sought against FSC, FSC shall have the rights and duties given to the Investment Companies, and the Investment Companies and each other person so indemnified shall have the rights and duties given to FSC by the provisions of subsection (a) above. (c) Nothing herein contained shall be deemed to protect any person against liability to the Investment Companies or their shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the duties of such person or by reason of the reckless disregard by such person of the obligations and duties of such person under this Agreement. (d) Insofar as indemnification for liabilities may be permitted pursuant to Section 17 of the Investment Company Act of 1940, as amended, for Trustees/Directors, officers, FSC and controlling persons of the Investment Companies by the Trustees/Directors pursuant to this Agreement, the Investment Companies are aware of the position of the Securities and Exchange Commission as set forth in the Investment Company Act Release No. IC-11330. Therefore, the Investment Companies undertakes that in addition to complying with the applicable provisions of this Agreement, in the absence of a final decision on the merits by a court or other body before which the proceeding was brought, that an indemnification payment will not be made unless in the absence of such a decision, a reasonable determination based upon factual review has been made (i) by a majority vote of a quorum of non-party Disinterested Trustees/Directors, or (ii) by independent legal counsel in a written opinion that the indemnitee was not liable for an act of willful misfeasance, bad faith, gross negligence or reckless disregard of duties. The Investment Companies further undertakes that advancement of expenses incurred in the defense of a proceeding (upon undertaking for repayment unless it is ultimately determined that indemnification is appropriate) against an officer, Trustees/Directors, FSC or controlling person of the Investment Companies will not be made absent the fulfillment of at least one of the following conditions: (i) the indemnitee provides security for his undertaking; (ii) the Investment Companies is insured against losses arising by reason of any lawful advances; or (iii) a majority of a quorum of non-party Disinterested Trustees/Directors or independent legal counsel in a written opinion makes a factual determination that there is reason to believe the indemnitee will be entitled to indemnification. Error! Reference source not found. 11. If at any time the Shares of any Fund are offered in two or more Classes, FSC agrees to adopt compliance standards as to when a class of shares may be sold to particular investors. 12. This Agreement will become binding on the parties hereto upon the execution of the attached exhibits to the Agreement. Exhibit 1 to the Distributor's Contract The following provisions are hereby incorporated and made part of the Distributor's Contract (the "Distributor's Contract") dated October 24, 1997, between the Investment Companies and Federated Securities Corp. as principal distributor (the "Principal Distributor") with respect to the Class B Shares of the portfolios (the "Funds") set forth on the attached Schedule A. References herein to this Distributor's Contract refer to the Distributor's Contract as supplemented hereby and made applicable hereby to the Class B Shares of the Funds. In the event of any inconsistency between the terms of this Exhibit and the terms of the Distributor's Contract, the terms of this Exhibit will govern. Once effective in respect of the Class of Shares of any Fund set forth above, the Distributors Contract as amended by this Exhibit shall be effective in respect of all shares of such class outstanding whether issued prior to or after such effectiveness. 1. The Investment Companies hereby appoints the Principal Distributor to engage in activities principally intended to result in the sale of Class B Shares ("Class B Shares") of each Fund. Pursuant to this appointment, the Principal Distributor is authorized to select a group of financial institutions ("Financial Institutions") to sell Class B Shares of a Fund at the current offering price thereof as described and set forth in the respective prospectuses of the Fund. 2. (a) In consideration of the Principal Distributor's services under this Distributor's Contract in respect of each Fund the Investment Companies on behalf of the Fund agree: (I) to pay the Principal Distributor or at its direction its "Allocable Portion" (as hereinafter defined) of a fee (the "Distribution Fee") equal to 0.75 of 1% per annum of the average daily net asset value of the Class B Shares of the Fund outstanding from time to time, and (II) to withhold from redemption proceeds in respect of Class B Shares of the Fund such Principal Distributor's Allocable Portion of the Contingent Deferred Sales Charges ("CDSCs") payable in respect of such redemption as provided in the Prospectus for the Fund and to pay the same over to such Principal Distributor or at its direction at the time the redemption proceeds in respect of such redemption are payable to the holder of the Class B Shares redeemed. (b) The Principal Distributor will be deemed to have performed all services required to be performed in order to be entitled to receive its Allocable Portion of the Distribution Fee payable in respect of the Class B Shares of a Fund upon the settlement of each sale of a "Commission Share" (as defined in the Allocation Schedule attached hereto as Schedule B) of the Fund taken into account in determining such Principal Distributor's Allocable Portion of such Distribution Fees. (c) Notwithstanding anything to the contrary set forth in this Exhibit, the Distributor's Contract or (to the extent waiver thereof is permitted thereby) applicable