PRESIDENT'S MESSAGE
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders for Trust for
U.S. Treasury Obligations, which covers the six-month period from October 1,
1995 through March 31, 1996. The report begins with an Investment Review from
the fund's portfolio manager and follows with the Portfolio of Investments
and Financial Statements.
This money market mutual fund offers a high-quality approach to daily
investment income along with daily liquidity and stability of principal*-all
through a portfolio of short-term U.S. Treasury obligations. At the end of
the reporting period, more than 76% of fund assets were invested in
repurchase agreements backed by U.S. Treasury obligations because of the
yield advantage of these securities. The remaining assets were invested in
direct U.S. Treasury obligations.
Dividends paid to shareholders during the six-month period totaled $75.8
million, or $0.03 per share. At the end of the period, the fund's net assets
stood at $2.9 billion.
Thank you for selecting Trust for U.S. Treasury Obligations as your quality
cash investment. We welcome your comments and suggestions.
Sincerely,
Glen R. Johnson
President
May 15, 1996
* Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to
do so. An investment in this fund is neither insured nor guaranteed by the
U.S. government.
INVESTMENT REVIEW
Trust for U.S. Treasury Obligations (the "Fund"), which is rated AAAm* by
Standard & Poor's Ratings Group and Aaa* by Moody's Investors Service, Inc.,
is invested in direct obligations of the U.S. Treasury, either in the form of
notes and bills or as collateral for repurchase agreements. Recently, the
Fund has been managed within an average maturity range of 40-50 days.
The Federal Reserve Board (the "Fed") eased monetary policy twice over the
six-month reporting period ended March 31, 1996. Faced with slowing economic
growth and benign inflationary pressures, the Fed lowered the federal funds
target rate from 5.75% to 5.5% in the latter part of December, and again from
5.5% to the current 5.25% at the end of January. The short end of the
government yield curve anticipated the policy moves from the Fed, and amid
indications of sluggish consumer and manufacturing sectors of the economy,
looked forward to additional eases in the not too distant future.
February and March brought a shift in market psychology regarding the extent
and direction of changes in monetary policy by the Fed, however. Recovering
from the harsh winter weather and spurred onward by lower interest rates, the
housing market and consumer spending breathed some life into the economy,
which had seemed on the verge of recession earlier in the year. The market
was then stunned in early March by the report of a 705,000 increase in non-
farm payroll jobs for February-the largest increase in over 12 years-which
caused the yields on short-term securities to rise by as many as 25 basis
points on that day alone. Now confronted with a much sturdier economy than
previously thought, the front end of the market retreated from its
expectations for additional easing from the Fed in the near future, and moved
to pricing in anticipation of a neutral policy from the Fed in the near term
and a tightening in monetary policy by the Fed later in 1996. Yields on
short-term government securities reflected this rather volatile mood in the
markets; the yield on the three-month Treasury bill began the reporting
period in October 1995 at 5.4%, declined to 4.9% by mid-February 1996, and
ended March at close to 5.2%.
The Fund remained targeted in a 40- to 50-day average maturity target range
throughout the reporting period, and moved its positioning within that range
according to the relative value opportunities offered in the market. When the
short-end of the government markets seemed overly pessimistic with respect to
the health of the economy during the fourth quarter of 1995 and early 1996,
the average maturity of the Fund drifted to the lower end of the target range
as investments in overnight repurchase agreements were attractive relative to
fixed rate securities. More recently, as the market now appears to be overly
optimistic with respect to economic strength, we moved the average maturity
of the Fund toward the longer end of its range as fixed rate securities once
again appeared to offer relative value to overnight investments. The Fund's
portfolio continued to be barbelled, combining a large position in repurchase
agreements with Treasury securities with longer maturities of 6 to 13 months.
* An AAAm rating is obtained after Standard & Poor's Ratings Group evaluates
a number of factors, including credit quality, market price
exposure and management. Standard & Poor's Ratings Group monitors the
portfolio weekly for developments that could cause changes in the ratings.
Money market funds and bond funds rated Aaa by Moody's Investors Service,
Inc. are judged to be of an investment quality similar to Aaa-rated fixed
income obligations, that is, they are judged to be of the best quality.
These ratings do not remove market risks and are subject to change.
