PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Trust for
U.S. Treasury Obligations, which covers the six-month reporting period from
October 1, 1996, through March 31, 1997. The report begins with an
investment review from the trust'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 82% of trust 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 reporting period totaled
$60.1 million, or $0.02 per share. At the end of the reporting period, the
trust's net assets stood at $2.5 billion.
Thank you for selecting Trust for U.S. Treasury Obligations as your quality
cash investment. We welcome your comments and suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
May 15, 1997
* 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, 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
trust has been managed within an average maturity range of 35-45 days.
After keeping monetary policy on hold for most of the reporting period --
indeed, for over a year -- the Federal Reserve Board (the "Fed") voted to
raise the federal funds target rate by 25 basis points on March 25, 1997, to
5.5% from 5.25%. The move was seen as being pre-emptive against inflation in
the face of stronger than expected demand. Throughout much of the reporting
period, short-term interest rates traded within a fairly narrow range,
lulled by continued evidence of benign inflationary pressures. Persistent
above-trend economic growth, however, eventually began to weigh heavily on
the market in light of tight labor market conditions. Short-term interest
rates started to rise in late February 1997, spurred onward by congressional
testimony given by Alan Greenspan late in the month, in which he indicated
that the transitory factors preventing a rise in wages in the face of fairly
robust growth may be ending. By the time the Fed tightened, much of the move
had already been priced into the financial markets.
With very short-term securities heavily influenced by quarter-end and
year-end pressures, movements in the one-year Treasury bill were the best
barometer of changing market sentiment over the reporting period. After
trading between 5.4% to 5.6% for a number of months, the yield on the
one-year Treasury bill rose steadily from 5.4% in late February 1997, to 6%
by the end of March 1997, amid growing expectations of an imminent
tightening by the Fed. The front end of the yield curve steepened over this
latter period, with the yield on the one-year Treasury bill backing up by
over 50 basis points compared to a rise of under 25 basis points for the
three-month Treasury bill. While this steepening is quite typical of the
early phase of a Fed tightening cycle, the effect was more pronounced due to
technical influences at the very front end of the curve. The declines in the
equity and bond markets resulted in a flight-to-quality to very short-term
securities, and this effect -- combined with quarter-end window-dressing --
resulted in the more subdued response to the policy change in this area.
The trust remained targeted in a 35- to 45-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. Toward
the end of the reporting period, the trust's average maturity drifted to the
lower end of this target range as anticipation of a change in monetary
policy mounted. The trust's portfolio continued to be barbelled, combining a
large position in repurchase agreements with Treasury securities with longer
maturities of 6 to 13 months. This structure should continue to provide a
competitive yield. Although current expectations are that the Fed will find
cause to tighten monetary policy further in 1997 -- perhaps as soon as in
the second quarter -- we also would anticipate that the overall tightening
cycle will not be long in terms of magnitude or duration. The pre-emptive
mode by the Fed should help to preclude the need for more aggressive action
down the road by preventing the build-up of inflationary pressures. We would
look to see moderately higher short-term interest rates throughout the
course of the year, but not to the extent evidenced in the last tightening
cycle in 1994. As such, we will likely continue in our modestly defensive
stance for the portfolio until market conditions indicate otherwise.
* 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.
TRUST FOR U.S. TREASURY OBLIGATIONS
PORTFOLIO OF INVESTMENTS
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS -- 17.4%
<C> <S> <C>
$ 60,000,000 (a)U.S. Treasury Bills, 5.42% - 5.765%, 6/26/1997 - 3/5/1998 $ 57,949,409
381,000,000 U.S. Treasury Notes, 5.125% - 7.375%, 5/15/1997 - 2/28/1998 381,779,620
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 439,729,029
(B) REPURCHASE AGREEMENTS -- 82.8%
295,000,000 BT Securities Corporation, 6.460%, dated 3/31/1997, due 4/1/1997 295,000,000
100,000,000 BOT Securities, Inc., 6.500%, dated 3/31/1997,
due 4/1/1997 100,000,000
100,000,000 Barclays de Zoete Wedd Securities, Inc., 6.450%, dated 3/31/1997,
due 4/1/1997 100,000,000
120,000,000 Bear, Stearns and Co., 6.400%, dated 3/31/1997, due 4/1/1997 120,000,000
100,000,000 CIBC Wood Gundy Securities Corp., 6.400%, dated 3/31/1997,
due 4/1/1997 100,000,000
52,000,000 (c)CS First Boston, 5.270%, dated 3/6/1997, due 4/7/1997 52,000,000
100,000,000 Daiwa Securities America, Inc., 6.400%, dated 3/31/1997,
due 4/1/1997 100,000,000
75,000,000 Deutsche Bank Government Securities, Inc., 6.450%, dated 3/31/1997,
due 4/1/1997 75,000,000
100,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 6.400%,
dated 3/31/1997, due 4/1/1997 100,000,000
