-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PpNWjYosqjDO+Vi1WWpBmyNEjvCbeFM/2aSTJ8DtO9QNL/BK+1XEyuPivGzOvWS4 OR8/zjz17EnYyDQOZz6Myg== 0000856517-99-000025.txt : 19990802 0000856517-99-000025.hdr.sgml : 19990802 ACCESSION NUMBER: 0000856517-99-000025 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONEY MARKET OBLIGATIONS TRUST /NEW/ CENTRAL INDEX KEY: 0000856517 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05950 FILM NUMBER: 99673652 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TWR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122882614 MAIL ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURG STATE: PA ZIP: 15222-3779 N-30D 1 SEMI-ANNUAL REPORT President's Message Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders for Federated Master Trust, which covers the six-month period from December 1, 1998 through May 31, 1999. Effective April 26, 1999, the Trust became a portfolio of Money Market Obligations Trust. The report contains commentary by the Trust's portfolio manager, followed by a complete listing of the Trust's investments on the last day of the reporting period, and its financial statements. The Trust pursues competitive daily income, along with daily liquidity and stability of principal, 1 through a diversified portfolio of money market securities. At the end of the reporting period, the portfolio was diversified among commercial paper (43.8%), repurchase agreements (12.3%), variable rate instruments (23.5%), corporate notes (5.6%), loan participation (9.5%) and certificates of deposit (5.4%). Dividends paid monthly to shareholders during the reporting period totaled $0.02 per share. At the end of the reporting period, the Trust's net assets totaled $404.9 million. Thank you for selecting Federated Master Trust as a daily cash investment. As always, we welcome your comments and suggestions. Sincerely, [Graphic] J. Christopher Donahue President July 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 Trust. Investment Review Federated Master Trust invests in money market instruments maturing in 13 months or less. The average maturity of these securities, computed on a dollar-weighted basis, is restricted to 90 days or less. Portfolio securities must be rated in the highest short-term rating category by one or more of the nationally recognized statistical rating organizations or be of comparable quality to securities having such ratings. Typical security types include, but are not limited to, commercial paper, certificates of deposit, time deposits, variable rate instruments and repurchase agreements. Economic growth for the end of 1998 and the first part of 1999 was robust, despite slowing foreign economies. Fourth quarter 1998 gross domestic product ("GDP") registered 3.90% and first quarter 1999 GDP climbed to 4.50%. Despite the high growth, inflation remained subdued by all measures. The Consumer Price Index ("CPI") 1 rose just 2.80% on an annualized basis for the six months ended May 31, 1999, and the Producer Price Index ("PPI")2 grew at 2.60% during the same period. The Employment Cost Index3 grew at an annualized 2.00% pace during the last quarter of 1998 and into the first quarter of 1999. Thirty-day commercial paper started the period at 5.00% on December 1, 1998, and then rose as high as 5.51% on December 30, 1998, reflecting year-end technical pressures. Rates fell back off again in January 1999, with 30-day commercial paper settling in at the 4.75% federal funds target rate, and ended the reporting period at 4.86%. The money market yield curve steepened throughout the reporting period. One month commercial paper rates declined 14 basis points while six month rates rose 11 basis points reflecting the concern in the market about the strength in the U.S. domestic consumer and housing markets and the concern that the Federal Reserve Board (the "Fed") may need to address this strength by raising rates. The trust's target average maturity range remained in the 45-55 day target range for the entire reporting period, reflecting a positive position regarding Fed policy and the money market yield curve. In structuring the trust, there was continued emphasis placed on positioning 30%-35% of the trust's assets in variable rate demand notes and accomplishing a modest barbell structure. During the six months ended May 31, 1999, the net assets of Federated Master Trust decreased from $465.1 million to $404.9 million while the 7- day net yield decreased from 4.93% to 4.54%. 4 The effective average maturity of the trust on May 31, 1999, was 58 days. 1 The CPI is a measure of change in consumer prices, as determined by a monthly survey of the U.S. Bureau of Labor Statistics. 2 The PPI is a measure of change in wholesale prices, as released monthly by the U.S. Bureau of Labor Statistics. 3 The Employment Cost Index is an index designed to measure the change in the cost of labor, free from the influence of employment shifts among occupations and industries, based on the changes in (1) wages and salaries, and (2) employee benefits. 4 Performance quoted represents past performance and is not indicative of future results. Yields will vary. Yields quoted for money market funds most closely reflect the trust's current earnings. Last Meeting of Shareholders A Special Meeting of shareholders of Federated Master Trust was held on March 22, 1999. On January 21, 1999, the record date for shareholder voting at the meeting, there were 475,899,717 total outstanding shares. The following items were considered by shareholders and the results of their voting were as follows: AGENDA ITEM 1 Election of Trustees: SHARES VOTED SHARES AFFIRMATIVELY WITHHELD Thomas G. Bigley 239,440,136 8,316,773 John T. Conroy, Jr. 239,446,989 8,309,920 Nicholas P. Constantakis 239,508,610 8,248,299 John F. Cunningham 239,508,610 8,248,299 J. Christopher Donahue 239,508,610 8,248,299 Peter E. Madden 239,508,610 8,248,299 Charles F. Mansfield, Jr. 239,508,610 8,248,299 John E. Murray, Jr. 239,508,610 8,248,299 John S. Walsh 239,508,610 8,248,299 The following Trustees of the trust continued their terms as Trustees: John F. Donahue, Lawrence D. Ellis, M.D. and