With growth in the first quarter at 2.8%, the economy clearly appears to be
on firmer footing than it was in the fourth quarter, when GDP grew at only
.5%. As such, the Fed should feel no urgency to lower short-term rates
further. By the same token, however, with areas of softness in the economy
still evident and with consumer indebtedness at very high levels, we feel
that there appears to be no danger of the economy overheating to any great
extent. As long as inflation remains benign, the Fed should be content to sit
on the sidelines for the time being until confronted with signs of undue
strength or weakness in economic growth. The average maturity of the Fund
will likely be managed in accordance with our expectation for a stable
monetary policy in the near term; however, changing economic and
market developments are continuously monitored to best serve our clients
attracted to the short-term U.S. government market.
TRUST FOR U.S. TREASURY OBLIGATIONS
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY-23.5%
$373,000,000(a) U.S. Treasury Bills, 4.62%-5.51%, 5/2/1996-3/6/1997 $ 365,203,198
318,000,000 U.S. Treasury Notes, 6.125%-8.00%, 5/15/1996-2/28/1997 320,733,460
TOTAL U.S. TREASURY 685,936,658
(B)REPURCHASE AGREEMENTS-76.6%
100,000,000 B.A. Securities, Inc., 5.250%, dated 3/29/1996, due 4/1/1996 100,000,000
163,400,000 BT Securities Corporation, 5.430%, dated 3/29/1996, due 4/1/1996 163,400,000
135,200,000 Barclays de Zoete Wedd Securities, Inc., 5.450%, dated 3/29/1996,
due 4/1/1996 135,200,000
135,000,000 Bear, Stearns & Co., Inc., 5.350%, dated 3/29/1996, due 4/1/1996 135,000,000
100,000,000 CIBC Wood Gundy Securities Corp., 5.550%, dated 3/29/1996,
due 4/1/1996 100,000,000
140,000,000 Chemical Government Securities, 5.350%, dated 3/29/1996,
due 4/1/1996 140,000,000
130,000,000 Daiwa Securities America, Inc., 5.530%, dated 3/29/1996,
due 4/1/1996 130,000,000
120,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.350%, dated
3/29/1996, due 4/1/1996 120,000,000
100,000,000 First Union Capital Markets Corp., 5.430%, dated 3/29/1996,
due 4/1/1996 100,000,000
100,000,000 Goldman, Sachs & Company, 5.400%, dated 3/29/1996,
due 4/1/1996 100,000,000
110,000,000 J.P. Morgan Securities, Inc., 5.400%, dated 3/29/1996,
due 4/1/1996 110,000,000
175,500,000 Lehman Brothers Government Securities, Inc., 5.600%, dated
3/29/1996, due 4/1/1996 175,500,000
48,000,000(c) Morgan Stanley & Co., Inc., 5.200%, dated 3/4/1996, due 4/3/1996 48,000,000
100,000,000 Nikko Securities Co. International, Inc., 5.400%, dated 3/29/1996,
due 4/1/1996 100,000,000
25,000,000 SBC Capital Markets, Inc., 5.150%, dated 3/29/1996, due 4/1/1996 25,000,000
</TABLE>
TRUST FOR U.S. TREASURY OBLIGATIONS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS-CONTINUED
$ 50,000,000 SBC Capital Markets, Inc., 5.250%, dated 3/29/1996, due 4/1/1996 $ 50,000,000
200,000,000 SBC Capital Markets, Inc., 5.400%, dated 3/29/1996, due 4/1/1996 200,000,000
120,000,000 SBC Capital Markets, Inc., 5.420%, dated 3/29/1996, due 4/1/1996 120,000,000
10,000,000 State Street Bank & Trust Co., 5.400%, dated 3/29/1996,
due 4/1/1996 10,000,000
75,000,000 UBS Securities, Inc., 5.300%, dated 3/29/1996, due 4/1/1996 75,000,000
100,000,000 UBS Securities, Inc., 5.300%, dated 3/29/1996, due 4/1/1996 100,000,000
TOTAL REPURCHASE AGREEMENTS 2,237,100,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $2,923,036,658
</TABLE>
(a) The issue shows the rate of discount rate at time of purchase.