law, the Investment Companies' obligation to pay the Principal Distributor's Allocable Portion of the Distribution Fees payable in respect of the Class B Shares of a Fund shall not be terminated or modified for any reason (including a termination of this Distributor's Contract as it relates to Class B Shares of a Fund) except to the extent required by a change in the Investment Company Act of 1940 (the "Act") or the Conduct Rules of the National Association of Securities Dealers, Inc., in either case enacted or promulgated after May 1, 1997, or in connection with a "Complete Termination" (as hereinafter defined) of the Distribution Plan in respect of the Class B Shares of a Fund. (d) The Investment Companies will not take any action to waive or change any CDSC in respect of the Class B Shares of a Fund, except as provided in the Investment Companies' prospectus or statement of additional information as in effect as of the date hereof without the consent of the Principal Distributor and the permitted assigns of all or any portion of its right to its Allocable Portion of the CDSCs. (e) Notwithstanding anything to the contrary set forth in this Exhibit, the Distributor's Contract, or (to the extent waiver thereof is permitted thereby) applicable law, neither the termination of the Principal Distributor's role as principal distributor of the Class B Shares of a Fund, nor the termination of this Distributor's Contract nor the termination of the Distribution Plan will terminate such Principal Distributor's right to its Allocable Portion of the CDSCs in respect of the Class B Shares of a Fund. (f) Notwithstanding anything to the contrary in this Exhibit, the Distributor's Contract, or (to the extent waiver thereof is permitted thereby) applicable law, the Principal Distributor may assign, sell or pledge (collectively, a "Transfer") its rights to its Allocable Portion of the Distribution Fees and CDSCs earned by it (but not its obligations to the Investment Companies under this Distributor's Contract) in respect of the Class B Shares of a Fund to raise funds to make the expenditures related to the distribution of Class B Shares of the Fund and in connection therewith upon receipt of notice of such Transfer, the Investment Companies shall pay, or cause to be paid to the assignee, purchaser or pledgee (collectively with their subsequent transferees, "Transferees") such portion of the Principal Distributor's Allocable Portion of the Distribution Fees and CDSCs in respect of the Class B Shares of the Fund so Transferred. Except as provided in (c) above and notwithstanding anything to the contrary set forth elsewhere in this Exhibit, the Distributor's Contract, or (to the extent waiver thereof is permitted thereby) applicable law, to the extent the Principal Distributor has Transferred its rights thereto to raise funds as aforesaid, the Investment Companies' obligation to pay to the Principal Distributor's Transferees the Principal Distributor's Allocable Portion of the Distribution Fees payable in respect of the Class B Shares of each Fund shall be absolute and unconditional and shall not be subject to dispute, offset, counterclaim or any defense whatsoever, including without limitation, any of the foregoing based on the insolvency or bankruptcy of the Principal Distributor (it being understood that such provision is not a waiver of the Investment Companies' right to pursue such Principal Distributor and enforce such claims against the assets of such Principal Distributor other than the Distributor's right to the Distribution Fees, CDSCs and servicing fees, in respect of the Class B Shares of any Fund which have been so transferred in connection with such Transfer). The Fund agrees that each such Transferee is a third party beneficiary of the provisions of this clause (f) but only insofar as those provisions relate to Distribution Fees and CDSCs transferred to such Transferee. (g) For purposes of this Distributor's Contract, the term Allocable Portion of Distribution Fees payable in respect of the Class B Shares of any Fund shall mean the portion of such Distribution Fees allocated to such Principal Distributor in accordance with the Allocation Schedule attached hereto as Schedule B. (h) For purposes of this Distributor's Contract, the term "Complete Termination" of the Plan in respect of any Fund means a termination of the Plan involving the complete cessation of the payment of Distribution Fees in respect of all Class B Shares of such Fund, and the termination of the distribution plans and the complete cessation of the payment of distribution fees pursuant to every other Distribution Plan pursuant to rule 12b-1 of the Investment Companies in respect of such Fund and any successor Fund or any Fund acquiring a substantial portion of the assets of such Fund and for every future class of shares which has substantially similar characteristics to the Class B Shares of such Fund including the manner of payment and amount of sales charge, contingent deferred sales charge or other similar charges borne directly or indirectly by the holders of such shares. 3. The Principal Distributor may enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. The Principal Distributor, in its sole discretion, may pay Financial Institutions a lump sum fee on the settlement date for the sale of each Class B Share of the Fund to their clients or customers for distribution of such share. The schedules of fees to be paid such firms or Financial Institutions and the basis upon which such fees will be paid shall be determined from time to time by the Principal Distributor in its sole discretion. 