SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Short-Term U.S. Government Trust, a portfolio of Money Market Obligations Trust,
which covers the six-month reporting period from January 1, 1999 through June
30, 1999. The report begins with a commentary by the fund's portfolio manager
and follows with a complete listing of the fund's holdings and its financial
statements.
Federated Short-Term U.S. Government Trust continues to pursue daily
income while bringing you the additional advantages of daily liquidity and
stability of principal, all through a portfolio of
U.S. government obligations.
On June 30, 1999, the $331.9 million fund was invested in short-term U.S.
government obligations (52.1%) and repurchase agreements fully
collateralized by U.S. government obligations (48.7%).
Over the six-month reporting period, the fund paid dividends totaling $0.02 per
share while maintaining a stable net asset value of $1.00 per share. 1
Thank you for choosing Federated Short-Term U.S. Government Trust as a daily
cash investment. We welcome your comments and suggestions.
Sincerely,
[Graphic]
J. Christopher Donahue
President
August 15, 1999
1 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
Federated Short-Term U.S. Government Trust may invest in U.S. Treasury and
government agency obligations and repurchase agreements which have these
securities as collateral. The fund continues to emphasize issues of the Federal
National Mortgage Association, Student Loan Marketing Association, Federal Farm
Credit Bank System, Federal Home Loan Bank System, and Federal Home Loan
Mortgage Corp. The fund may also maintain a U.S. Treasury position when there
are narrow spreads between U.S. Treasury and government agency obligations.
The semi-annual reporting period brought a dramatic shift in investor sentiment
regarding the direction of the next move by the Federal Reserve Board (the
"Fed"), and culminated with a 25 basis point tightening by the Fed on June 30.
The economy entered 1999 with considerable strength, and lingering fears about
the economic crises overseas were replaced by concern that the robust pace of
growth of the economy would ignite inflationary pressures. First quarter GDP was
4.30%, driven by consumer demand and housing. The second quarter brought
continued evidence of growth that the market and the Fed could no longer ignore.
In spite of a benign inflation picture, interest rates rose across the yield
curve as expectations mounted that the Fed would need to tighten monetary policy
in the face of growth that exceeded traditional measures of non-inflationary
potential. Fed commentary reinforced this perception even while acknowledging
that productivity gains continued to rein in inflationary pressures. By the time
Chairman Greenspan testified before the Joint Economic Committee in June, where
he hinted that it may be appropriate for the Fed to take back some of the
liquidity that had been infused into the market in the fourth quarter of 1998,
the market had taken into account the inevitable near-term tightening, and
anticipated more to follow. As a result, when the Fed opted to tighten by 25
basis points on June 30 but announced a neutral inter- meeting policy stance, a
relieved market took this as a sign that additional tightenings may not be
forthcoming.
Movements in interest rates reflected the shift in market sentiment. The yield
on the three-month agency discount note, for example, traded with a range of
4.70% to 4.80% through April, but then climbed steadily through May and June to
5.10% at the time of the Fed move.
The fund was managed within a 40 to 50-day average maturity target range, moving
within that range according to relative value opportunities available in the
market place. With wide spreads between U.S. Treasury and government agency
securities, we concentrated our purchases in the government agency sector over
the period. We added to our floating rate position, bringing the percentage of
the fund from 19.00% to 27.00%, in order to increase our responsiveness to
rising interest rates. The fund's portfolio was barbelled in structure,
combining positions in repurchase agreements and floating rate notes with longer
securities with 6 to 12- month maturities. It would be prudent not to attach too
much significance to the Fed's adoption of a neutral bias at this point in time,
however, since the path of monetary policy will likely be determined by the
strength of the economic data to be released in weeks to come. If growth
persists at a robust pace, then the Fed may be tempted to tighten again at the
August Federal Open Market Committee meeting, to preempt the need for more
dramatic action down the road. With the market currently pricing in only a
portion of this possibility, we will likely remain at the lower end of our
current target range in the near term.
Last Meeting of Shareholders
A Special Meeting of the Fund's shareholders was held on March 22, 1999. On
January 21, 1999, the record date for the shareholders voting at the meeting,
there were 362,386,173 total outstanding shares. The following items were
considered by shareholders and the results were as follows:
AGENDA ITEM 1
To elect Trustees:
<TABLE>
<CAPTION>
ABSTENTIONS WITHHELD
AND BROKER AUTHORITY TO
NAMES FOR AGAINST NON-VOTES VOTE
<S> <C> <C> <C> <C>
Thomas G. Bigley 219,210,701 324,516
John T. Conroy, Jr. 219,210,701 324,516
John F. Cunningham 219,210,701 324,516
Peter E. Madden 219,210,701 324,516
Charles F. Mansfield, Jr. 219,210,701 324,516
John E. Murray, Jr. 219,210,701 324,516
John S. Walsh 219,210,701 324,516
</TABLE>
AGENDA ITEM 2
To ratify the selection of Arthur Andersen LLP as the Fund's Independent
Auditors.
