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, 1997 through March 31, 1998. The report begins with an investment
review from the fund's portfolio manager and follows with the fund's 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 81% 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 reporting period totaled
$49.8 million, or $0.03 per share. At the end of the reporting period, the
fund's net assets reached $1.8 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, 1998
* 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 not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Trust for U.S. Treasury Obligations, which is rated AAAm* by Standard & Poor's
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 35-45 days.
The Federal Reserve Board (the "Fed") kept monetary policy on hold over the
fourth quarter of last year and the first quarter of this year, in spite of
continued robust growth in the U.S. economy. A friendly inflation picture
coupled with crises in various Asian economies provided a counterbalance to the
above-trend growth. As the risks to the Fed appeared to be more symmetrical, Fed
officials appeared to be content to sit on the sidelines until the impact of the
Asian turmoil on the domestic economy became more clear.
Movements in interest rates on short-term Treasury securities were driven by
both economic and technical factors over the reporting period. The yield on the
three-month Treasury bill, for example, began the reporting period at 5.1% but
was driven downward to below 5% in early October 1997, as the alarming declines
in the overseas markets resulted in a flight-to-quality to Treasuries. The yield
rose to 5.2% by early November 1997, as the immediate crisis subsided, and then
climbed steadily to 5.4% as overseas investors--primarily Japanese--sold their
Treasury holdings to help meet liquidity needs back home. Early in January 1998,
the pendulum swung back again, as growing speculation that the impact on the
domestic economy from the troubles in Asia might be so great that the Fed might
actually have to ease monetary policy gripped the market. The yield on the
three-month Treasury bill fell again to 5% as a result. These fears were
replaced by fears of the need for tighter monetary policy as the Asian impact
was slow to materialize and growth continued above 3%. The yield rose to 5.3% in
mid-February 1998, as a result, and then traded down to end the reporting period
at 5.1% as supply issues and quarter-end window-dressing took center stage.
The fund was targeted in a 35-45 day average maturity target range over the
reporting period, essentially a neutral stance for the portfolio. Once an
average maturity range is established, the fund maximizes performance through
ongoing relative value analysis. The fund's structure remained barbelled over
the reporting period, as a yield advantage continued to exist for repurchase
agreements relative to other short-term investments. The fund combines a
significant percentage in these repurchase agreements--primarily on an overnight
basis--with purchases of securities with 6- to 12-month maturities. This
portfolio structure continues to provide a competitive yield.
With continued improvement in the Federal budget, less supply of short-term U.S.
Treasury securities should keep this sector well-bid in the near term, with much
of the curve trading below rates offered on repurchase agreements. The shape of
the curve could steepen, however, if anticipation of a tightening by the Fed
should strengthen. The second quarter should shed more light on whether or not
the Asian crisis will have a sufficient influence on the domestic economy to
curb its growth to the 2 - 21U2% pace thought to be non-inflationary. We will
likely continue in our neutral stance until the picture is more in focus;
however, changing economic and market developments are continuously monitored to
best serve our clients attracted to the short term U.S. government market.
* An AAAm rating is obtained after Standard & Poor's evaluates a number of
factors, including credit quality, market price exposure, and management.
Standard & Poor's 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.
PORTFOLIO OF INVESTMENTS
TRUST FOR U.S. TREASURY OBLIGATIONS
MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--18.8%
$ 24,000,000 (a)U.S. Treasury Bills, 5.330%-5.625%, 5/28/1998-6/25/1998 $ 23,734,752
321,000,000 U.S. Treasury Notes, 4.750%-8.250%, 7/15/1998- 3/31/1999 321,574,826
Total Short-Term U.S. Treasury Obligations 345,309,578
(B)REPURCHASE AGREEMENTS--81.4%
80,000,000 ABN AMRO Chicago Corp., 5.970%, dated 3/31/1998, due 80,000,000
4/1/1998
80,000,000 BA Securities, Inc., 5.950%, dated 3/31/1998, due 4/1/1998 80,000,000
98,995,000 BT Securities Corp., 5.970%, dated 3/31/1998, due 4/1/1998 98,995,000
110,200,000 Barclays de Zoete Wedd Securities, Inc., 5.950%, dated 110,200,000
3/31/1998, due 4/1/1998
80,000,000 Bear, Stearns and Co., 5.930%, dated 3/31/1998, due 80,000,000
4/1/1998
80,000,000 CIBC Wood Gundy Securities Corp., 5.930%, dated 3/31/1998, 80,000,000
due 4/1/1998
80,000,000 Credit Suisse First Boston, Inc., 5.970%, dated 3/31/1998, 80,000,000
due 4/1/1998
80,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.930%, 80,000,000
dated 3/31/1998, due 4/1/1998
80,000,000 First Union Capital Markets, 5.950%, dated 3/31/1998, due 80,000,000
4/1/1998
45,000,000 (c)Goldman Sachs Group, LP, 5.440%, dated 1/30/1998, due 45,000,000
4/30/1998
80,000,000 Greenwich Capital Markets, Inc., 5.950%, dated 3/31/1998, 80,000,000
due 4/1/1998
80,000,000 Morgan Stanley Group, Inc., 5.950%, dated 3/31/1998, due 80,000,000
4/1/1998
80,000,000 Salomon Smith Barney Holdings, Inc., 5.950%, dated 80,000,000
3/31/1998, due 4/1/1998
80,000,000 Societe Generale, New York, 5.950%, dated 3/31/1998, due 80,000,000
4/1/1998
60,000,000 Swiss Bank Capital Markets, 5.850%, dated 3/31/1998, due 60,000,000
4/1/1998
25,000,000 UBS Securities, Inc., 5.900%, dated 3/31/1998, due 25,000,000
4/1/1998
115,000,000 UBS Securities, Inc., 5.950%, dated 3/31/1998, due 115,000,000
4/1/1998
80,000,000 UBS Securities, Inc., 5.950%, dated 3/31/1998, due 80,000,000
4/1/1998
80,000,000 Westdeutsche Landesbank Girozentrale, 5.930%, dated 80,000,000
3/31/1998, due 4/1/1998
Total Repurchase Agreements (at amortized cost) 1,494,195,000
Total Investments (at amortized cost)(d) $ 1,839,504,578
</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
($1,835,087,788) at March 31, 1998.
