TRUST FOR
SHORT-TERM U.S.
GOVERNMENT
SECURITIES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
898331103
8063001 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Trust for
Short-Term U.S. Government Securities (the "Trust"), which covers the six-month
period from December 1, 1993 through
May 31, 1994. The Report includes the Investment Review and Financial
Statements, which contain the Trust's Portfolio of Investments.
The Trust continues to pursue daily income, which may be exempt from state and
local taxes, along with the additional advantages of daily liquidity and
stability of principal*--all through a portfolio composed of U.S. Treasury and
U.S. government agency obligations and repurchase agreements backed by these
obligations. At the end of the period, repurchase agreements made up more than
67 percent of the portfolio, due to their yield advantage.
At the end of the period, the Trust's net assets stood at $1.5 billion.
Dividends paid to shareholders during the period totaled $25 million, or $0.02
per share.
Thank you for selecting Trust for Short-Term U.S. Government Securities as a
cash investment. We will continue to keep you up to date, and we welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
July 15, 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 Short-Term U.S. Government Securities (the "Trust") is invested in
direct U.S. Treasury and U.S. government agency obligations and in repurchase
agreements which have these securities as collateral. Although the Trust has
maintained a Treasury position due to narrow agency yield spreads over
Treasuries, the Trust continues to invest in issues of the Student Loan
Marketing Association, Federal Farm Credit Bank System, and Federal Home Loan
Bank System. Recently, the Trust has been managed with a somewhat conservative
average maturity of 30-40 days.
The semi-annual reporting period saw the first changes in Federal Reserve Board
(the "Fed") policy since September, 1992. The Fed tightened monetary policy by
increasing the Federal funds target rate from 3% to 4.25% over the period from
February, 1994, through May, 1994. The moves were viewed as being a preemptive
strike against the threat of inflation by removing the stimulus that the Fed had
been providing to the economy through an overly accommodative policy stance.
With inflation apparently under control and economic growth slowing slightly,
Fed policy appears to be on hold temporarily at its current neutral stance.
However, rising capacity utilization rates, commodity prices, and other
inflation measures may prompt another tightening by the Fed sometime this summer
in order to keep inflation firmly in check.
Movements in short-term rates were largely driven by market sentiment early in
the reporting period, as the rate on three-month Treasury bills fell from 3.20%
at the end of November, 1993, to 3% near the end of January, 1994. Once the Fed
began tightening in February, 1994, the rate on three-month Treasury bills rose
steadily to 4.25% by the end of May, 1994.
As a yield advantage continued to exist for investments in repurchase agreements
versus direct investments in short-term Treasury and agency securities, a
substantial percentage of the Trust's investments remained in repurchase
agreements. The Trust continued to combine attractive yields from repurchase
agreements collateralized by U.S. Treasury and U.S. government agency securities
with short-term agency floating rate notes and Treasury and agency securities
with longer maturities of six to twelve months. This portfolio structure
continues to provide a competitive yield.
Over the reporting period, the Trust's average maturity drifted shorter in the
face of the somewhat uncertain environment created by the Fed. In light of the
expectations of additional tightenings in monetary policy, the Trust is expected
to continue to maintain its conservative posture in the near future, while
maximizing performance through ongoing relative value analysis. 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 SHORT-TERM U.S. GOVERNMENT SECURITIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- --------------------------------------------------------------------------- -----------------
SHORT-TERM GOVERNMENT OBLIGATIONS--19.7%
- --------------------------------------------------------------------------------------------
**FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--6.9%
---------------------------------------------------------------------------
$ 101,500,000 3.18%-4.76%, 6/30/94-11/28/94 $ 100,682,847
--------------------------------------------------------------------------- -----------------
FEDERAL HOME LOAN BANK NOTES--1.0%
---------------------------------------------------------------------------
14,000,000 8.625%, 6/27/94 14,051,287
--------------------------------------------------------------------------- -----------------
**FEDERAL HOME LOAN BANK, DISCOUNT NOTES--5.5%
---------------------------------------------------------------------------
81,000,000 3.17%-4.70%, 7/25/94-4/24/95 79,553,219
--------------------------------------------------------------------------- -----------------
*STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--6.3%
---------------------------------------------------------------------------
92,000,000 4.83%-4.93%, 8/22/94-3/27/95 91,968,636
--------------------------------------------------------------------------- -----------------
TOTAL SHORT-TERM GOVERNMENT OBLIGATIONS 286,255,989
--------------------------------------------------------------------------- -----------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--12.8%
- --------------------------------------------------------------------------------------------
U.S. TREASURY BILLS--5.8%
---------------------------------------------------------------------------
86,000,000 3.16%-4.78%, 8/4/94-5/4/95 84,812,411
--------------------------------------------------------------------------- -----------------
U.S. TREASURY NOTES--7.0%
---------------------------------------------------------------------------
101,000,000 4.25%-9.50%, 7/31/94-2/15/95 102,037,664
--------------------------------------------------------------------------- -----------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 186,850,075
