TRUST
FOR
U.S.
TREASURY
OBLIGATIONS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MARCH 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8042508 (5/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Trust for
U.S. Treasury Obligations (the "Trust"), which covers the six-month period
ended March 31, 1994. The report begins with the portfolio manager's Investment
Review and follows with the Portfolio of Investments and Financial Statements.
The Trust delivers a high-quality investment approach to daily income along
with the additional advantages of daily liquidity and stability of principal*,
all through a portfolio of short-term U.S. Treasury obligations. During the
reporting period, the portfolio consisted primarily of repurchase agreements
collateralized by U.S. Treasury obligations due to the yield advantage of these
securities.
At the end of the period, the Trust's net assets stood at $4.5 billion.
Dividends paid to shareholders during the period totaled $61 million, or $0.01
per share.
Thank you for your participation in Trust for U.S. Treasury Obligations. We
welcome your comments and suggestions.
Sincerely,
[LOGO]
Glen R. Johnson
President
May 16, 1994
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Trust has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Trust for U.S. Treasury Obligations is invested in direct obligations of the
U.S. Treasury, either in the form of notes and bills or as collateral for
repurchase agreements. The Trust is rated AAAm by Standard & Poor's Corporation
and Aaa by Moody's Investors Service, Inc.*
The semi-annual reporting period saw the first changes in monetary policy by
the Federal Reserve (the "Fed") since September 1992. The rate on the three-
month Treasury bill rose from just under 3% at the end of September 1993 to
3.2% at the end of November, and then fell to just under 3% again by the end of
January 1994, with movements driven largely by market sentiment. The rate then
rose to close to 3.6% by the end of March. A yield advantage continued to exist
for investments in repurchase agreements versus direct investments in short-
term Treasury securities. The barbell structure of the Trust was maintained
over the period, combining a significant position in overnight repurchase
agreements with Treasury securities with longer maturities of six to twelve
months.
The Fed began what is anticipated to be a series of gradual tightenings in
early February, by moving the Fed funds target rate from 3% to 3.25%. Fed
officials indicated an uneasiness with what they perceived to be the
"accomodative" nature of the current monetary policy stance, and expressed
their desire to move toward a more "neutral" policy. The Fed followed with
another tightening in late March, moving the target rate from 3.25% to 3.50%.
The actions by the Fed were viewed as being preemptive strikes against the
forces of inflation. Short rates anticipated the tightening moves by the Fed,
and currently reflect the expectations of additional policy moves in the near
future.
Over the reporting period, the Trust's average maturity has drifted shorter in
response to the uncertain Fed outlook, in order to increase the Trust's
responsiveness to changes in short-term interest rates and to be able to take
advantage of opportunities presented by higher interest rates. Recently, the
Trust has been managed with an average maturity of 30-40 days, reflecting the
expectations of additional tightenings by the Fed. The Trust maximizes
performance through ongoing relative value analysis of the yield curve relative
to U.S. Treasury obligations and repurchase agreements collateralized by those
obligations. However, changing economic and market developments are
continuously monitored to best serve our clients attracted to the short-term
U.S. Treasury market.
* Ratings are subject to change.