Majorie P. Smuts. AGENDA ITEM 2 To ratify the selection of Deloitte & Touche LLP as the trust's independent auditors: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 241,690,314 177,007 5,889,588 AGENDA ITEM 3 To make changes to the trust's fundamental investment policies: (a) To approve amending the trust's fundamental investment policy with regard to diversification of its investments: SHARED SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,600,480 1,122,829 6,029,333 (b) To approve making non-fundamental, and amending, the trust's fundamental investment policy regarding maturity of money market instruments: SHARES SHARED VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,626,793 1,041,530 6,084,319 (c) To approve making non-fundamental the trust's policy prohibiting investment in securities to exercise control of an issuer: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,391,017 1,201,229 6,160,396 (d) To approve making non-fundamental, and amending, the trust's ability to invest in the securities of other investment companies: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,531,830 1,120,683 6,100,129 (e) To approve making non-fundamental the trust's policy regarding types of money market instruments which the trust is permitted to purchase: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,287,315 1,387,298 6,078,030 (f) To approve making non-fundamental the trust's ability to invest in unrated securities: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 239,867,341 1,765,604 6,119,698 (g) To approve making non-fundamental the trust's policy regarding the description of bank instruments that the trust may purchase: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,378,362 1,111,479 6,262,801 (h) To approve making non-fundamental the trust's policy regarding the description of commercial paper that the trust may purchase: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,383,853 1,197,909 6,170,880 (i) To approve making non-fundamental, and amending, the trust's policy regarding pledging assets to secure permitted borrowings: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,236,708 1,402,904 6,113,031 AGENDA ITEM 4 To eliminate the trust's fundamental investment policy on concentration and to reserve freedom to concentrate investments in the domestic banking industry: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,148,874 1,577,170 6,026,598 AGENDA ITEM 5 To approve an amendment and restatement to the trust's Declaration of Trust to require the approval by a "1940 Act" majority of shareholders in the event of the sale or conveyance of the assets of the trust to another trust or corporation: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,522,889 1,170,584 6,059,169 AGENDA ITEM 6 To approve a proposed Agreement and Plan of Reorganization between the trust and Money Market Obligations Trust, on behalf of its series, Federated Master Trust (the "New Fund"), whereby the New Fund would acquire all of the assets of the trust in exchange for shares of the New Fund to be distributed pro rata by the trust to its shareholders in complete liquidation and termination of the trust: SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 240,234,717 1,508,815 6,009,110 Portfolio of Investments MAY 31, 1999 (UNAUDITED)
PRINCIPAL AMOUNT VALUE CERTIFICATE OF DEPOSIT-5.4% BANKING-5.4% $ 5,000,000 Bank of Montreal, 5.250%, 5/12/2000 $ 4,997,719 10,000,000 Canadian Imperial Bank of Commerce, 5.030% - 5.340%, 1/27/2000 - 3/3/2000 9,996,503 2,000,000 Svenska Handelsbanken, Stockholm, 5.180%, 3/20/2000 1,999,536 5,000,000 UBS AG, 4.939% - 5.300%, 1/13/2000 - 3/10/2000 5,001,506 TOTAL CERTIFICATE OF DEPOSIT 21,995,264 COMMERCIAL PAPER-42.1% 1 BANKING-13.5% 20,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London), 5.139%, 11/26/1999 19,510,500 12,263,000 Fountain Square Commercial Funding Corp., (Fifth Third Bank, Cincinnati Support Agreement), 4.950% - 5.076%, 6/1/1999 - 10/4/1999 12,180,586 18,000,000 Greenwich Funding Corp., 4.847% - 5.119%, 6/1/1999 - 2/1/2000 17,913,103 5,000,000 UBS Finance (Delaware), Inc., (UBS AG LOC), 5.042%, 12/23/1999 4,861,625 TOTAL 54,465,814 BROKERAGE-8.4% 23,000,000 Morgan Stanley, Dean Witter & Co., 4.904%, 6/4/1999 22,990,685 11,000,000 Salomon Smith Barney Holdings, Inc., 4.891%, 6/4/1999 10,995,563 TOTAL 33,986,248 FINANCE - COMMERCIAL-20.2% 13,000,000 Asset Securitization Cooperative Corp., 4.827% - 4.913%, 6/3/1999 - 7/15/1999 12,968,045 1,000,000 Beta Finance, Inc., 4.895%, 7/6/1999 995,338 20,000,000 Falcon Asset Securitization Corp., 4.825% - 4.837%, 6/3/1999 - 6/10/1999 19,988,651 16,000,000 General Electric Capital Corp., 4.832% - 4.970%, 6/2/1999 - 8/9/1999 15,924,871 5,000,000 PREFCO-Preferred Receivables Funding Co., 4.827%, 6/3/1999 4,998,667 8,000,000 Receivables Capital Corp., 4.891%, 7/7/1999 7,961,120 19,000,000 Sheffield Receivables Corp., 4.852% - 4.907%, 6/16/1999 - 7/15/1999 18,935,821 TOTAL 81,772,513 TOTAL COMMERCIAL PAPER 170,224,575 CORPORATE NOTES-5.6% FINANCE - COMMERCIAL-5.2% 21,000,000 Beta Finance, Inc., 5.000% - 5.200%, 1/20/2000 - 5/10/2000 21,000,000 PRINCIPAL AMOUNT VALUE CORPORATE NOTES-continued FINANCE - EQUIPMENT-0.4% $ 969,304 Heller Equipment Asset Receivables Trust 1999-1, Class A1, 4.947%, 5/13/2000 $ 969,304 673,565 Newcourt Equipment Trust Securities 1998-1, Class A1, 5.007%, 11/20/1999 673,643 TOTAL 1,642,947 INSURANCE-0.0% 226,178 WFS Financial 1998-C Owner Trust, Class A1, (FSA INS), 5.395%, 11/20/1999 226,178 TOTAL CORPORATE NOTES 22,869,125 LOAN PARTICIPATION-11.2% BROKERAGE-1.2% 5,000,000 Goldman Sachs Group LP, 4.951%, 6/1/1999 5,000,000 ELECTRICAL EQUIPMENT-0.8% 3,100,000 Mt. Vernon Phenol Plant Partnership, (Guaranteed by General Electric Co.), 5.050%, 5/17/2000 3,100,000 FINANCE - AUTOMOTIVE-2.5% 10,000,000 General Motors Acceptance Corp., Mortgage of PA, (Guaranteed by General Motors Acceptance Corp.), 4.950%, 6/1/1999 10,000,000 INSURANCE-6.7% 20,200,000 Marsh & McLennan Cos., Inc., 4.960%, 7/23/1999 20,200,000 7,000,000 Aspen Funding Corp., (MBIA INS), 4.845%, 6/4/1999 6,997,188 TOTAL 27,197,188 TOTAL LOAN PARTICIPATION 45,297,188 