PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Trust for
Short-Term U.S. Government Securities, which covers the six-month reporting
period from December 1, 1996, through May 31, 1997. The report contains
commentary by the portfolio manager, followed by a complete listing of the
trust's investments on the last day of the reporting period, and the
financial statements.
This money market mutual fund pursues daily income, which may be exempt from
state taxes, along with the additional advantages of daily liquidity and
stability of principal* through a portfolio composed of U.S. Treasury and
government agency obligations and repurchase agreements backed by these
obligations.
Dividends paid to shareholders over the reporting period totaled $0.02 per
share. At the end of the reporting period, the trust's net assets stood at
$690.2 million.
Thank you for selecting Trust for Short-Term U.S. Government Securities as a
daily cash investment. We welcome your comments and suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
July 15, 1997
* 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 the fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Trust for Short-term U.S. Government Securities is invested in direct U.S.
Treasury and U.S. government agency obligations and in repurchase agreements
which have these securities as collateral. The trust continues to invest in
issues of the Student Loan Marketing Association, Federal Farm Credit Bank
System, and Federal Home Loan Bank System, and maintains a small Treasury
position for liquidity purposes.
After keeping monetary policy on hold for most of the reporting period,
indeed, for over a year, on March 25, 1997, the Federal Reserve Board (the
"Fed") voted to raise the federal funds target rate by 25 basis points to
5.50% from 5.25%. The move was seen as being preemptive against inflation in
the face of persistent demand. At the beginning of the reporting period,
short-term interest rates traded within a fairly narrow range, lulled by
continued evidence of benign inflationary pressures. Continued 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, spurred onward by Congressional testimony by Fed
Chairman 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.
In the following weeks, short-term interest rates traded within a relatively
narrow range as market participants debated the timing of the next
tightening. As signs of a weakening in consumer demand finally appeared,
rates then fell in late April and throughout May 1997. The decline in rates
offered on Treasury bills over the reporting period, however, was
exacerbated by technical factors, in particular, a reduction in the overall
auction sizes of Treasury bills due to larger-than-expected tax receipts by
the Treasury.
Movements in the six-month Treasury bill over the reporting period reflected
both shifting market sentiment regarding the Fed and these technical
influences. The yield on this security opened December 1996, at 5.20%, and
traded between 5.15% and 5.35% until mid-February. As fears that strong
economic growth might spark inflationary pressures unsettled the market, the
yield on the six-month Treasury bill then rose steadily to 5.60% by the time
of the Fed tightening. The yield then stayed high for several weeks before
falling to close the period at 5.40%.
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. The
trust's portfolio continued to be barbelled in structure, combining
attractive yields from repurchase agreements collateralized by U.S. Treasury
and 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 pursue a competitive yield.
Over the reporting period, the trust reduced its holdings of Treasuries and
repurchase agreements in favor of fixed-rate agency securities, due to the
relatively attractive spreads available in that sector. With a friendly
inflation picture and signs of a slowing in the demand side of the economy,
we would expect the Fed to remain on hold in the near future, and the trust
will likely maintain its current average maturity positioning.
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM GOVERNMENT OBLIGATIONS -- 41.0%
Federal Farm Credit Bank Note -- 0.6%
$ 4,000,000 5.600%, 6/3/1997 $ 3,999,969
(a)Federal Farm Credit Bank, Discount Notes -- 4.1%
28,640,000 5.39% - 5.790%, 6/23/1997 - 9/30/1997 28,452,530
(b)Federal Farm C redit Bank, Floating Rate Notes -- 2.1%
14,000,000 5.520%, 6/3/1997 13,993,221
Federal Home Loan Bank Notes -- 2.5%
17,300,000 5.460% - 6.025%, 11/18/1997 - 4/15/1998 17,287,415
(a)Federal Home Loan Bank, Discount Notes -- 18.0%
125,915,000 5.380% - 5.880%, 6/5/1997 - 11/28/1997 124,339,894
(b)Federal Home Loan Bank, Floating Rate Notes -- 5.2%
36,000,000 5.349% - 5.563%, 6/3/1997 - 6/23/1997 35,988,911
Student Loan Marketing Association Notes -- 1.4%
10,000,000 5.535% - 5.620%, 6/30/1997 - 2/25/1998 9,981,158
(b)Student Loan Marketing Association, Floating Rate Notes -- 7.1%
49,000,000 5.350% - 5.410%, 6/3/1997 48,989,287
TOTAL SHORT-TERM GOVERNMENT OBLIGATIONS 283,032,385
SHORT-TERM U.S. TREASURY OBLIGATIONS -- 4.5%
(a)U.S. Treasury Bills -- 0.9%
7,000,000 5.300% - 5.360%, 3/5/1998 6,712,689
U.S. Treasury Notes -- 3.6%
24,500,000 6.125%-7.875%, 11/15/1997-5/15/1998 24,691,635
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 31,404,324
(C)REPURCHASE AGREEMENTS -- 54.6%
30,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.57%, dated 5/30/1997, due 6/2/1997 30,000,000
165,000,000 Fuji Government Securities, Inc., 5.57%, dated 5/30/1997, due 6/2/1997 165,000,000
6,000,000 (d)Goldman Sachs Group, LP, 5.44%, dated 5/23/1997, due 7/3/1997 6,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
REPURCHASE AGREEMENTS -- CONTINUED
$ 30,000,000 Greenwich Capital Markets, Inc., 5.55%, dated 5/30/1997, due 6/2/1997 $ 30,000,000
30,000,000 Nesbitt Burns Securities, Inc., 5.55%, dated 5/30/1997, due 6/2/1997 30,000,000
35,000,000 PaineWebber, Group, Inc., 5.57%, dated 5/30/1997, due 6/2/1997 35,000,000
15,800,000 Swiss Bank Capital Markets, 5.55%, dated 5/30/1997, due 6/2/1997 15,800,000
19,000,000 (d)Swiss Bank Capital Markets, 5.51%, dated 4/2/1997, due 6/2/1997 19,000,000
30,000,000 UBS Securities, Inc., 5.57%, dated 5/30/1997, due 6/2/1997 30,000,000
16,000,000 (d)UBS Securities, Inc., 5.50%, dated 4/2/1997, due 6/2/1997 16,000,000
TOTAL REPURCHASE AGREEMENTS 376,800,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 691,236,709
</TABLE>
(a) Each issue shows the effective yield.