TRUST FOR U.S. TREASURY OBLIGATIONS
PORTFOLIO OF INVESTMENTS
MARCH 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ----------------------------------------------- --------------
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--31.9%
------------------------------------------------------------
$487,750,000 *U.S. Treasury Bills, 3.125%-4.29%, 4/7/94-
4/6/95 $ 503,120,042
-----------------------------------------------
912,300,000 U.S. Treasury Notes, 4.25%-11.625%, 4/15/94- 922,528,675
1/15/95 --------------
-----------------------------------------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,425,648,717
----------------------------------------------- --------------
**REPURCHASE AGREEMENTS--68.3%
------------------------------------------------------------
8,000,000 BT Securities, Inc., 3.50%, dated 3/31/94, due
4/1/94 8,000,000
-----------------------------------------------
50,000,000 Aubrey G. Lanston & Co., Inc., 3.55%, dated
3/31/94, due 4/4/94 50,000,000
-----------------------------------------------
209,400,000 BZW Securities, Inc., 3.57%, dated 3/31/94, due
4/4/94 209,400,000
-----------------------------------------------
150,000,000 BT Securities, Inc., 3.55%, dated 3/31/94, due
4/4/94 150,000,000
-----------------------------------------------
175,000,000 BT Securities, Inc., 3.55%, dated 3/31/94, due
4/4/94 175,000,000
-----------------------------------------------
155,000,000 BT Securities, Inc., 3.60%, dated 3/31/94, due
4/4/94 155,000,000
-----------------------------------------------
100,000,000 Sanwa-BGK Securities, Inc., 3.55%, dated
3/31/94, due 4/4/94 100,000,000
-----------------------------------------------
175,000,000 Daiwa Securities America, Inc., 3.60%, dated
3/31/94, due 4/4/94 175,000,000
-----------------------------------------------
50,000,000 Deutsche Bank Government Securities, Inc.,
3.55%, dated 3/31/94,
due 4/4/94 50,000,000
-----------------------------------------------
175,000,000 Donaldson, Lufkin & Jenrette Securities Corp.,
3.60%, dated 3/31/94, due 4/4/94 175,000,000
-----------------------------------------------
130,000,000 Fuji Government Securities, Inc., 3.55%, dated
3/31/94, due 4/4/94 130,000,000
-----------------------------------------------
208,730,000 Goldman Sachs & Co., 3.55%, dated 3/31/94, due
4/4/94 208,730,000
-----------------------------------------------
50,000,000 Harris Trust & Savings Bank, Chicago, 3.55%,
dated 3/31/94,
due 4/4/94 50,000,000
-----------------------------------------------
145,000,000 Kidder, Peabody & Co., Inc., 3.58%, dated
3/31/94, due 4/4/94 145,000,000
-----------------------------------------------
81,200,000 J.P. Morgan Securities, Inc., 3.59%, dated
3/31/94, due, 4/4/94 81,200,000
-----------------------------------------------
75,000,000 Morgan Stanley & Co., Inc., 3.45%, dated
3/31/94, due 4/4/94 75,000,000
-----------------------------------------------
210,000,000 Nations Bank of North Carolina, 3.625%, dated
3/31/94, due 4/4/94 210,000,000
-----------------------------------------------
100,000,000 Nikko Securities Co. International Inc., 3.55%,
dated 3/31/94,
due 4/4/94 100,000,000
-----------------------------------------------
$100,000,000 Nikko Securities Co. International Inc., 3.55%,
dated 3/31/94,
due 4/4/94 $ 100,000,000
-----------------------------------------------
125,000,000 Prudential Securities, Inc., 3.55%, dated
3/31/94, due 4/4/94 125,000,000
-----------------------------------------------
100,000,000 UBS Securities, Inc., 3.50%, dated 3/31/94, due
4/4/94 100,000,000
-----------------------------------------------
169,000,000 UBS Securities, Inc., 3.60%, dated 3/31/94, due
4/4/94 169,000,000
-----------------------------------------------
30,000,000 ***J.P. Morgan Securities, Inc., 3.18%, dated
1/10/94, due 4/11/94 30,000,000
-----------------------------------------------
91,000,000 ***Kidder, Peabody & Co., Inc., 3.62%, dated
3/24/94, due 4/25/94 91,000,000
-----------------------------------------------
54,000,000 ***Kidder, Peabody & Co., Inc., 3.60%, dated
3/17/94, due 4/29/94 54,000,000
-----------------------------------------------
91,000,000 ***Morgan Stanley & Co., Inc., 3.65%, dated
3/30/94, due 5/27/94 91,000,000
-----------------------------------------------
40,000,000 ***Morgan Stanley & Co., Inc., 3.65%, dated 40,000,000
3/30/94, due 5/31/94 --------------
-----------------------------------------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 3,047,330,000
----------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $4,472,978,717+
----------------------------------------------- --------------
</TABLE>
* Each issue shows the rate of discount at time of purchase.
** Repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in
joint accounts with other Federated Funds.
*** Although final maturity falls at or beyond seven days, a liquidity feature
is included in each transaction to permit the termination of the
repurchase agreement.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($4,464,379,275) at March 31, 1994.
(See Notes which are an integral part of the financial statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
- -----------------------------------------------------------
Investments in repurchase agreements (Note
2B) $3,047,330,000
- -------------------------------------------
Investments in other securities 1,425,648,717
- ------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A) $4,472,978,717
- -----------------------------------------------------------
Cash 5,323,766
- -----------------------------------------------------------
Receivable for Trust shares sold 21,573,842
- -----------------------------------------------------------
Interest receivable 21,168,928
- -----------------------------------------------------------
Receivable from Adviser (Note 4) 423,165
- ----------------------------------------------------------- ------------------
Total assets 4,521,468,418
- -----------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------
Payable for Trust shares redeemed 27,933,335
- -------------------------------------------
Payable for investments purchased 19,132,467
- -------------------------------------------
Dividends payable 9,774,244
- -------------------------------------------
Miscellaneous liabilities 249,097
- ------------------------------------------- ---------------
Total liabilities 57,089,143
- ----------------------------------------------------------- --------------
NET ASSETS for 4,464,379,275 shares of beneficial interest
outstanding $4,464,379,275
- ----------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per
Share
($4,464,379,275 / 4,464,379,275 shares of beneficial $1.00
interest outstanding) --------------
- -----------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the financial statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------
Interest income (Note 2C) $70,888,581
- ----------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------
Investment advisory fee (Note 4) $ 8,733,379
- ---------------------------------------------------
Trustees' fees 12,592
- ---------------------------------------------------
Administrative personnel and services (Note 4) 780,429
- ---------------------------------------------------
Custodian and recordkeeping fees and expenses 196,895
- ---------------------------------------------------
Transfer and dividend disbursing agent fees and ex-
penses (Note 4) 38,525
- ---------------------------------------------------
Trust share registration costs 11,198
- ---------------------------------------------------
Auditing fees 8,905
- ---------------------------------------------------
Legal fees 171,500
- ---------------------------------------------------
Taxes 43,012
- ---------------------------------------------------
Printing and postage 5,450
- ---------------------------------------------------
Insurance premiums 38,540
- ---------------------------------------------------
Shareholder service fee (Note 4) 187,444
- ---------------------------------------------------
Miscellaneous 40,093
- --------------------------------------------------- -----------
Total expenses 10,267,962
- ---------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 390,000
- --------------------------------------------------- -----------
Net expenses 9,877,962
- ---------------------------------------------------------------- -----------
Net investment income $61,010,619
- ---------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the financial statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
1994* 1993
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------
OPERATIONS--
- ------------------------------------------
Net investment income $ 61,010,619 $ 135,311,781
- ------------------------------------------ ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ------------------------------------------
Dividends to shareholders from net invest-
ment income (61,010,619) (135,311,781)
- ------------------------------------------ ---------------- ----------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ------------------------------------------
Net proceeds from sales of shares 10,021,470,972 21,734,680,959
- ------------------------------------------
Net asset value of shares issued to share-
holders in
payment of dividends declared 7,181,911 16,577,158
- ------------------------------------------
Cost of shares redeemed (10,253,930,847) (22,332,859,766)
- ------------------------------------------ ---------------- ----------------
Change in net assets from Trust share
transactions (225,277,964) (581,601,649)
- ------------------------------------------ ---------------- ----------------
Change in net assets (225,277,964) (581,601,649)
- ------------------------------------------
NET ASSETS--
- ------------------------------------------
Beginning of period 4,689,657,239 5,271,258,888
- ------------------------------------------ ---------------- ----------------
End of period $ 4,464,379,275 $ 4,689,657,239
- ------------------------------------------ ---------------- ----------------
</TABLE>
*Six months ended March 31, 1994 (unaudited).