4. The Principal Distributor will prepare reports to the Board of Trustees/Directors of the Investment Companies on a quarterly basis showing amounts expended hereunder including amounts paid to Financial Institutions and the purpose for such expenditures. In consideration of the mutual covenants set forth in the Distributor's Contract between the Investment Companies and the Principal Distributor, the Principal Distributor and the Investment Companies hereby execute and deliver this Exhibit with respect to the Class B Shares of the Fund. Witness the due execution hereof this 24th day of October, 1997. ATTEST: INVESTMENT COMPANIES (listed on Schedule A) By: /s/ S. Elliott Cohan By: /s/ John W. McGonigle Title: Assistant Secretary` Title: Executive Vice President ATTEST: FEDERATED SECURITIES CORP. By: /s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Schedule A to Exhibit 1 Liberty U.S. Government Money Market Trust - Class B Shares EX-99.SHSERVAGREEEX 6 Exhibit (h)(iii) under Form N-1A Exhibit 10 under Item 601/Reg. S-K PRINCIPAL SHAREHOLDER SERVICER'S AGREEMENT THIS AGREEMENT, is made as of the 24th day of October, 1997, by and between those Investment Companies on behalf of the Portfolios (individually referred to herein as a "Fund" and collectively as "Funds") and Classes of Shares ("Classes") listed on Schedule A to Exhibit 1, as may be amended from time to time, having their principal office and place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of Agreement and Federated Securities Corp. as the principal shareholder servicer (the "Principal Servicer"). Each of the Exhibits hereto is incorporated herein in its entirety and made a part hereof. In the event of any inconsistency between the terms of this Agreement and the terms of any applicable Exhibit, the terms of the applicable Exhibit shall govern. In consideration of the mutual covenants hereinafter contained it is hereby agreed by and between the parties hereto as follows. 1. The Investment Companies hereby appoint the Principal Servicer as their agent to select, negotiate and contract for the performance of and arrange for the rendition of personal services to shareholders and/or the maintenance of accounts of shareholders of each Class of the Funds as to which this Agreement is made applicable (The Principal Servicer's duties hereunder are referred to as "Services"). The Principal Servicer hereby accepts such appointment and agrees to perform or cause to be performed the Services in respect of the Classes of the Funds to which this Agreement has been made applicable by an Exhibit. The Principal Servicer agrees to cause to be provided shareholder services which, in its best judgment (subject to supervision and control of the Investment Companies' Boards of Trustees or Directors, as applicable), are necessary or desirable for shareholders of the Funds. The Principal Servicer further agrees to provide the Investment Companies, upon request, a written description of the shareholder services for which the Principal Servicer is arranging hereunder. 2. During the term of this Agreement, each Investment Company will pay the Principal Servicer and the Principal Servicer agrees to accept as full compensation for its services rendered hereunder a fee as set forth on the Exhibit applicable to the Class of each Fund subject to this Agreement. For the payment period in which this Agreement becomes effective or terminates with respect to any Class of a Fund, there shall be an appropriate proration of the monthly fee on the basis of the number of days that this Agreement is in effect with respect to such Class of the Fund during the month. 3. This Agreement is effective with respect to each Class of a Fund as of the date of execution of the applicable Exhibit and shall continue in effect for one year from the date of its execution, and thereafter for successive periods of one year only if the form of this Agreement is approved at least annually by the Board of each Investment Company, including a majority of the members of the Board of the Investment Company who are not interested persons of the Investment Company ("Independent Board Members") cast in person at a meeting called for that purpose. 4. Notwithstanding paragraph 3, this Agreement may be terminated with regard to a particular Class of a Fund as follows: (a) at any time, without the payment of any penalty, by the vote of a majority of the Independent Board Members of any Investment Company or by a vote of a majority of the outstanding voting securities of any Fund as defined in the Investment Company Act of 1940 on sixty (60) days' written notice to the parties to this Agreement; (b) automatically in the event of the Agreement's assignment as defined in the Investment Company Act of 1940; and 5. The Principal Servicer agrees to arrange to obtain any taxpayer identification number certification from each shareholder of the Funds to which it provides Services that is required under Section 3406 of the Internal Revenue Code, and any applicable Treasury regulations, and to provide each Fund or its designee with timely written notice of any failure to obtain such taxpayer identification number certification in order to enable the implementation of any required backup withholding. 6. The Principal Servicer shall not be liable for any error of judgment or mistake of law or for any loss suffered by any Investment Company in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. the Principal Servicer shall be entitled to rely on and may act upon advice of counsel (who may be counsel for such Investment Company) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Any person, even though also an officer, trustee, partner, employee or agent of the Principal Servicer, who may be or become a member of such Investment Company's Board, officer, employee or agent of any Fund, shall be deemed, when rendering services to such Fund or acting on any business of such Fund (other than services or business in connection with the duties of the Principal Servicer hereunder) to be rendering such services to or acting solely for such Fund and not as an officer, trustee, partner, employee or agent or one under the control or direction of the Principal Servicer even though paid by the Principal Servicer. This Section 6 shall survive termination of this Agreement. 7. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which an enforcement of the change, waiver, discharge or termination is sought. 8. The Principal Servicer is expressly put on notice of the limitation of liability as set forth in the Declaration of Trust of each Investment Company that is a Massachusetts business trust and agrees that the obligations assumed by each such Investment Company pursuant to this Agreement shall be limited in any case to such Investment Company and its assets and that the Principal Servicer shall not seek satisfaction of any such obligations from the shareholders of such Investment Company, the Trustees, Officers, Employees or Agents of such Investment Company, or any of them. 9. The execution and delivery of this Agreement have been authorized by the Directors of the Principal Servicer and signed by an authorized officer of the Principal Servicer, acting as such, and neither such authorization by such Directors nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, and the obligations of this Agreement are not binding upon any of the Directors or shareholders of the Principal Servicer, but bind only the property of the Principal Servicer as provided in the Articles of Incorporation of the Principal Servicer. 10. Notices of any kind to be given hereunder shall be in writing (including facsimile communication) and shall be duly given if delivered to any Investment Company at the following address: Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered to the Principal Servicer at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President. 11. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject hereof whether oral or written. If any provision of this Agreement shall be held or made invalid by a court or regulatory agency decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Pennsylvania law; provided, however, that nothing herein shall be construed in a manner inconsistent with the Investment Company Act of 1940 or any rule or regulation promulgated by the Securities and Exchange Commission thereunder. 12. This Agreement may be executed by different parties on separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. 13. This Agreement shall not be assigned by any party without the prior written consent of the Principal Servicer in the case of assignment by any Investment Company, or of the Investment Companies in the case of assignment by the Principal Servicer, except that any party may assign to a successor all of or a substantial portion of its business to a party controlling, controlled by, or under common control with such party. Nothing in this Section 13 shall prevent the Principal Servicer from delegating its responsibilities to another entity to the extent provided herein. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. Investment Companies (listed on Schedule A) Attest: /s/ S. Elliott Cohan By: /s/ John W. McGonigle Title: Assistant Secretary Title: Executive Vice President Federated Securities Corp. Attest:/s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Exhibit 1 to the Principal Shareholder Servicer's Agreement Related to Class B Shares of the Funds The following provisions are hereby incorporated and made part of the Principal Shareholder Servicer's Agreement (the "Principal Shareholder Servicer's Agreement") as of the 24th day of October, 1997, by and between those Investment Companies on behalf of the Portfolios (individually referred to herein as a "Fund" and collectively as "Funds") and Classes of Shares ("Classes") listed on Schedule A to Exhibit 1, as may be amended from time to time, having their principal office and place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of Agreement and Federated Securities Corp. as the principal shareholder servicer (the "Principal Servicer"). Each of the Exhibits hereto is incorporated herein in its entirety and made a part hereof. In the event of any inconsistency between the terms of this Exhibit and the terms of the Principal Shareholder Servicer's Agreement, the terms of this Exhibit shall govern. 1. Each Investment Company hereby appoints the Principal Servicer to arrange for the rendition of the shareholder services in respect of Class B Shares ("Class B Shares") of each Fund. Pursuant to this appointment, the Principal Servicer is authorized to select various companies including but not limited to Federated Shareholder Services ("Companies or a Company ") to provide such services. 2. (a) In consideration of the Principal Servicer's Services under this Agreement in respect of the Class B Shares each Fund agrees to pay the Principal Servicer or at its direction its "Allocable Portion" (as hereinafter defined) of a fee (the "Servicing Fee") equal to 0.25 of 1% per annum of the average daily net asset value of the Class B Shares of the Fund outstanding from time to time, provided however, that in the event the Fund operates as a -------- ------- fund of funds (a "FOF Fund") by investing the proceeds of the issuance of its Class B Shares in Class A Shares of another fund (the "Other Fund") and the Principal Shareholder Servicer receives a servicing fee in respect of the Class A Shares of the Other Fund so acquired by the FOF Fund, the Servicing Fee payable in respect of such Class B Shares of the FOF Fund will be reduced by the amount of the servicing fee actually received by the Principal Shareholder Servicer or its assign from the Other Fund in respect