--------------------------------------------------------------------------- -----------------
TOTAL SHORT-TERM OBLIGATIONS 473,106,064
--------------------------------------------------------------------------- -----------------
***REPURCHASE AGREEMENTS--67.5%
- --------------------------------------------------------------------------------------------
60,000,000 PoundDaiwa Securities America, Inc., 4.25%, dated 5/31/94,
due 6/1/94 60,000,000
---------------------------------------------------------------------------
60,000,000 PoundDonaldson, Lufkin & Jenrette Securities Corp., 4.25%,
dated 5/31/94, due 6/1/94 60,000,000
---------------------------------------------------------------------------
50,000,000 PoundFirst Chicago Capital Markets, 4.25%, dated 5/31/94,
due 6/1/94 50,000,000
---------------------------------------------------------------------------
225,000,000 PoundGreenwich Capital Markets, Inc., 4.27%, dated 5/31/94,
due 6/1/94 225,000,000
---------------------------------------------------------------------------
9,300,000 PoundJ.P. Morgan Securities, Inc., 4.27%, dated 5/31/94,
due 6/1/94 9,300,000
---------------------------------------------------------------------------
50,000,000 PoundKidder, Peabody & Co., Inc., 4.30%, dated 5/31/94, due 6/1/94 50,000,000
---------------------------------------------------------------------------
40,000,000 PoundNationsbank Corp., 4.24%, dated 5/31/94, due 6/1/94 40,000,000
---------------------------------------------------------------------------
70,000,000 PoundNikko Securities Co., 4.25%, dated 5/31/94, due 6/1/94 70,000,000
---------------------------------------------------------------------------
320,000,000 PoundPaineWebber, Inc., 4.30%, dated 5/31/94, due 6/1/94 320,000,000
---------------------------------------------------------------------------
60,000,000 PoundS.G. Warburg & Co., Inc., 4.25%, dated 5/31/94, due 6/1/94 60,000,000
---------------------------------------------------------------------------
18,000,000 @Merrill Lynch Government Securities, Inc., 4.25%, dated 5/6/94, due 8/4/94 18,000,000
---------------------------------------------------------------------------
21,000,000 @UBS Securities, Inc., 4.30%, dated 5/19/94, due 6/9/94 21,000,000
--------------------------------------------------------------------------- -----------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 983,300,000
--------------------------------------------------------------------------- -----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $ 1,456,406,064\
--------------------------------------------------------------------------- -----------------
</TABLE>
* Denotes variable rate obligations for which current rates and next reset
dates are shown.
** Each issue shows the rate of discount at the time of purchase.
*** Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
Pound The investment in the repurchase agreement was through participation in a
joint account with other Federated funds.
@ Although the final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,455,888,330) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $ 983,300,000
- -----------------------------------------------------------------------------
Investments in other securities 473,106,064
- ----------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A) $ 1,456,406,064
- ----------------------------------------------------------------------------------------------
Cash 930,407
- ----------------------------------------------------------------------------------------------
Interest receivable 2,748,767
- ----------------------------------------------------------------------------------------------
Receivable for Trust shares sold 247,069
- ---------------------------------------------------------------------------------------------- -----------------
Total assets 1,460,332,307
- ----------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------
Dividends payable $ 4,023,401
- -----------------------------------------------------------------------------
Payable for Trust shares redeemed 246,939
- -----------------------------------------------------------------------------
Accrued expenses 173,637
- ----------------------------------------------------------------------------- ---------------
Total liabilities 4,443,977
- ---------------------------------------------------------------------------------------------- -----------------
NET ASSETS for 1,455,888,330 shares of beneficial interest outstanding $ 1,455,888,330
- ---------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($1,455,888,330 / 1,455,888,330 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $ 1.00
- ---------------------------------------------------------------------------------------------- -----------------
(SEE NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS)
</TABLE>
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income (Note 2B) $ 28,933,836
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 3,296,022
- -----------------------------------------------------------------------------------
Trustees' fees 9,500
- -----------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 510,729
- -----------------------------------------------------------------------------------
Custodian and portfolio accounting fees 134,170
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 27,915
- -----------------------------------------------------------------------------------
Shareholder services fee (Note 4) 204,546
- -----------------------------------------------------------------------------------
Trust share registration fees 14,385
- -----------------------------------------------------------------------------------
Auditing fee 19,750
- -----------------------------------------------------------------------------------
Legal fees 52,000
- -----------------------------------------------------------------------------------
Printing and postage 3,500
- -----------------------------------------------------------------------------------
Taxes 18,066
- -----------------------------------------------------------------------------------
Insurance premiums 15,000
- -----------------------------------------------------------------------------------
Miscellaneous 19,820