NOTES - VARIABLE-23.5% 3 BANKING-12.9% 10,000,000 Bankers Trust Co., New York, 4.950%, 6/1/1999 9,999,944 645,000 Dave White Chevrolet, Inc., Series 1996, (Huntington National Bank, Columbus, OH LOC), 4.990%, 6/3/1999 645,000 24,750,138 2 Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank Girozentrale Swap Agreement), 4.923%, 6/15/1999 24,750,138 7,224,946 2 Rabobank Optional Redemption Trust, Series 1997-101, 5.000%, 7/17/1999 7,224,946 8,000,000 Societe Generale, Paris, 4.953%, 6/1/1999 7,998,975 1,485,000 White Brothers Properties, Series 1996, (Huntington National Bank, Columbus, OH LOC), 4.990%, 6/3/1999 1,485,000 TOTAL 52,104,003 FINANCE - RETAIL-0.5% 2,000,000 2 Bishop's Gate Residential Mortgage Trust 1998-2, Class A-1, 5.139%, 6/10/1999 2,000,000 INSURANCE-10.1% 2,000,000 GE Life and Annuity Assurance Co., 5.110%, 9/1/1999 2,000,000 PRINCIPAL AMOUNT VALUE NOTES - VARIABLE-continued 3 INSURANCE-CONTINUED $ 10,000,000 General American Life Insurance Co., 5.120%, 6/21/1999 $ 10,000,000 8,976,793 2 Liquid Asset Backed Securities Trust, Series 1997-3 Senior Notes, (Guaranteed by AMBAC Financial Group, Inc.), 4.970%, 6/28/1999 8,976,793 20,000,000 Monumental Life Insurance Co., 5.130%, 6/1/1999 20,000,000 TOTAL 40,976,793 TOTAL NOTES - VARIABLE 95,080,796 REPURCHASE AGREEMENTS- 12.3% 4 18,000,000 ABN AMRO, Inc., 4.910%, dated 5/28/1999, due 6/1/1999 18,000,000 22,000,000 Nationsbanc Montgomery Securities, Inc., 4.900%, dated 5/28/1999, due 6/1/1999 22,000,000 10,000,000 Salomon Brothers, Inc., 4.900%, dated 5/28/1999, due 6/1/1999 10,000,000 TOTAL REPURCHASE AGREEMENTS 50,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST) 5 $ 405,466,948
1 Each issue shows the rate of discount at the time of purchase for discount issues, or the coupon for interest bearing issues. 2 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At May 31, 1999, these securities amounted to $42,951,877 which represents 10.61% of total net assets. 3 Floating rate note with current rate and next reset date shown. 4 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 joint accounts with other Federated funds. 5 Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($404,939,967) at May 31, 1999. The following acronyms are used throughout this portfolio: AMBAC -American Municipal Bond Assurance Corporation FSA -Financial Security Assurance INS -Insured LOC -Letter of Credit LP -Limited Partnership MBIA - -Municipal Bond Investors Assurance PLC -Public Limited Company See Notes which are an integral part of the Financial Statements Statement of Assets and Liabilities MAY 31, 1999 (UNAUDITED) ASSETS: Investments in repurchase agreements $ 50,000,000 Investments in securities 355,466,948 Total investments in securities, at amortized cost and value $ 405,466,948 Income receivable 1,229,047 TOTAL ASSETS 406,695,995 LIABILITIES: Income distribution payable 1,649,018 Payable to Bank 94,962 Accrued expenses 12,048 TOTAL LIABILITIES 1,756,028 Net assets for 404,939,967 shares outstanding $ 404,939,967 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $404,939,967 / 404,939,967 shares outstanding $1.00
See Notes which are an integral part of the Financial Statements Statement of Operations SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED) INVESTMENT INCOME: Interest $ 11,567,888 EXPENSES: Investment advisory fee $ 907,598 Administrative personnel and services fee 171,082 Custodian fees 18,514 Transfer and dividend disbursing agent fees and expenses 13,744 Directors'/Trustees' fees 7,082 Auditing fees 7,518 Legal fees 4,007 Portfolio accounting fees 41,515 Shareholder services fee 567,249 Share registration costs 16,938 Printing and postage 7,443 Insurance premiums 17,090 Miscellaneous 4,545 TOTAL EXPENSES 1,784,325 WAIVERS: Waiver of investment advisory fee $ (292,540) Waiver of shareholder services fee (453,799) TOTAL WAIVERS (746,339) Net expenses 1,037,986 Net investment income $ 10,529,902
See Notes which are an integral part of the Financial Statements Statement of Changes in Net Assets
SIX MONTHS ENDED YEAR (unaudited) ENDED MAY 31, NOVEMBER 30, 1999 1998 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 10,529,902 $ 27,388,081 DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net investment income (10,529,902) (27,388,081) SHARE TRANSACTIONS: Proceeds from sale of shares 1,026,366,501 2,348,710,920 Net asset value of shares issued to shareholders in payment of distributions declared 1,940,060 6,627,670 Cost of shares redeemed (1,088,500,489) (2,384,603,857) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (60,193,928) (29,265,267) Change in net assets (60,193,928) (29,265,267) NET ASSETS: Beginning of period 465,133,895 494,399,162 End of period $ 404,939,967 $ 465,133,895
See Notes which are an integral part of the Financial Statements Financial Highlights (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (unaudited) MAY 31, YEAR ENDED NOVEMBER 30, 1999 1998 1997 1996 1995 1994 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 2.34% 5.33% 5.27% 5.18% 5.73% 3.78% RATIOS TO AVERAGE NET ASSETS: Expenses 0.46% 2 0.45% 0.45% 0.45% 0.46% 0.46% Net investment income 4.64% 2 5.22% 5.16% 5.04% 5.59% 3.72% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $404,940 $465,134 $494,399 $626,764 $729,144 $773,260
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 Computed on an annualized basis. See Notes which are an integral part of the Financial Statements Notes to Financial Statements MAY 31, 1999 (UNAUDITED) ORGANIZATION Federated Master Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. Effective April 26, 1999, the Trust became a portfolio of the Money Market Obligations Trust. Money Market Obligations Trust consists of 13 portfolios. The financial statements included herein are only those of the Trust. 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 Trust is 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. RESTRICTED SECURITIES Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Trustees. The Trust will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. 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 May 31, 1999, capital paid-in aggregated $404,939,967. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED MAY 31, NOVEMBER 30, 1999 1998 Shares sold 1,026,366,501 2,348,710,920 Shares issued to shareholders in payment of distributions declared 1,940,060 6,627,670 Shares redeemed (1,088,500,489) (2,384,603,857) NET CHANGE RESULTING FROM SHARE TRANSACTIONS (60,193,928) (29,265,267)