of the Class A Shares of the Other Fund acquired with the proceeds of such Class B Shares of the FOF Fund. (b) (i) The Principal Servicer will be deemed to have fully earned its Allocable Portion (computed as of any date) of the Servicing Fee payable in respect of the Class B Shares of a Fund (and to have satisfied its obligation to arrange for shareholder services in respect of such Class B Shares) on the date it has arranged for shareholder services to be performed by Federated Shareholder Services by payment of the lump sum contemplated by Alternative A to Exhibit 1 to the Shareholder Services Agreement among the Principal Servicer, Federated Shareholder Services and the Fund dated as of the date hereof (the "Shareholder Services Agreement") to Federated Shareholder Services (whose obligations are fully supported by its parent company) in respect of each "Commission Share" (as defined in the Allocation Schedule attached hereto in Schedule B) of the Fund, taken into account in determining such Principal Servicer's Allocable Portion of such Servicing Fees as of such date. The Principal Servicer shall not be deemed to have any other duties in respect of the Shares and its Allocable Portion of the Servicing Fees to which the preceding sentence applies and such arrangements shall be deemed a separate and distinct contractual arrangement from that described in clause (ii). (ii) The Principal Servicer will be deemed to have fully earned any Servicing Fees not included in its Allocable Portion (i.e., those attributable to Shares in respect of which Alternative A under Exhibit 1 to the Shareholder Services Agreement is not applicable) as such services are performed in respect of such Shares. (c) Notwithstanding anything to the contrary set forth in this Exhibit, the Principal Shareholder Agreement, or (to the extent waiver thereof is permitted thereby) applicable law, each Investment Company's obligation to pay the Principal Servicer's Allocable Portion of the Servicing Fees payable in respect of the Class B Shares of a Fund shall not be terminated or modified for any reason (including a termination of this Principal Shareholder Servicer's Agreement as it relates to the Fund) except to the extent required by a change in the Investment Company Act of 1940 (the "Act") or the Conduct Rules of the National Association of Securities Dealers, Inc., in either case enacted or promulgated after May 1, 1997, or in connection with a "Complete Termination" (as hereinafter defined) in respect of the Class B Shares of such Fund. (d) Notwithstanding anything to the contrary in this Exhibit, the Principal Shareholder Agreement, or (to the extent waiver thereof is permitted thereby) applicable law, the Principal Servicer may assign, sell or pledge (collectively, "Transfer") its rights to its Allocable Portion of the Servicing Fees (but not its obligations to the Investment Companies under this Principal Shareholder Servicer's Agreement) in respect of the Class B Shares of a Fund to raise funds to make the expenditures related to the Services and in connection therewith upon receipt of notice of such Transfer, the Investment Company shall pay to the assignee, purchaser or pledgee (collectively with their subsequent transferees, "Transferees") such portion of the Principal Servicer's Allocable Portion of the Servicing Fees in respect of the Class B Shares of the Fund so Transferred. Except as provided in (c) above and notwithstanding anything to the contrary set forth elsewhere in this Exhibit, the Principal Shareholder Agreement, or (to the extent waiver thereof is permitted thereby) applicable law, to the extent the Principal Servicer has Transferred its rights thereto to raise funds as aforesaid, the Investment Companies' obligation to pay to the Principal Servicer's Transferees the Principal Servicer's Allocable Portion of the Servicing Fees payable in respect of the Class B Shares of each Fund shall be absolute and unconditional and shall not be subject to dispute, offset, counterclaim or any defense whatsoever, including without limitation, any of the foregoing based on the insolvency or bankruptcy of the Principal Servicer, Federated Shareholder Services (or its parent) or the failure of Federated Shareholder Services (or its parent) to perform its Irrevocable Service Commitment (it being understood that such provision is not a waiver of the Investment Companies' right to pursue such Principal Servicer and enforce such claims against the assets of such Principal Servicer other than the Principal Servicer's right to the Distribution Fees, Servicing Fees and CDSCs in respect of the Class B Shares of the Fund which have been so transferred in connection with such Transfer). The Fund agrees that each such Transferee is a third party beneficiary of the provisions of this clause (d) but only insofar as those provisions relate to Servicing Fees transferred to such Transferee. (e) For purposes of this Principal Shareholder Servicer's Agreement, the term Allocable Portion of Servicing Fees payable in respect of the Class B Shares of any Fund shall mean the portion of such Servicing Fees allocated to such Principal Servicer in accordance with the Allocation Schedule attached hereto as Schedule B. (f) For purposes of this Principal Shareholder Servicer's Contract, the term "Complete Termination" of shareholder servicing arrangements in respect of Class B Shares of a Fund means a termination of shareholder servicing arrangements involving the complete cessation of payments of Servicing Fees in respect of all Class B Shares, and the complete cessation of payments of servicing fees for every existing and future class of shares of the Fund and any successor Fund or any Fund acquiring a substantial portion of the assets of the Fund ,which has substantially similar characteristics to the Class B Shares taking into account the manner and amount of sales charge, servicing fee, contingent deferred sales charge or other similar charge borne directly or indirectly by the holders of such shares. 