(b) The 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.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the creditworthiness of the issuer is
downgraded.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,921,433,409) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 2,237,100,000
Investments in securities 685,936,658
Total investments in securities, at amortized cost and value $ 2,923,036,658
Cash 1,671,500
Income receivable 9,267,329
Receivable for shares sold 4,340
Total assets 2,933,979,827
LIABILITIES:
Income distribution payable 12,252,359
Accrued expenses 294,059
Total liabilities 12,546,418
NET ASSETS for 2,921,433,409 shares outstanding $ 2,921,433,409
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
$2,921,433,409 <divided sign> 2,921,433,409 shares outstanding $1.00
</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, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 82,360,153
EXPENSES:
Investment advisory fee $ 5,794,301
Administrative personnel and services fee 1,095,649
Custodian fees 130,014
Transfer and dividend disbursing agent fees and expenses 59,501
Directors'/Trustees' fees 6,759
Auditing fees 7,959
Legal fees 21,929
Portfolio accounting fees 62,566
Shareholder services fee 3,621,438
Share registration costs 13,281
Printing and postage 9,077
Insurance premiums 27,765
Taxes 39,929
Miscellaneous 12,280
Total expenses 10,902,448
Waivers -
Waiver of investment advisory fee $ (1,433,500)
Waiver of shareholder services fee (2,897,150)
Total waivers (4,330,650)
Net expenses 6,571,798
Net investment income $ 75,788,355
</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>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MARCH 31, SEPTEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS -
Net investment income $ 75,788,355 $ 172,627,365
DISTRIBUTIONS TO SHAREHOLDERS-
Distributions from net investment income (75,788,355) (172,627,365)
SHARE TRANSACTIONS-
Proceeds from sale of shares 5,781,855,358 13,858,475,723
Net asset value of shares issued to shareholders in
payment of distributions declared 8,728,205 23,428,471
Cost of shares redeemed (5,900,396,982) (15,502,314,561)
Change in net assets resulting from share transactions (109,813,419) (1,620,410,367)
Change in net assets (109,813,419) (1,620,410,367)
NET ASSETS:
Beginning of period 3,031,246,828 4,651,657,195
End of period $ 2,921,433,409 $ 3,031,246,828
</TABLE>
(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>
SIX MONTHS
ENDED
(UNAUDITED)
MARCH 31, YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<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 0.03 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
LESS DISTRIBUTIONS
Distributions
from net
investment income (0.03) (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
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(A) 2.65% 5.45% 3.31% 2.84% 4.00% 6.49% 8.18% 8.89% 6.83% 5.89%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.45%* 0.45% 0.45% 0.45% 0.45% 0.46% 0.45% 0.45% 0.45% 0.45%
Net investment
income 5.23%* 5.28% 3.21% 2.80% 3.95% 6.33% 7.89% 8.56% 6.61% 5.74%
SUPPLEMENTAL DATA
Net assets,
end of period
(000 omitted) $2,921,433 $3,031,247 $4,651,657 $4,689,657 $5,271,259 $5,744,351 $5,997,327 $5,747,794 $4,766,221 $4,846,175
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
(1) ORGANIZATION
Trust for U.S. Treasury Obligations (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The investment objective of the Trust
is stability of principal and current income consistent with stability of
principal.
(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. These
policies are in conformity with generally accepted accounting principles.
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 Act.
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 under
repurchase agreement transactions. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market
value of each repurchase agreement's collateral to ensure that the
value of collateral at least equals the repurchase price to be paid
under the repurchase agreement transaction.
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 the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees").
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS-Interest income and
expenses are accrued daily. Bond premium and discount, if applicable,
are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-
dividend date.
FEDERAL TAXES-It is the Trust's policy to comply with the provisions
of the Code applicable to regulated investment companies and to
distribute to shareholders each year substantially all of its income.
Accordingly, no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS-The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-
issued securities on the trade date 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.
TRUST FOR U.S. TREASURY OBLIGATIONS
USE OF ESTIMATES-The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial
statements. Actual results could differ from those estimated.
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, 1996, capital paid-in aggregated $2,921,433,409.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
1996 1995
<S> <C> <C>
Shares sold 5,781,855,358 13,858,475,723
Shares issued to shareholders in payment of distributions declared 8,728,205 23,428,471
Shares redeemed (5,900,396,982) (15,502,314,561)
Net change resulting from share transactions (109,813,419) (1,620,410,367)
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE-Federated Research, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of the Trust's average daily net assets. The Adviser will
waive, to the extent of its advisory fee, the amount, if any, by which the
Trust's aggregate annual operating expenses exceed 0.45% of average daily net
assets of the Trust.
ADMINISTRATIVE FEE-Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE-Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to
0.25% of average daily net assets of the Trust shares for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRUST FOR U.S. TREASURY OBLIGATIONS
TRANSFER AND DIVIDEND DISBURSING AGENT FEES-FServ, through its subsidiary,
Federated Shareholder Services Company serves as transfer and dividend
disbursing agent for the Trust. The fee paid to FServ is based on the size,
type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES-FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL-Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
TRUSTEES OFFICERS
<TABLE>
<S> <S>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not 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. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
TRUST
FOR
U.S.
TREASURY
OBLIGATIONS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MARCH 31, 1996
(LOGO) FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
(LOGO)
Cusip 898334107 RECYCLED