- ----------------------------------------------------------------------------------- -------------
Total expenses 4,325,403
- -----------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 589,200
- ----------------------------------------------------------------------------------- -------------
Net expenses 3,736,203
- -------------------------------------------------------------------------------------------------- --------------
Net investment income $ 25,197,633
- -------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 25,197,633 $ 61,504,285
- ------------------------------------------------------------------------ ------------------ --------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ------------------------------------------------------------------------
Dividends to shareholders from net investment income (25,197,633) (61,504,285)
- ------------------------------------------------------------------------ ------------------ --------------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ------------------------------------------------------------------------
Proceeds from sale of shares 4,134,534,078 9,948,537,734
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 2,664,053 5,956,915
- ------------------------------------------------------------------------
Cost of shares redeemed (4,411,711,498) (10,582,840,994)
- ------------------------------------------------------------------------ ------------------ --------------------
Change in net assets from Trust share transactions (274,513,367) (628,346,345)
- ------------------------------------------------------------------------ ------------------ --------------------
Change in net assets (274,513,367) (628,346,345)
- ------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------
Beginning of period 1,730,401,697 2,358,748,042
- ------------------------------------------------------------------------ ------------------ --------------------
End of period $ 1,455,888,330 $ 1,730,401,697
- ------------------------------------------------------------------------ ------------------ --------------------
* Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 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 0.02 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.06 0.08
- ---------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS
DISTRIBUTIONS
- ----------------
Dividends to
shareholders
from net
investment
income (0.02) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.06) (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** 1.54% 2.87% 3.72% 6.10% 8.08% 9.01% 7.05% 6.09% 6.59% 8.65%
- ----------------
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 3.06%(a) 2.82% 3.68% 5.99% 7.79% 8.65% 6.79% 5.90% 6.39% 7.91%
- ----------------
SUPPLEMENTAL
DATA
- ----------------
Net assets, end
of period
(000 omitted) $1,455,888 $1,730,402 $2,358,748 $2,802,108 $3,603,455 $3,852,650 $3,993,621 $5,148,285 $5,866,222 $6,108,833
- ----------------
<CAPTION>
1984
<S> <C>
- ---------------- ---------
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 1.00
- ----------------
INCOME FROM
INVESTMENT
OPERATIONS
- ----------------
Net investment
income 0.10
- ---------------- ---------
LESS
DISTRIBUTIONS
- ----------------
Dividends to
shareholders
from net
investment
income (0.10)
- ---------------- ---------
NET ASSET VALUE,
END OF PERIOD $ 1.00
- ---------------- ---------
TOTAL RETURN** 10.07%
- ----------------
RATIOS TO
AVERAGE NET
ASSETS
- ----------------
Expenses 0.45%
- ----------------
Net investment
income 9.61%
- ----------------
SUPPLEMENTAL
DATA
- ----------------
Net assets, end
of period
(000 omitted) $6,141,101
- ----------------
</TABLE>
* Six months ended May 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 SHORT-TERM U.S. GOVERNMENT SECURITIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end, no load, 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. These
policies are in conformity with generally accepted accounting principles.
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
Act.
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 collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
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 (the "Trustees").
C. 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.
D. 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 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 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.
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 May
31, 1994, capital paid-in aggregated $1,455,888,330. Transactions in Trust
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------------
1994* 1993
<S> <C> <C>
- -------------------------------------------------------------------------- ----------------- ------------------
Shares sold 4,134,534,078 9,948,537,734
- --------------------------------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 2,664,053 5,956,915
- --------------------------------------------------------------------------
Shares redeemed (4,411,711,498) (10,582,840,994)
- -------------------------------------------------------------------------- ----------------- ------------------
Net change resulting from Trust share transactions (274,513,367) (628,346,345)
- -------------------------------------------------------------------------- ----------------- ------------------
</TABLE>
* Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
ADVISORY FEE--Federated Research, the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.40 of 1% 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 .45 of 1% of average daily net assets
of the Trust.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the FAS fee is based
on the level of average aggregate 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 SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average net assets of the Trust 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 and dividend disbursing agent for the Trust. The
FServ 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 or
Directors 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
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. Investment in these shares
involves 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.