3. The Principal Servicer may enter into separate written agreements with Companies to provide the services set forth in Paragraph 1 herein. The schedules of fees to be paid such Companies and the basis upon which such fees will be paid shall be determined from time to time by the Principal Servicer in its sole discretion. 4. The Principal Servicer will prepare reports to the Board of Trustees/Directors of the Investment Companies on a quarterly basis showing amounts expended hereunder including amounts paid to Companies and the purpose for such expenditures. In consideration of the mutual covenants set forth in the Principal Shareholder Servicer's Contract, the Principal Servicer and the Investment Companies hereby execute and deliver this Exhibit with respect to the Class B Shares of each Fund. Witness the due execution hereof this 24th day of October, 1997. ATTEST: INVESTMENT COMPANIES (listed on Schedule A) By: /s/ S. Elliott Cohan By: /s/ John W. McGonigle Title: Assistant Secretary Title: Executive Vice President ATTEST: FEDERATED SECURITIES CORP. By: /s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Schedule A to Exhibit 1 Liberty U.S. Government Money Market Trust - Class B Shares EX-99.SHSERVAGREEEX 7 Exhibit (h)(iv) under Form N-1A Exhibit 10 under Item 601/Reg. S-K SHAREHOLDER SERVICES AGREEMENT THIS AGREEMENT, is made as of the 24th day of October, 1997, by and between those Investment Companies on behalf of the Portfolios (individually referred to herein as a "Fund" and collectively as "Funds") and Classes of Shares ("Classes") listed on Schedule A to Exhibit 1, as it may be amended from time to time, having their principal office and place of business at Federated Investors Tower, Pittsburgh, PA 15222-3779 and who have approved this form of Agreement and Federated Securities Corp.("FSC"), a Pennsylvania Corporation, having its principal office and place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 and Federated Shareholder Services, a Delaware business trust, having its principal office and place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS"). Each of the Exhibits hereto is incorporated herein in its entirety and made a part hereof. In the event of any inconsistency between the terms of this Agreement and the terms of any applicable Exhibit, the terms of the applicable Exhibit shall govern. 1. FSC as Principal Servicer (Principal Servicer") hereby contracts with FSS to render or cause to be rendered personal services to shareholders and/or the maintenance of accounts of shareholders of each Class of the Funds to which this Agreement is made applicable by an Exhibit hereto ("Services"). In addition to providing Services directly to shareholders of the Funds, FSS is hereby appointed the Investment Companies' agent to select, negotiate and subcontract for the performance of Services. FSS hereby accepts such appointment. FSS agrees to provide or cause to be provided Services which, in its best judgment (subject to supervision and control of the Investment Companies' Boards of Trustees or Directors, as applicable), are necessary or desirable for shareholders of the Funds. FSS further agrees to provide the Investment Companies, upon request, a written description of the Services which FSS is providing hereunder. The Investment Companies, on behalf of the Funds and each Class subject hereto consents to the appointment of FSS to act in its capacity as described herein and agrees to look solely to FSS for performance of the Services. 2. The term of the undertaking of FSS to render services hereunder in respect of any Class of any Fund and the manner and amount of compensation to be paid in respect thereof shall be specified in respect of each Class of the Funds to which this Agreement is made applicable by an Exhibit hereto. FSS agrees to look solely to the Principal Servicer for its compensation hereunder. 3. This Agreement shall become effective in respect of any Class of Shares of a Fund upon execution of an Exhibit relating to such Class of the Fund. Once effective in respect of any Class of shares, this Agreement shall continue in effect for one year from the date of its execution, and thereafter for successive periods of one year only if the form of this Agreement is approved at least annually by the Board of each Investment Company, including a majority of the members of the Board of the Investment Company who are not interested persons of the Investment Company ("Independent Board Members") cast in person at a meeting called for that purpose. 4. Notwithstanding paragraph 3, this Agreement may be terminated as follows: (a) By any Investment Company as to any Fund at any time, without the payment of any penalty, by the vote of a majority of the Independent Board Members of any Investment Company or by a vote of a majority of the outstanding voting securities of any Fund as defined in the Investment Company Act of 1940 on sixty (60) days' written notice to the parties to this Agreement; (b) automatically in the event of the Agreement's assignment as defined in the Investment Company Act of 1940; and 5. FSS agrees to obtain any taxpayer identification number certification from each shareholder of the Funds to which it provides Services that is required under Section 3406 of the Internal Revenue Code, and any applicable Treasury regulations, and to provide each Investment Company or its designee with timely written notice of any failure to obtain such taxpayer identification number certification in order to enable the implementation of any required backup withholding. 