(b) Denotes variable rate securities which show current rate and next demand
date.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in a joint account with other Federated funds.
(d) 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.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($690,252,906) at May 31, 1997.
(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, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 376,800,000
Investments in securities 314,436,709
Total investments in securities, at amortized cost and value $ 691,236,709
Cash 86,029
Income receivable 2,033,103
Receivable for shares sold 2,074
Total assets 693,357,915
LIABILITIES:
Income distribution payable 3,031,805
Accrued expenses 73,204
Total liabilities 3,105,009
NET ASSETS for 690,252,906 shares outstanding $ 690,252,906
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$690,252,906 / 690,252,906 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 21,706,951
EXPENSES:
Investment advisory fee $ 1,590,632
Administrative personnel and services fee 300,232
Custodian fees 36,430
Transfer and dividend disbursing agent fees and expenses 53,152
Directors'/Trustees' fees 7,814
Auditing fees 6,245
Legal fees 7,500
Portfolio accounting fees 54,877
Shareholder services fee 994,145
Share registration costs 7,654
Printing and postage 5,000
Insurance premiums 4,368
Taxes 6,460
Miscellaneous 1,277
Total expenses 3,075,786
Waivers --
Waiver of investment advisory fee $ (476,895)
Waiver of shareholder services fee (795,316)
Total waivers (1,272,211)
Net expenses 1,803,575
Net investment income $ 19,903,376
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30,
MAY 31, 1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 19,903,376 $ 43,227,608
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (19,903,376) (43,227,608)
SHARE TRANSACTIONS --
Proceeds from sale of shares 1,618,792,156 3,693,374,650
Net asset value of shares issued to shareholders in payment of
distributions declared 2,621,730 5,768,359
Cost of shares redeemed (1,775,269,286) (3,807,791,877)
Change in net assets resulting from share transactions (153,855,400) (108,648,868)
Change in net assets (153,855,400) (108,648,868)
NET ASSETS:
Beginning of period 844,108,306 952,757,174
End of period $ 690,252,906 $ 844,108,306
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
MAY 31, YEAR ENDED NOVEMBER 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 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07
LESS DISTRIBUTIONS
Distributions from
net investment
income (0.02) (0.05) (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07)
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) 2.52% 5.09% 5.63% 3.70% 2.87% 3.72% 6.10% 8.08% 9.01% 7.05%
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 5.01%* 4.98% 5.47% 3.55% 2.82% 3.68% 5.99% 7.79% 8.65% 6.79%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $690,253 $844,108 $952,757 $1,184,269 $1,730,402 $2,358,748 $2,802,108 $3,603,455 $3,852,650 $3,993,621
</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 SHORT-TERM U.S. GOVERNMENT SECURITIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
1. ORGANIZATION
Trust for Short-Term U.S. Government Securities (the "Trust") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as an
open-end management investment company. The investment objective of the
Trust is high current income consistent with stability of principal and
liquidity.
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
May 31, 1997, capital paid-in aggregated $690,252,906.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX-MONTH YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1997 1996
<S> <C> <C>
Shares sold 1,618,792,156 3,693,374,650
Shares issued to shareholders in payment of distributions declared 2,621,730 5,768,359
Shares redeemed (1,775,269,286) (3,807,791,877)
Net change resulting from share transactions (153,855,400) (108,648,868)
</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 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 for the period.
This fee is to obtain 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
Matthew S. Hardin
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
SHORT-TERM U.S.
GOVERNMENT
SECURITIES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1997
[Graphic]Federated Investors
Federated Securities Corp., Distributor
Cusip 898331103
8063001 (7/97)
[Graphic]