<TABLE>
<CAPTION>
ABSTENTIONS WITHHELD
AND BROKER AUTHORITY
FOR AGAINST NON-VOTES TO VOTE
<S> <C> <C> <C>
219,041,311 2,314 491,591
</TABLE>
AGENDA ITEM 3
To approve an amendment and restatement of the Declaration of Trust to require
approval of a "1940 Act" majority of shareholders in the event of the sale and
conveyance of the Fund to another trust or corporation.
<TABLE>
<CAPTION>
ABSTENTIONS WITHHELD
AND BROKER AUTHORITY
FOR AGAINST NON-VOTES TO VOTE
<S> <C> <C> <C>
214,723,805 142,555 4,665,819
</TABLE>
AGENDA ITEM 4
To approve making non-fundamental the Fund's policy regarding acquiring voting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS WITHHELD
AND BROKER AUTHORITY
FOR AGAINST NON-VOTES TO VOTE
<S> <C> <C> <C>
189,241,127 29,559,844 731,208
</TABLE>
AGENDA ITEM 5
To approve the Plan of Reorganization between the Fund and Money Market
Obligations Trust whereby Money Market Obligations Trust would acquire all of
the assets of the Fund in exchange for shares of its portfolio, Federated
Short-Term U.S. Government Trust.
<TABLE>
<CAPTION>
ABSTENTIONS WITHHELD
AND BROKER AUTHORITY
FOR AGAINST NON-VOTES TO VOTE
<S> <C> <C> <C>
215,956,973 142,555 3,432,651
</TABLE>
Portfolio of Investments
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS-52.1%
$ 3,000,000 1 Federal Farm Credit System
Floating Rate Note,
4.769%, 7/1/1999 $ 2,999,097
2,000,000 Federal Farm Credit System
Note, 5.400%, 7/3/2000 1,996,960
30,000,000 1 Federal Home Loan Bank
System Floating Rate
Notes, 4.775% - 5.339%,
7/1/1999 - 9/1/1999 29,993,450
22,050,000 Federal Home Loan Bank
System Notes, 4.790% -
5.540%, 7/13/1999 -
6/14/2000 22,039,675
23,033,000 2 Federal Home Loan Mortgage
Corp. Discount Notes,
4.700% - 5.220%,
7/8/1999 - 6/22/2000 22,745,853
27,500,000 1 Federal Home Loan Mortgage
Corp. Floating Rate Notes,
4.700% - 4.935%, 7/19/1999
- 8/17/1999 27,489,593
3,000,000 Federal Home Loan Mortgage
Corp. Note, 5.544%,
8/13/1999 2,999,809
18,000,000 2 Federal National Mortgage
Association Discount
Notes, 4.610% - 4.720%,
7/30/1999 - 1/24/2000 17,843,845
19,000,000 1 Federal National Mortgage
Association Floating Rate
Notes, 4.785% - 4.974%,
7/15/1999 - 9/23/1999 18,991,109
13,500,000 Federal National Mortgage
Association Notes, 4.780%
- 5.540%, 7/16/1999 -
5/5/2000 13,493,409
11,000,000 1 Student Loan Marketing
Association Floating Rate
Notes, 5.539% - 5.639%,
7/6/1999 - 7/7/1999 10,997,311
TOTAL SHORT-TERM
OBLIGATIONS 171,590,111
REPURCHASE AGREEMENTS-
48.7% 3
15,000,000 ABN AMRO Chicago Corp.,
5.125%, dated 6/30/1999,
due 7/1/1999 15,000,000
5,300,000 Barclays Capital, Inc.,
4.900%, dated 6/30/1999,
due 7/1/1999 5,300,000
5,000,000 4 Chase Government
Securities, Inc., 4.960%,
dated 6/22/1999, due
7/14/1999 5,000,000
3,000,000 4 Credit Suisse First
Boston, Inc., 4.780%,
dated 4/20/1999, due
7/19/1999 3,000,000
10,000,000 4 Credit Suisse First
Boston, Inc., 4.780%,
dated 4/28/1999, due
7/27/1999 10,000,000
5,000,000 4 Goldman Sachs Group, LP,
4.940%, dated 6/17/1999,
due 7/19/1999 5,000,000
5,000,000 4 Goldman Sachs Group, LP,
4.955%, dated 6/22/1999,
due 7/22/1999 5,000,000
10,000,000 4 Lehman Brothers, Inc.,
4.790%, dated 4/12/1999,
due 7/12/1999 10,000,000
5,000,000 Lehman Brothers, Inc.,
4.930%, dated 6/30/1999,
due 7/1/1999 5,000,000
10,000,000 4 Morgan Stanley Group,
Inc., 4.810%, dated
5/10/1999, due 8/9/1999 10,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
REPURCHASE AGREEMENTS-
continued 3
$ 4,000,000 Nationsbanc Montgomery
Securities, Inc., 5.220%,
dated 6/30/1999, due
7/1/1999 $ 4,000,000
8,000,000 4 Nesbitt Burns, Inc.,
4.790%, dated 4/14/1999,
due 7/13/1999 8,000,000
75,000,000 PaineWebber Group, Inc.,
5.100%, dated 6/30/1999,
due 7/1/1999 75,000,000
TOTAL REPURCHASE
AGREEMENTS 160,300,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 5 $ 331,890,111