6. FSS shall not be liable for any error of judgment or mistake of law or for any loss suffered by any Investment Company in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. FSS shall be entitled to rely on and may act upon advice of counsel (who may be counsel for such Investment Company) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Any person, even though also an officer, trustee, partner, employee or agent of FSS, who may be or become a member of such Investment Company's Board, officer, employee or agent of any Investment Company, shall be deemed, when rendering services to such Investment Company or acting on any business of such Investment Company (other than services or business in connection with the duties of FSS hereunder) to be rendering such services to or acting solely for such Investment Company and not as an officer, trustee, partner, employee or agent or one under the control or direction of FSS even though paid by FSS. This Section 6 shall survive termination of this Agreement. 7. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which an enforcement of the change, waiver, discharge or termination is sought. 8. FSS is expressly put on notice of the limitation of liability as set forth in the Declaration of Trust of each Investment Company that is a Massachusetts business trust and agrees that the obligations assumed by each such Investment Company pursuant to this Agreement shall be limited in any case to such Investment Company and its assets and that FSS shall not seek satisfaction of any such obligations from the shareholders of such Investment Company, the Trustees, Officers, Employees or Agents of such Investment Company, or any of them. 9. The execution and delivery of this Agreement have been authorized by the Trustees of FSS and signed by an authorized officer of FSS, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of FSS, but bind only the trust property of FSS as provided in the Declaration of Trust of FSS. 10. Notices of any kind to be given hereunder shall be in writing (including facsimile communication) and shall be duly given if delivered to any Investment Company at the following address: Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered to FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President. 11. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject hereof whether oral or written. If any provision of this Agreement shall be held or made invalid by a court or regulatory agency decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Pennsylvania law; provided, however, that nothing herein shall be construed in a manner inconsistent with the Investment Company Act of 1940 or any rule or regulation promulgated by the Securities and Exchange Commission thereunder. 12. This Agreement may be executed by different parties on separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. 13. This Agreement shall not be assigned by any party without the prior written consent of the parties hereto. Nothing in this Section 13 shall prevent FSS from delegating its responsibilities to another entity to the extent provided herein. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. Investment Companies (listed on Schedule A) Attest: /s/ S. Elliott Cohan By: /s/ John W. McGonigle Title: Assistant Secretary Title: Executive Vice President Federated Shareholder Services Attest:/s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Federated Securities Corp. Attest: /s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President EXHIBIT 1 TO SHAREHOLDER SERVICES AGREEMENT FOR CLASS B SHARES OF THE INVESTMENT COMPANIES 1. The Shareholder Services Agreement for Shares of the Investment Companies on behalf of the portfolios (individually referred to as a "Fund" and collectively as "Funds") and the classes of shares ("Classes") listed on the attached Schedule A dated October 24, 1997 among Federated Securities Corp. ("Principal Servicer"), Federated Shareholder Services ("Class Servicer") and the Investment Companies is hereby made applicable on the terms set forth herein to the Class B Shares of the above-referenced Funds. In the event of any inconsistency between the terms of this Exhibit and the Shareholder Services Agreement, the terms of this Exhibit shall govern. 2. In connection with the Services to be rendered to holders of Class B Shares of each Fund, the Principal Servicer and Class Servicer agree that the Principal Servicer shall retain and compensate the Class Servicer for its Services in respect of the Class B Shares of the Fund on one of the following alternative basis as the Principal Servicer shall elect: ALTERNATIVE A3: The Principal Servicer shall pay the Class Servicer a dollar amount as set forth on Schedule A per Class B Commission Share (as defined in the Principal Shareholder Servicer's Agreement) of the Fund. Class Servicer agrees that upon receipt of such payment (which shall be deemed to be full and adequate consideration for an irrevocable service commitment (the "Irrevocable Service Commitment") of Class Servicer hereunder), Class Servicer shall be unconditionally bound and obligated to either: (1) provide the Services in respect of such Commission Share and all other Shares derived therefrom via reinvestment of dividends, free exchanges or otherwise for so long as the same is outstanding or (2) in the event the Class Servicer for the Class B Shares is terminated by the Investment Company, to arrange for a replacement Class Servicer satisfactory to the Investment Company to perform such services, at no additional cost to the Fund. ALTERNATIVE B4: If Alternative A is not elected, the Principal Servicer shall pay the Class Servicer twenty five basis points (0.25%) per annum on the average daily net asset value of each Class B Share of the Fund monthly in arrears. The Class Servicer agrees that such payment is full and adequate consideration for the Services to be rendered by it to the holder of such Class B Share. 