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE Federated Investment Management Company, 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, 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 Trust will pay FSSC up to 0.25% of average daily net assets of the Trust shares 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 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 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 Trust'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. 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 B. FISHER Vice President RICHARD J. THOMAS Treasurer 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 SEMI-ANNUAL REPORT Federated Master Trust SEMI-ANNUAL REPORT TO SHAREHOLDERS MAY 31, 1999 [Graphic] Federated Federated Master Trust Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor Cusip 60934N740 8070106 (7/99) [Graphic] SEMI-ANNUAL REPORT 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 period from December 1, 1998 through May 31, 1999. Effective April 26, 1999, the Trust became a portfolio of Money Market Obligations Trust. The report contains commentary by the Trust's portfolio manager, followed by a complete listing of the Trust's investments on the last day of the reporting period, and its financial statements. The Trust pursues daily income, which may be partially exempt from state and local taxes, 1 and offers the additional advantages of daily liquidity and stability of principal.2 The Trust's portfolio consists of U.S. Treasury and government agency obligations and repurchase agreements backed by these obligations. Dividends paid monthly to shareholders over the reporting period totaled $0.02 per share. At the end of the reporting period, the Trust's net assets totaled $572.4 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] J. Christopher Donahue President July 15, 1999 1 Shareholders should consult a tax adviser. 2 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 trust. Investment Review Trust for Short-Term U.S. Government Securities invests in U.S. government agency obligations, such as issues of the Federal National Mortgage Association, Student Loan Marketing Association, Federal Farm Credit System, Federal Home Loan Bank System, and Federal Home Loan Mortgage Corp., and may maintain a small position in U.S. Treasury obligations for liquidity purposes. The trust also invests in repurchase agreements that have these securities as collateral. Over the six-month reporting period ended May 31, 1999, the Federal Reserve Board (the "Fed") did not change monetary policy. The reporting period was characterized by shifts in market sentiment regarding the direction and magnitude of the next adjustment in monetary policy. The reporting period opened in the midst of relative market calm as the 75 basis points in easing steps taken by the Fed from late September to mid-November 1998 were successful in relieving the credit and liquidity strains that had gripped the financial markets. However, lingering concerns over the health of various foreign economies kept alive expectations for future easing from the Fed. As these trouble spots remained relatively stable, attention returned to domestic economic fundamentals. Propelled by relentless consumer demand and a strong housing sector, gross domestic product expanded at a powerful 6.00% in the fourth quarter of 1998, and entered 1999 with a considerable head of steam. Although growth slowed to around 4.00% in the first quarter, this still energetic pace exceeded what has traditionally been considered the non-inflationary potential of the economy. Productivity gains kept inflationary pressures remarkably restrained in the face of this growth. The markets came to acknowledge, however, that the Fed could not ignore such a robust economic fundamental picture indefinitely, and fears that a near-term tightening might occur surfaced by late February. Those anxieties were premature, as the absence of price pressures provided the Fed with more breathing room for a time. By the end of the reporting period in May, a near-term tightening to pre-empt inflation seemed inevitable. Movements in short-term interest rates reflected the shifting market sentiment. The yield on the one-year agency discount note traded at 4.90% in early December, then declined to 4.70% in the weeks that followed as the bias at the Fed remained toward additional easings. In mid January, short-term interest rates began to rise gradually as the market's focus returned to the domestic economy, and the yield on this security rose to 5.10% by late February as near term tightening fears seized the market. As these concerns subsided, the yield fell back to 4.90%, then climbed steadily once more throughout May to reach 5.30% by the end of the month. Recently, the trust's average maturity has been managed within a 40 to 50 day target range. We moved the average maturity to the upper end of that range in late February as near-term tightening fears grew. Since that time, the trust's average maturity has drifted lower as legitimate evidence has mounted that the Fed may indeed tighten monetary policy at the end of June in a pre-emptive move against inflationary pressures. Last Meeting of Shareholders A Special Meeting of shareholders of Trust for Short-Term U.S. Government Securities was held on March 22, 1999. On January 21, 1999, the record date for shareholder voting at the meeting, there were 612,143,333 total outstanding shares. The following items were considered by shareholders and the results of their voting were as follows: AGENDA ITEM 1 Election of Trustees:
