Money Market Funds - COUNTRY Financial

securities at August 31, 2008. Illiquid securities aredisclosed within the funds’ schedule of investments.SECURITY TRANSACTIONS AND INVESTMENT INCOME – Forfinancial statement purposes, the funds record securitytransactions on the trade date of the security purchase orsale. Interest income, including amortization of bondpremium and discount, is recorded on an accrual basis.DISTRIBUTIONS TO SHAREHOLDERS – Distributions from netinvestment income are declared daily and are payable incash or reinvested in additional shares of the fund at netasset value on the first business day of the following month.FEDERAL TAXES – Each fund is treated as a separate taxableentity. Each fund intends to continue to qualify as aregulated investment company as provided in SubchapterM of the Internal Revenue Code, as amended, and todistribute all taxable income, if any, to its shareholders.Accordingly, no provision for federal income taxes isrequired.Financial Accounting Standards Board (“FASB”)Interpretation No. 48 “Accounting for Uncertainty inIncome Taxes” (“FIN 48”). FIN 48 provides guidance forhow uncertain tax positions should be recognized,measured, presented, and disclosed in the financialstatements. FIN 48 requires the evaluation of tax positionstaken or expected to be taken in the course of preparingthe funds’ tax returns to determine whether the taxpositions are “more-likely-than-not” of being sustained bythe applicable tax authority. Tax positions not deemed tomeet the “more-likely-than-not” threshold would berecorded as a tax benefit or expense in the current year. Asof August 31, 2008 the funds did not have any taxpositions that did not meet the “more-likely-than-not”threshold of being sustained by the applicable taxauthority. Generally, tax authorities can examine all taxreturns filed for the last three years.Net investment income and net realized gains (losses) maydiffer for financial statement and tax purposes because oftemporary or permanent book-to-tax differences. To theextent these differences are permanent, reclassifications aremade to the appropriate equity accounts in the period inwhich the differences arise.On the Statements of Assets and Liabilities, the followingreclassifications were made:FundAccumulatedNet RealizedGainAccumulatedPaid InCapitalTreasury Obligations Fund $62 $(62)The character of distributions made during the year from net investment income or net realized gains may differ from itsultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscalperiod in which the amounts are distributed may differ from the period that the income or realized gains (losses) wererecorded by the fund. The distributions paid during the fiscal years ended August 31, 2008 and August 31, 2007 (adjusted bydividends payable as of August 31, 2008 and August 31, 2007) were as follows:FundOrdinaryIncomeTax-ExemptIncomeAugust 31, 2008Government Obligations Fund $298,693 $ — $ — $298,693Prime Obligations Fund 774,795 — — 774,795Tax Free Obligations Fund — 56,253 — 56,253Treasury Obligations Fund 535,866 — — 535,866U.S. Treasury Money Market Fund 24,814 — — 24,814FundOrdinaryIncomeTax-ExemptIncomeAugust 31, 2007Government Obligations Fund $283,469 $ — $ — $283,469Prime Obligations Fund 890,465 — — 890,465Tax Free Obligations Fund 90 67,750 — 67,840Treasury Obligations Fund 820,049 — — 820,049U.S. Treasury Money Market Fund 37,570 — — 37,570CapitalGainCapitalGainTotalTotalFIRST AMERICAN FUNDS 2008 Annual Report 39