The following acronym is used throughout this portfolio:
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TRUST FOR U.S. TREASURY OBLIGATIONS
MARCH 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 1,839,504,578
Cash 39,548
Income receivable 4,204,612
Receivable for shares sold 325
Total assets 1,843,749,063
LIABILITIES:
Income distribution payable $ 8,445,331
Accrued expenses 215,944
Total liabilities 8,661,275
Net Assets for 1,835,087,788 shares outstanding $ 1,835,087,788
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$1,835,087,788 / 1,835,087,788 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TRUST FOR U.S. TREASURY OBLIGATIONS
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 54,255,450
EXPENSES:
Investment advisory fee $ 3,846,672
Administrative personnel and services fee 725,409
Custodian fees 74,935
Transfer and dividend disbursing agent fees and 26,366
expenses
Directors'/Trustees' fees 14,924
Auditing fees 6,462
Legal fees 34,944
Portfolio accounting fees 67,840
Shareholder services fee 2,404,170
Share registration costs 10,920
Printing and postage 8,464
Insurance premiums 12,434
Taxes 34,944
Miscellaneous 13,108
Total expenses 7,281,592
Waivers--
Waiver of investment advisory fee $ (984,885)
Waiver of shareholder services fee (1,923,336)
Total waivers (2,908,221)
Net expenses 4,373,371
Net investment income $ 49,882,079
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TRUST FOR U.S. TREASURY OBLIGATIONS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
MARCH 31, 1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 49,882,079 $ 122,829,265
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (49,882,079) (122,829,265)
SHARE TRANSACTIONS--
Proceeds from sale of shares 4,189,305,164 10,154,245,628
Net asset value of shares issued to shareholders in 5,028,983 13,230,871
payment of distributions declared
Cost of shares redeemed (4,156,409,447) (11,031,251,972)
Change in net assets resulting from share transactions 37,924,700 (863,775,473)
Change in net assets 37,924,700 (863,775,473)
NET ASSETS:
Beginning of period 1,797,163,088 2,660,938,561
End of period $ 1,835,087,788 $ 1,797,163,088
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
SIX MONTHS
ENDED
(UNAUDITED)
MARCH 31, YEAR ENDED SEPTEMBER 30,
1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
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 0.03 0.05 0.05 0.05 0.03 0.03
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.05) (0.05) (0.05) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.61% 5.16% 5.18% 5.45% 3.31% 2.84%
RATIOS TO AVERAGE NET ASSETS
Net expenses 0.45%* 0.45% 0.45% 0.45% 0.45% 0.45%
Net investment income 5.19%* 5.04% 5.06% 5.28% 3.21% 2.80%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,835,088 $1,797,163 $2,660,939 $3,031,247 $4,651,657 $4,689,657
</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)
NOTES TO FINANCIAL STATEMENTS
TRUST FOR U.S. TREASURY OBLIGATIONS
MARCH 31, 1998 (UNAUDITED)
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.
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 uses the amortized cost method to value its portfolio securities 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.
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, 1998, capital paid-in aggregated $1,835,087,788. Transactions in shares were
as follows:
<TABLE>
Six Months
Ended Year Ended
(unaudited) September 30,
March 31, 1998 1997
<S> <C> <C>
Shares sold 4,189,305,164 10,154,245,628
Shares issued to shareholders in payment of 5,028,983 13,230,871
distributions declared
Shares redeemed (4,156,409,447) (11,031,251,972)
Net change resulting from share transactions 37,924,700 (863,775,473)
</TABLE>
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, if any, the amount, by which the Trust's aggregate annual operating
expenses, exceed 0.45% of its average daily net assets.
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.
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.
YEAR 2000 ISSUE
Similar to other financial organizations, the Trust could be adversely affected
if the computer systems used by the Trust's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Trust's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust.
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
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
Matthew S. Hardin
Assistant Secretary
Mutual funds are not deposits or obligations of any bank, are not guaranteed by
any bank, and are not insured or guaranteed by the U.S. government, the FDIC,
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 share value of $1.00, there is no guarantee that they
will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[Graphic]Federated Investors
Trust for U.S. Treasury Obligations
SEMI-ANNUAL REPORT TO SHAREHOLDERS MARCH 31, 1998
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-8400
www.federatedinvestors.com
Cusip 898334107
8042508 (5/98)
[Graphic]