WITHHELD AUTHORITY FOR TO VOTE Thomas G. Bigley 393,557,295 19,258 John T. Conroy, Jr. 393,576,553 0 Nicholas P. Constantakis 393,576,553 0 John F. Cunningham 393,576,553 0 J. Christopher Donahue 393,576,553 0 Peter E. Madden 393,576,553 0 Charles F. Mansfield, Jr. 393,576,553 0 John E. Murray, Jr. 393,576,553 0 John S. Walsh 393,576,553 0
The following Trustees of the trust continued their terms as Trustees: John F. Donahue, Lawrence D. Ellis, M.D. and Marjorie P. Smuts. AGENDA ITEM 2 To ratify the selection of Deloitte & Touche LLP as the trust's independent auditors:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 393,144,374 432,179 0
AGENDA ITEM 3 To make changes to the trust's fundamental investment policies: (a) To approve making non-fundamental, and amending, the trust's fundamental investment policy regarding maturity of money market instruments:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 370,063,444 4,374,291 19,135,275
(b) To approve amending the trust's fundamental investment policy regarding pledging securities to permit the trust to pledge assets to secure permitted borrowings:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 351,218,748 22,381,022 19,973,241
AGENDA ITEM 4 To approve a clarifying amendment to the trust's Investment Advisory Agreement to exclude Rule 12b-1 fees and shareholder service fees from the expense cap:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 340,251,019 40,717,036 12,608,497
AGENDA ITEM 5 To approve an amendment and restatement to the trust's Declaration of Trust to require the approval by a "1940 Act" majority of shareholders in the event of the sale or conveyance of the assets of the trust to another trust or corporation:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 368,495,659 9,961 25,067,390
AGENDA ITEM 6 To approve a proposed Agreement and Plan of Reorganization between the trust and Money Market Obligations Trust, on behalf of its series, Trust for Short-Term U.S. Government Securities (the "New Fund"), whereby the New Fund would acquire all of the assets of the trust in exchange for shares of the New Fund to be distributed pro rata by the trust to its shareholders in complete liquidation and termination of the trust:
SHARES SHARES VOTED VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 368,479,390 9,961 25,083,659
Portfolio of Investments MAY 31, 1999 (UNAUDITED)
PRINCIPAL AMOUNT VALUE GOVERNMENT AGENCIES-64.0% $ 10,400,000 1 Federal Farm Credit System Discount Notes, 4.700% - 5.280%, 7/7/1999 - 8/16/1999 $ 10,317,699 23,000,000 2 Federal Farm Credit System Floating Rate Notes, 4.700% - 4.780%, 6/1/1999 - 6/17/1999 22,999,747 81,000,000 2 Federal Home Loan Bank System Floating Rate Notes, 4.775% - 5.150%, 6/1/1999 - 8/26/1999 80,985,490 31,500,000 Federal Home Loan Bank System Notes, 4.790% - 5.540%, 7/6/1999 - 4/20/2000 31,488,898 85,000,000 1 Federal Home Loan Mortgage Corp. Discount Notes, 4.700% - 4.800%, 6/10/1999 - 8/10/1999 84,673,974 17,000,000 2 Federal Home Loan Mortgage Corp. Floating Rate Notes, 4.705% - 4.800%, 6/17/1999 - 8/17/1999 16,990,394 44,595,000 1 Federal National Mortgage Association Discount Notes, 4.400% - 4.780%, 6/10/1999 - 1/24/2000 44,263,868 19,000,000 2 Federal National Mortgage Association Floating Rate Notes, 4.715% - 4.785%, 6/15/1999 - 8/10/1999 18,990,324 19,500,000 Federal National Mortgage Association Notes, 4.780% - 5.180%, 11/30/1999 - 5/5/2000 19,486,799 33,000,000 2 Student Loan Marketing Association Floating Rate Notes, 4.820% - 5.450%, 6/1/1999 - 6/2/1999 32,991,502 3,500,000 Student Loan Marketing Association Note, 5.583%, 8/11/1999 3,499,727 TOTAL GOVERNMENT AGENCIES 366,688,422 REPURCHASE AGREEMENTS- 36.0% 3 15,000,000 Bankers Trust Co., New York, 4.900%, dated 5/28/1999, due 6/1/1999 15,000,000 6,000,000 4 Credit Suisse First Boston, Inc., 4.780%, dated 4/20/1999, due 7/19/1999 6,000,000 17,000,000 4 Credit Suisse First Boston, Inc., 4.780%, dated 4/28/1999, due 7/27/1999 17,000,000 3,800,000 Deutsche Bank Government Securities, Inc., 4.820%, dated 5/28/1999, due 6/1/1999 3,800,000 16,000,000 4 Lehman Brothers, Inc., 4.790%, dated 4/12/1999, due 7/12/1999 16,000,000 15,000,000 4 Morgan Stanley Group, Inc., 4.810%, dated 5/10/1999, due 8/9/1999 15,000,000 PRINCIPAL AMOUNT VALUE REPURCHASE AGREEMENTS- continued 3 $ 8,000,000 4 Nesbitt Burns, Inc., 4.790%, dated 4/14/1999, due 7/13/1999 $ 8,000,000 105,000,000 PaineWebber Group, Inc., 4.900%, dated 5/28/1999, due 6/1/1999 105,000,000 20,000,000 Prudential Securities, Inc., 4.920%, dated 5/28/1999, due 6/1/1999 20,000,000 TOTAL REPURCHASE AGREEMENTS 205,800,000 TOTAL INVESTMENTS (AT AMORTIZED COST) 5 $ 572,488,422
1 The issues show the rate of discount at time of purchase. 2 Denotes variable rate securities which show current rate and next demand date. 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 ($572,433,132) at May 31, 1999. See Notes which are an integral part of the Financial Statements Statement of Assets and Liabilities MAY 31, 1999 (UNAUDITED)
ASSETS: Investments in repurchase agreements $ 205,800,000 Investments in securities 366,688,422 Total investments in securities, at amortized cost and value $ 572,488,422 Cash 74,058 Income receivable 2,147,672 Receivable for shares sold 787 TOTAL ASSETS 574,710,939 LIABILITIES: Income distribution payable 2,218,515 Accrued expenses 59,292 TOTAL LIABILITIES 2,277,807 Net assets for 572,433,132 shares outstanding 572,433,132 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $572,433,132 / 572,433,132 shares outstanding $1.00
See Notes which are an integral part of the Financial Statements Statement of Operations SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED)
INVESTMENT INCOME: Interest $ 14,751,192 EXPENSES: Investment advisory fee $ 1,185,724 Administrative personnel and services fee 223,509 Custodian fees 19,265 Transfer and dividend disbursing agent fees and expenses 3,909 Directors'/Trustees' fees 6,985 Auditing fees 7,480 Legal fees 3,241 Portfolio accounting fees 45,938 Shareholder services fee 741,078 Share registration costs 9,922 Printing and postage 5,111 Insurance premiums 2,167 Miscellaneous 4,688 TOTAL EXPENSES 2,259,017 WAIVERS: Waiver of investment advisory fee $ (322,293) Waiver of shareholder services fee (592,862) TOTAL WAIVERS (915,155) Net expenses 1,343,862 Net investment income $ 13,407,330