100,000,000 Dresdner Securities (USA), Inc., 6.500%, dated 3/31/1997,
due 4/1/1997 100,000,000
100,000,000 First Union Capital Markets, 6.400%, dated 3/31/1997, due 4/1/1997 100,000,000
25,000,000 Goldman Sachs & Company, LP, 6.250%, dated 3/31/1997, due 4/1/1997 25,000,000
185,000,000 Goldman Sachs & Company, LP, 6.500%, dated 3/31/1997, due 4/1/1997 185,000,000
110,000,000 Harris Nesbitt Thomson, 6.420%, dated 3/31/1997,
due 4/1/1997 110,000,000
100,000,000 Sanwa-BGK Securities Co., LP, 6.450%, dated 3/31/1997,
due 4/1/1997 100,000,000
50,000,000 SBC Capital Markets, 6.400%, dated 3/31/1997, due 4/1/1997 50,000,000
100,000,000 SBC Capital Markets, 6.400%, dated 3/31/1997, due 4/1/1997 100,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
$ 93,800,000 SBC Capital Markets, 6.420%, dated 3/31/1997,
due 4/1/1997 $ 93,800,000
80,000,000 Toronto Dominion Securities (USA) Inc., 6.550%,
dated 3/31/1997, due 4/1/1997 80,000,000
100,000,000 UBS Securities, Inc., 6.400%, dated 3/31/1997, due 4/1/1997 100,000,000
TOTAL REPURCHASE AGREEMENTS 2,085,800,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $ 2,525,529,029
</TABLE>
(a) The issue shows the rate of discount 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.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,519,596,443) at March 31, 1997.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
TRUST FOR U.S. TREASURY OBLIGATIONS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 2,085,800,000
Investments in securities 439,729,029
Total investments in securities, at amortized cost and value $ 2,525,529,029
Income receivable 5,089,249
Total assets 2,530,618,278
LIABILITIES:
Income distribution payable $ 9,972,487
Payable to bank 765,979
Accrued expenses 283,369
Total liabilities 11,021,835
NET ASSETS for 2,519,596,443 shares outstanding $ 2,519,596,443
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$2,519,596,443 / 2,519,596,443 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, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 65,615,542
EXPENSES:
Investment advisory fee $ 4,836,512
Administrative personnel and services fee 913,221
Custodian fees 100,395
Transfer and dividend disbursing agent fees and expenses 47,512
Directors'/Trustees' fees 15,005
Auditing fees 6,813
Legal fees 32,896
Portfolio accounting fees 71,647
Shareholder services fee 3,022,820
Share registration costs 11,559
Printing and postage 9,649
Insurance premiums 9,787
Taxes 43,329
Miscellaneous 9,889
Total expenses 9,131,034
Waivers --
Waiver of investment advisory fee $ (1,216,697)
Waiver of shareholder services fee (2,418,256)
Total waivers $ (3,634,953)
Net expenses 5,496,081
Net investment income $ 60,119,461
</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,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 60,119,461 $ 142,302,402
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (60,119,461) (142,302,402)
SHARE TRANSACTIONS --
Proceeds from sale of shares 5,090,534,824 11,099,679,061
Net asset value of shares issued to shareholders in payment of
distributions declared 6,035,037 19,082,696
Cost of shares redeemed (5,237,911,979) (11,489,070,024)
Change in net assets resulting from share transactions (141,342,118) (370,308,267)
Change in net assets (141,342,118) (370,308,267)
NET ASSETS:
Beginning of period 2,660,938,561 3,031,246,828
End of period $ 2,519,596,443 $ 2,660,938,561
</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,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<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 0.02 0.05 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07
LESS DISTRIBUTIONS
Distributions
from
net (0.02) (0.05) (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07)
investment
income
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 2.50% 5.18% 5.45% 3.31% 2.84% 4.00% 6.49% 8.18% 8.89% 6.83%
RETURN(A)
RATIOS TO
AVERAGE NET
ASSETS
Expenses 0.45%* 0.45% 0.45% 0.45% 0.45% 0.45% 0.46% 0.45% 0.45% 0.45%
Net
investment
income 4.97%* 5.06% 5.28% 3.21% 2.80% 3.95% 6.33% 7.89% 8.56% 6.61%
SUPPLEMENTAL DATA
Net assets,
end of
period (000 $2,519,596 $2,660,939 $3,031,247 $4,651,657 $4,689,657 $5,271,259 $5,744,351 $5,997,327 $5,747,794 $4,766,221
omitted)
</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, 1997 (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")
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive
less than the repurchase price on the sale of collateral securities.
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.
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, 1997, capital paid-in aggregated $2,519,596,443.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1997 1996
<S> <C> <C>
Shares sold 5,090,534,824 11,099,679,061
Shares issued to shareholders in payment of distributions declared 6,035,037 19,082,696
Shares redeemed (5,237,911,979) (11,489,070,024)
Net change resulting from share transactions (141,342,118) (370,308,267)
</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 the 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.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC"), serves as
transfer and dividend disbursing agent for the Trust. The fee paid to FSSC
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
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
S. Elliott Cohan
Assistant Secretary
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 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, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 898334107
8042508 (5/97)