</TABLE>
1 Current rate and next reset date shown.
2 Each issue shows the rate of discount at the time of purchase.
3 The repurchase agreements are fully collateralized by U.S. Treasury and/or
government agency 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.
4 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.
5 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($329,242,610) at June 30, 1999.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase
agreements $ 160,300,000
Investments in securities 171,590,111
Total investments in
securities, at amortized
cost and value $ 331,890,111
Cash 88,123
Income receivable 1,510,681
Receivable for shares sold 3,359
TOTAL ASSETS 333,492,274
LIABILITIES:
Payable for investments
purchased 2,945,393
Income distribution
payable 1,297,630
Accrued expenses 6,641
TOTAL LIABILITIES 4,249,664
Net assets for 329,242,610
shares outstanding $ 329,242,610
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$329,242,610 / 329,242,610
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 9,151,784
EXPENSES:
Investment advisory fee $ 741,221
Administrative personnel
and services fee 139,720
Custodian fees 10,251
Transfer and dividend
disbursing agent fees and
expenses 28,625
Directors'/Trustees' fees 7,306
Auditing fees 5,864
Legal fees 4,079
Portfolio accounting fees 40,057
Shareholder services fee 463,263
Share registration costs 10,977
Printing and postage 8,916
Insurance premiums 1,759
Miscellaneous 2,177
TOTAL EXPENSES 1,464,215
WAIVERS:
Waiver of investment
advisory fee $ (233,050)
Waiver of shareholder
services fee (370,610)
TOTAL WAIVERS (603,660)
Net expenses 860,555
Net investment income $ 8,291,229
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 8,291,229 $ 18,938,821
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (8,291,229) (18,938,821)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 626,767,060 1,340,144,670
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,242,248 5,415,142
Cost of shares redeemed (649,785,624) (1,484,833,055)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (20,776,316) (139,273,243)
Change in net assets (20,776,316) (139,273,243)
NET ASSETS:
Beginning of period 350,018,926 489,292,169
End of period $ 329,242,610 $ 350,018,926
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
JUNE 30, YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
<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 0.02 0.05 0.05 0.05 0.06 0.04
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.04)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.24% 5.16% 5.24% 5.10% 5.72% 3.99%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.79% 3 0.79% 0.79% 0.79% 0.78% 0.56%
Net investment income 2 4.14% 3 4.71% 4.77% 4.66% 5.25% 3.78%
Expenses (after waivers) 0.46% 3 0.46% 0.46% 0.46% 0.46% 0.45%
Net investment income (after waivers) 4.47% 3 5.04% 5.10% 4.99% 5.57% 3.89%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $329,243 $350,019 $489,292 $609,589 $773,851 $977,106
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
JUNE 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Short-Term U.S. Government Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. Effective April 29, 1999, the Fund became a
portfolio of the Money Market Obligations Trust (the "Trust"). The Trust
consists of 13 portfolios. The financial statements included herein are only
those of the Fund. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is high current income consistent with
stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund 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 Fund 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 Fund 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 Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund'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 Fund 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 Fund'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 Fund may engage in when-issued or delayed delivery transactions. The Fund
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 June
30, 1999, capital paid-in aggregated $329,242,610. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C>
Shares sold 626,767,060 1,340,144,670
Shares issued to
shareholders in payment of
distributions declared 2,242,248 5,415,142
Shares redeemed (649,785,624) (1,484,833,055)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (20,776,316) (139,273,243)
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund 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, Inc. 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC 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 FSSC, serves as transfer and dividend disbursing
agent for the Fund. 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 Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Fund are Officers and Directors or
Trustees of the above companies.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund'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 Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
J. CHRISTOPHER DONAHUE
President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD J. THOMAS
Treasurer
RICHARD B. FISHER
Vice President
DEBORAH A. CUNNINGHAM
Vice President
MARY JO OCHSON
Vice President
LESLIE K. ROSS
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 investment risk,
including the possible loss of principal.
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.
[Graphic]
Federated
World-Class Investment Manager
Federated Short-Term U.S. Government Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JUNE 30, 1999
SEMI-ANNUAL REPORT
[Graphic]
Federated
Federated Short-Term U.S. Government Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 60934N765
8080106 (8/99)
[Graphic]