See Notes which are an integral part of the Financial Statements Statement of Changes in Net Assets
SIX MONTHS ENDED YEAR (unaudited) ENDED MAY 31, NOVEMBER 30, 1999 1998 INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income $ 13,407,330 $ 33,320,259 DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net investment income (13,407,330) (33,320,259) SHARE TRANSACTIONS: Proceeds from sale of shares 1,029,554,846 2,254,528,698 Net asset value of shares issued to shareholders in payment of distributions declared 2,162,695 4,826,995 Cost of shares redeemed (1,056,969,228) (2,337,658,641) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (25,251,687) (78,302,948) Change in net assets (25,251,687) (78,302,948) NET ASSETS: Beginning of period 597,684,819 675,987,767 End of period $ 572,433,132 $ 597,684,819
See Notes which are an integral part of the Financial Statements Financial Highlights (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (unaudited) MAY 31, YEAR ENDED NOVEMBER 30, 1999 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 INCOME FROM INVESTMENT OPERATION: 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 2.28% 5.20% 5.20% 5.09% 5.63% 3.70% RATIOS TO AVERAGE NET ASSETS: Expenses 0.45%2 0.45% 0.45% 0.45% 0.45% 0.45% Net investment income 4.52%2 5.09% 5.07% 4.98% 5.47% 3.55% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted)$572,433 $597,685 $675,988 $844,108 $952,757 $1,184,269
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. 2 Computed on an annualized basis. See Notes which are an integral part of the Financial Statements Notes to Financial Statements MAY 31, 1999 (UNAUDITED) 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. Effective April 26, 1999, the Trust became a portfolio of the Money Market Obligations Trust. Money Market Obligations Trust consists of 13 portfolios. The financial statements included herein are only those of the Trust. 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 Trust 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 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 May 31, 1999, capital paid-in aggregated $572,433,132. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED MAY 31, NOVEMBER 30, 1999 1998 Shares sold 1,029,554,846 2,254,528,698 Shares issued to shareholders in payment of distributions declared 2,162,695 4,826,995 Shares redeemed (1,056,969,228) (2,337,658,641) NET CHANGE RESULTING FROM SHARE TRANSACTIONS (25,251,687) (78,302,948)
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 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, 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 Trust will pay FSSC up to 0.25% of average daily net assets of the Trust for the period. The fee paid is to obtain 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 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 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 Trust'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. 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 B. FISHER Vice President RICHARD J. THOMAS Treasurer 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 SEMI-ANNUAL REPORT Trust for Short-Term U.S. Government Securities SEMI-ANNUAL REPORT TO SHAREHOLDERS MAY 31, 1999 [Graphic] Federated Trust for Short-Term U.S. Government Securities Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor Cusip 60934N781 8063001 (7/99) [Graphic] SEMI-ANNUAL REPORT President's Message Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders for Trust For Government Cash Reserves, which covers the six-month period from December 1, 1998 through May 31, 1999. Effective April 26, 1999 the Trust became a portfolio of Money Market Obligations Trust. The report contains commentary by the Trust's portfolio manager, followed by a complete listing of the Trust's investments on the last day of the reporting period, and its financial statements. The Trust pursues daily income, which may be exempt from state and local taxes, 1 and offers the additional advantages of daily liquidity and stability of principal.2 The Trust's portfolio consists of U.S. Treasury and government agency obligations. Because the Trust does not invest in repurchase agreements, it is suitable for tax-sensitive investors in states that tax the income on these securities. Dividends paid monthly to shareholders during the reporting period totaled $0.02 per share. At the end of the reporting period, the Trust's net assets stood at $462.9 million. Thank you for selecting Trust for Government Cash Reserves as a daily cash investment. We welcome your comments and suggestions. Sincerely, [Graphic] J. Christopher Donahue President July 15, 1999 1 Shareholders should consult a tax adviser. 2 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 Trust. Investment Review Trust for Government Cash Reserves, which is rated AAAm 1 by Standard & Poor's ("S&P") and Aaa2 by Moody's Investors Services, Inc., invests exclusively in U.S. Treasury and government agency obligations, such as issues of the Student Loan Marketing Association, Federal Farm Credit System, Federal Home Loan Bank System, and Tennessee Valley Authority. The Trust does not invest in repurchase agreements, and is managed to provide distributions which are exempt from state and local taxes. Over the six-month reporting period ended May 31, 1999, the Federal Reserve Board (the "Fed") did not change monetary policy. The reporting period was characterized by shifts in market sentiment regarding the direction and magnitude of the next adjustment in monetary policy. The reporting period opened in the midst of relative market calm as the 75 basis points in easing steps taken by the Fed from late September to mid- November 1998 were successful in relieving the credit and liquidity strains that had gripped the financial markets. However, lingering concerns over the health of various foreign economies kept alive expectations for future easing from the Fed. As these trouble spots remained relatively stable, attention then returned to domestic economic fundamentals. Propelled by relentless consumer demand and a