3. In the event pursuant to paragraph 2 above, Alternative A has been elected and the Class Servicer is terminated as Class Servicer for the Class B Shares of the Fund, the Class Servicer agrees to pay to any successor Class Servicer for the Class B Shares of the Fund any portion of the excess, if any, of (A) the Servicing Fees received by it hereunder in respect of Class B Shares of the Fund plus interest thereon at the percent as set forth on Schedule A per annum minus (B) the costs it incurred hereunder in respect of the Class B Shares of the Fund prior to such termination. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. Attest: FEDERATED SECURITIES CORP. By: /s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Attest: FEDERATED SHAREHOLDER SERVICES By:/s/ Leslie K. Platt By: /s/ Byron F. Bowman Title: Assistant Secretary Title: Vice President Attest: INVESTMENT COMPANIES (listed on Schedule A) By: /s/ S. Elliott Cohan By: /s/ John W. McGonigle Title: Assistant Secretary Title: Executive Vice President Schedule A to Exhibit 1 Liberty U.S. Government Money Market Trust - Class B Shares EX-99.AUDITCONSENT 8 Exhibit (j)(i) under N-1A Exhibit 23 under Item 601/Reg. S-K ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use in Post-Effective Amendment No. 36 to Form N-1A Registration Statement of Money Market Obligations Trust of our report dated September 28, 1999, on the financial statements as of July 31, 1999, of Treasury Obligations Fund, Government Obligations Fund, Government Obligations Tax-Managed Fund, Prime Obligations Fund and Tax-Free Obligations Fund included in or made part of this registration statement. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts October 28, 1999 EX-99.AUDITCONSENT 9 Exhibit (j)(ii) under N-1A Exhibit 23 under Item 601/Reg. S-K Consent of Ernst & Young LLP, Independent Auditors We consent to the references to our firm under the captions "Financial Highlights" in the Prospectuses and "Independent Auditors" in the Statements of Additional Information and to the incorporation by reference of our reports dated September 17, 1999 on the Municipal Obligations Fund, Prime Cash Obligations Fund and Prime Value Obligations Fund in Post-Effective Amendment Number 36 to the Registration Statement (Form N-1A No. 33-31602) of the Money Market Obligations Trust dated October 31, 1999. /s/ Ernst & Young LLP Ernst & Young Boston, Massachusetts October 28, 1999 EX-99.POWERATTY 10 Exhibit (o)(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/John F. Donahue Chairman and Trustee October 4, 1999 - ------------------------------------------------- John F. Donahue (Chief Executive Officer) /s/J. Christopher Donahue President October 4, 1999 J. Christopher Donahue /s/Richard J. Thomas Treasurer October 4, 1999 - ------------------------------------------------- Richard J. Thomas (Principal Financial and Accounting Officer) /s/Thomas G. Bigley Trustee October 4, 1999 Thomas G. Bigley /s/John T. Conroy, Jr. Trustee October 4, 1999 - ------------------------------------------------- John T. Conroy, Jr. SIGNATURES TITLE DATE /s/William J. Copeland Trustee* October 4, 1999 William J. Copeland /s/James E. Dowd Trustee** October 4, 1999 James E. Dowd /s/Lawrece D. Ellis, M.D. Trustee October 4, 1999 Lawrence D. Ellis, M.D. /s/Edward L. Flaherty, Jr. Trustee** October 4, 1999 - ------------------------------------------------- Edward L. Flaherty, Jr. /s/Peter E. Madden Trustee October 4, 1999 Peter E. Madden /s/John E. Murray, Jr. Trustee October 4, 1999 - ------------------------------------------------- John E. Murray, Jr. /s/Wesley W. Posvar Trustee** October 4, 1999 Wesley W. Posvar /s/Marjorie P. Smuts Trustee October 4, 1999 Marjorie P. Smuts *Resigned April 2, 1999 **Resigned January 2, 1999
Sworn to and subscribed before me this 13th day of October, 1999 /s/Madaline P. Kelly Notarial Seal Madaline P. Kelly, Notary Public Baldwin Boro, Allegheny County My Commission Expires Feb. 22, 2000 Member, Pennsylvania Association of Notaries EX-99.POWERATTY 11 Exhibit (o)(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/William D. Dawson, III Chief Investment Officer October 4, 1999 - ---------------------------- William D. Dawson, III Sworn to and subscribed before me this 13th day of October, 1999 /s/Madaline P. Kelly Notarial Seal Madaline P. Kelly, Notary Public Baldwin Boro, Allegheny County My Commission Expires Feb. 22, 2000 Member, Pennsylvania Association of Notaries EX-99.POWERATTY 12 Exhibit (o)(iv) 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 October 4, 1999 John F. Cunningham Sworn to and subscribed before me this 13th day of October, 1999 /s/Madaline P. Kelly Notarial Seal Madaline P. Kelly, Notary Public Baldwin Boro, Allegheny County My Commission Expires Feb. 22, 2000 Member, Pennsylvania Association of Notaries EX-99.POWERATTY 13 Exhibit (o)(v) 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 October 4, 1999 - ------------------------------ Charles F. Mansfield, Jr. Sworn to and subscribed before me this 13th day of October, 1999 /s/Madaline P. Kelly Notarial Seal Madaline P. Kelly, Notary Public Baldwin Boro, Allegheny County My Commission Expires Feb. 22, 2000 Member, Pennsylvania Association of Notaries EX-99.POWERATTY 14 Exhibit (o)(vi) 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 October 4, 1999 John S. Walsh Sworn to and subscribed before me this 13th day of October, 1999 /s/Madaline P. Kelly Notarial Seal Madaline P. Kelly, Notary Public Baldwin Boro, Allegheny County My Commission Expires Feb. 22, 2000 Member, Pennsylvania Association of Notaries -----END PRIVACY-ENHANCED MESSAGE-----