(See Notes which are an integral part of the financial statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------------------------
1994* 1993 1992 1991 1990 1989 1988 1987 1986 1985
- ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
- ----------------------
INCOME FROM
INVESTMENT
OPERATIONS
- ----------------------
Net investment
income 0.01 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.07 0.08
- ---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ----------------------
Dividends to
shareholders from
net investment
income (0.01) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.07) (0.08)
- ---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN** 1.40% 2.84% 4.00% 6.49% 8.18% 8.89% 6.83% 5.89% 6.89% 8.57%
- ----------------------
RATIOS TO AVERAGE
NET ASSETS
- ----------------------
Expenses 0.45%(a) 0.45% 0.45% 0.46% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
- ----------------------
Net investment
income 2.79%(a) 2.80% 3.95% 6.33% 7.89% 8.56% 6.61% 5.74% 6.63% 8.22%
- ----------------------
SUPPLEMENTAL DATA
- ----------------------
Net assets, end of
period (000 omitted)
- -------------------- $4,464,379 $4,689,657 $5,271,259 $5,744,351 $5,997,327 $5,747,794 $4,766,221 $4,846,175 $4,780,610 $3,237,598
</TABLE>
* For the six months ended March 31, 1994 (unaudited).
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a)Computed on an annualized basis.
(See Notes which are an integral part of the financial statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994 (UNAUDITED)
- -------------------------------------------------------------------------------
(1) ORGANIZATION
Trust for U.S. Treasury Obligations (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end,
management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP").
A. INVESTMENT VALUATIONS--The Trust's use of the amortized cost method to
value its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of
each repurchase agreement's underlying securities to ensure the existence
of a proper level of collateral.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees of the Trust (the "Trustees").
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and distribute to
shareholders each year all of its taxable income. Accordingly, no
provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked
to market daily and begin earning interest on the settlement date.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At March
31, 1994 capital paid-in aggregated $4,464,379,275. Transactions in Trust
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1994* 1993
- ------------------------------------------- --------------- ---------------
<S> <C> <C>
Shares outstanding, beginning of period 4,689,657,239 5,271,258,888
- -------------------------------------------
Shares sold 10,021,470,972 21,734,680,959
- -------------------------------------------
Shares issued to shareholders in payment of
dividends declared 7,181,911 16,577,158
- -------------------------------------------
Shares redeemed (10,253,930,847) (22,332,859,766)
- ------------------------------------------- --------------- ---------------
Shares outstanding, end of period 4,464,379,275 4,689,657,239
- ------------------------------------------- --------------- ---------------
</TABLE>
*For the six months ended March 31, 1994 (unaudited).
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Research, the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal
to 0.40 of 1% of the average daily net assets. The advisor will waive, to the
extent of its advisory fee, the amount if any, by which the Trust's aggregate
annual operating expenses, including its investment advisory fee but excluding
interest, taxes, brokerage commissions, expenses of registering and qualifying
the Trust and its shares under federal and state laws, expenses of withholding
taxes, and extraordinary expenses exceeding 0.45 of 1% of average daily net
assets of the Trust.
ADMINISTRATIVE FEE--Federated Administrative Services and Federated
Administrative Services Inc. collectively provided the Trust administrative
personnel and services. Prior to March 1, 1994, these services were provided at
approximate cost. Effective March 1, 1994, the fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. 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.
SHAREHOLDER SERVICE FEES--Under the terms of a shareholder service agreement
with Federated Shareholder Services ("FSS") the Trust will pay FSS up to 0.25%
of 1% of the level of average net assets for the Fund for the period. This fee
is to obtain certain personal services for shareholders and the maintenance of
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Trust.
The fee is based on the size, type and number of accounts and transactions made
by shareholders.
Certain of the Officers and Trustees of the Trust are officers and Trustees of
the above companies.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
Wesley W. Posvar Edward C. Gonzales
Marjorie P. Smuts Vice President and Treasurer
John W. McGonigle
Vice President and Secretary
John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Robert C. Rosselot
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
precededor accompanied by the Trust's prospectus which contains facts
concerning itsobjective and policies, management fees, expenses and other
information.