strong housing sector, gross domestic product expanded at a powerful 6.00% in the fourth quarter of 1998, and entered 1999 with a considerable head of steam. Although growth slowed to around 4.00% in the first quarter of 1999, this still energetic pace exceeded what has traditionally been considered the non-inflationary potential of the economy. Productivity gains kept inflationary pressures remarkably restrained in the face of this growth. The markets came to acknowledge, however, that the Fed could not ignore such a robust economic fundamental picture indefinitely, and fears that a near-term tightening might occur surfaced by late February. Those anxieties were premature, as the absence of price pressures provided the Fed with more breathing room for a time. By the end of the reporting period in May, a near-term tightening to preempt inflation seemed inevitable. Movements in short-term interest rates reflected the shifting market sentiment. The yield on the one-year agency discount note traded at 4.90% in early December, then declined to 4.70% in the weeks that followed as the bias at the Fed remained toward additional easings. In mid January, short-term interest rates began to rise gradually as the market's focus returned to the domestic economy, and the yield on this security rose to 5.10% by late February as near term tightening fears seized the market. As these concerns subsided, the yield fell back to 4.90%, then climbed steadily once more throughout May to reach 5.30% by the end of the month. 1 This rating is obtained after S&P evaluates a number of factors, including credit quality, market price exposure and management. S&P monitors the portfolio weekly for developments that could cause changes in the ratings. Ratings are subject to change, and do not remove market risks. 2 Money market funds rated Aaa by Moody's Investors Services, 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. Recently, the trust's average maturity has been managed within a 40 to 50 day target range. We moved the average maturity to the upper end of that range in late February as near-term tightening fears grew. Since that time, the trust's average maturity has drifted lower as legitimate evidence has mounted that the Fed may indeed tighten monetary policy at the end of June in a preemptive move against inflationary pressures. Over the reporting period the trust's portfolio tended to be barbelled in structure, and continued to pursue a competitive yield. Close to one-third of the trust was invested in U.S. government agency floating rate notes, including a master note agreement designed to facilitate portfolio liquidity, which in addition to short-term agency discount notes, comprised the short-end of the barbell. The trust combined this short position with Treasury and agency securities with longer maturities of six to twelve months. Last Meeting of Shareholders A Special Meeting of shareholders of Trust for Government Cash Reserves was held on March 22, 1999. On January 21, 1999, the record date for shareholder voting at the meeting, there were 531,053,829 total outstanding shares. The following items were considered by shareholders and the results of their voting were as follows: AGENDA ITEM 1 Election of Trustees: 1
SHARES VOTED SHARES AFFIRMATIVELY WITHHELD Thomas G. Bigley 366,288,718 0 John T. Conroy, Jr. 366,288,718 0 John F. Cunningham 366,288,718 0 Peter E. Madden 366,288,718 0 Charles F. Mansfield, Jr. 366,288,718 0 John E. Murray, Jr., J.D., S.J.D. 366,288,718 0 John S. Walsh 366,288,718 0
1 The following Trustees of the Trust continued their terms as Trustees: John. F. Donahue, Lawrence D. Ellis, M.D. and Marjorie P. Smuts. AGENDA ITEM 2 To ratify the selection of Arthur Andersen LLP as the trust's independent auditors:
SHARES VOTED SHARES VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 366,288,718 0 0
AGENDA ITEM 3 To approve a proposed Agreement and Plan of Reorganization between the trust and Money Market Obligations Trust, on behalf of its series, Trust for Government Cash Reserves (the "New Fund"), whereby the New Fund would acquire all of the assets of the trust in exchange for shares of the New Fund to be distributed pro rata by the trust to its shareholders in complete liquidation and termination of the trust:
SHARES VOTED SHARES VOTED SHARES AFFIRMATIVELY NEGATIVELY ABSTAINING 366,132,371 0 156,346
Portfolio of Investments MAY 31, 1999 (UNAUDITED)
PRINCIPAL AMOUNT VALUE GOVERNMENT AGENCIES-99.9% $ 23,500,000 1 Federal Farm Credit System Discount Notes, 4.580% - 4.750%, 6/1/1999 - 8/27/1999 $ 23,358,057 16,000,000 2 Federal Farm Credit System Floating Rate Notes, 4.705% - 4.780%, 6/24/1999 15,998,973 10,000,000 Federal Farm Credit System Notes, 5.000% - 5.550%, 6/1/1999 - 4/3/2000 9,997,048 183,045,000 1 Federal Home Loan Bank System Discount Notes, 4.653% - 4.800%, 6/16/1999 - 8/13/1999 182,051,621 74,500,000 2 Federal Home Loan Bank System Floating Rate Notes, 4.721% - 5.150%, 6/1/1999 - 8/26/1999 74,492,615 22,810,000 Federal Home Loan Bank System Notes, 4.790% - 5.540%, 7/13/1999 - 4/28/2000 22,801,496 35,000,000 2 Student Loan Marketing Association Floating Rate Notes, 4.726% - 5.450%, 6/1/1999 - 6/2/1999 34,992,886 18,000,000 2 Student Loan Marketing Association Floating Rate Master Note, 4.921%, 6/1/1999 18,000,000 11,000,000 Student Loan Marketing Association Notes, 4.930% - 5.890%, 8/11/1999 - 2/8/2000 11,017,786 70,000,000 1 Tennessee Valley Authority Discount Notes, 4.660% - 4.700%, 6/2/1999 - 6/16/1999 69,918,862 TOTAL GOVERNMENT AGENCIES 462,629,344 TOTAL INVESTMENTS (AT AMORTIZED COST) 3 $ 462,629,344
1 The issues show the rate of discount at time of purchase. 2 Denotes variable rate securities which show current rate and next demand date. 3 Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($462,942,548) at May 31, 1999. See Notes which are an integral part of the Financial Statements Statement of Assets and Liabilities MAY 31, 1999 (UNAUDITED)
ASSETS: Total investments in securities, at amortized cost and value $ 462,629,344 Cash 575,762 Income receivable 1,524,059 TOTAL ASSETS 464,729,165 LIABILITIES: Income distribution payable $ 1,762,108 Accrued expenses 24,509 TOTAL LIABILITIES 1,786,617 Net assets for 462,942,548 shares outstanding $ 462,942,548 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $462,942,548 / 462,942,548 shares outstanding $1.00
See Notes which are an integral part of the Financial Statements Statement of Operations SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED)
INVESTMENT INCOME: Interest $ 12,929,804 EXPENSES: Investment advisory fee $ 1,042,837 Administrative personnel and services fee 196,575 Custodian fees 16,086 Transfer and dividend disbursing agent fees and expenses 6,056 Directors'/Trustees' fees 6,625 Auditing fees 6,485 Legal fees 2,689 Portfolio accounting fees 49,158 Shareholder services fee 651,773 Share registration costs 9,076 Printing and postage 3,875 Insurance premiums 1,772 Miscellaneous 6,867 TOTAL EXPENSES 1,999,874 WAIVERS: Waiver of investment advisory fee $ (283,335) Waiver of shareholder services fee (521,418) TOTAL WAIVERS (804,753) Net expenses 1,195,121 Net investment income $ 11,734,683
See Notes which are an integral part of the Financial Statements Statement of Changes in Net Assets
SIX MONTHS ENDED YEAR (unaudited) ENDED MAY 31, NOVEMBER 30, 1999 1998 INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income $ 11,734,683 $ 27,890,235 DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net investment income (11,734,683) (27,890,235) SHARE TRANSACTIONS: Proceeds from sale of shares 730,750,372 1,501,544,374 Net asset value of shares issued to shareholders in payment of distributions declared 1,376,641 3,374,747 Cost of shares redeemed (804,190,981) (1,532,616,817) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (72,063,968) (27,697,696) Change in net assets (72,063,968) (27,697,696) NET ASSETS: Beginning of period 535,006,516 562,704,212 End of period $ 462,942,548 $ 535,006,516
See Notes which are an integral part of the Financial Statements Financial Highlights (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (unaudited) MAY 31, YEAR ENDED NOVEMBER 30, 1999 1998 1997 1996 1995 1994 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 0.05 0.04 LESS DISTRIBUTIONS: Distributions from net investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.04) NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN 1 2.27% 5.16% 5.15% 5.08% 5.60% 3.74% RATIOS TO AVERAGE NET ASSETS: Expenses 2 0.77% 3 0.77% 0.77% 0.78% 0.77% 0.55% Net investment income 2 4.20% 3 4.75% 4.71% 4.67% 5.13% 3.58% Expenses (after waivers) 0.46% 3 0.46% 0.46% 0.46% 0.45% 0.45% Net investment income (after waivers) 4.50% 3 5.06% 5.02% 4.99% 5.45% 3.68% SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $462,943 $535,007 $562,704 $599,550 $739,553 $978,691
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 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 MAY 31, 1999 (UNAUDITED) ORGANIZATION Trust for Government Cash Reserves (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. Effective April 26, 1999, the Trust became a portfolio of the Money Market Obligations Trust. Money Market Obligations Trust consists of 13 portfolios. The financial statements included herein are only those of the Trust. 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 Trust 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 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. 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 trade 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At May 31,1999, capital paid-in aggregated $462,942,548. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED MAY 31, NOVEMBER 30, 1999 1998 Shares sold 730,750,372 1,501,544,374 Shares issued to shareholders in payment of distributions declared 1,376,641 3,374,747 Shares redeemed (804,190,981) (1,532,616,817) NET CHANGE RESULTING FROM SHARE TRANSACTIONS (72,063,968) (27,697,696)
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE Federated Investment Management Company, 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 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 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, 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 Trust will pay FSSC up to 0.25% of average daily net assets of the Trust shares 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 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 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. SUBSEQUENT EVENT Change of Independent Auditors: On May 19, 1999, the Trust's Board of Trustees, upon the recommendation of the Audit Committee of the Board of Trustees, dismissed Arthur Andersen LLP ("AA") as the Trust's independent auditors. During the six-month reporting period ended May 31, 1999 (the "Period"): (i) AA did not issue any report on the Trust's financial statements; (ii) there were no disagreements with AA on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of AA, would have caused it to make reference to the subject matter of the disagreements in connection with its report on the financial statements for such period; and (iii) there were no "reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended. The Trust, by action of its Board of Trustees, engaged Deloitte & Touche LLP ("D&T") as the independent auditors for purposes of auditing the Trust's financial statements for the fiscal year ending November 30, 1999. During the Period, neither the Trust, nor anyone on the Trust's behalf has consulted D&T on items which (i) concerned the application of the accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Trust's financial statements or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304). 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 B. FISHER Vice President RICHARD J. THOMAS Treasurer 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 SEMI-ANNUAL REPORT Trust for Government Cash Reserves SEMI-ANNUAL REPORT TO SHAREHOLDERS MAY 31, 1999 [Graphic] Federated Trust for Government Cash Reserves Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 1-800-341-7400 WWW.FEDERATEDINVESTORS.COM Federated Securities Corp., Distributor Cusip 60934N773 0062905 (7/99) [Graphic] -----END PRIVACY-ENHANCED MESSAGE-----