PRESIDENT'S MESSAGE
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
GNMA Trust. The report covers the six-month reporting period ended July 31,
1997, and includes the trust's investment review, portfolio holdings, and
financial statements.
In pursuit of current income, the trust's portfolio invests primarily in a
diversified portfolio of Government National Mortgage Association ("GNMA")
securities. Dividends paid by the trust during this reporting period totaled
$0.37 per share for Institutional Shares and $0.36 per share for Institutional
Service Shares. Total net returns for Institutional Shares and Institutional
Service Shares were 4.68%* and 4.57%,* respectively. The trust's total net
assets stood at $1.2 billion on the last day of the reporting period.
Thank you for selecting Federated GNMA Trust as a prudent, professionally
managed way to pursue investment income. Your questions and comments are always
welcome.
Sincerely,
[Graphic]
Glen R. Johnson
President
September 15, 1997
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
INVESTMENT REVIEW
The Federated GNMA Trust (the "Trust"), is designed for shareholders seeking
participation in a professionally managed portfolio of GNMA mortgage-backed
securities guaranteed as to the payment of principal and interest by the U.S.
government. (Trust shares are not guaranteed.) The Trust offers daily liquidity,
credit control and other advantages over comparable Treasury securities, while
at the same time allowing investors to avoid the complexities of managing a
portfolio of mortgage-backed securities. Shareholders hold an interest in a
diversified portfolio managed under a set of highly conservative disciplines.
Current portfolio strategy targets an effective duration of 3.0 years, which is
neutral to the Lehman GNMA single-family aggregate market weighted average
effective duration.* The asset allocation mix reflects a blend of GNMA
mortgage-backed securities with a diversified range of coupons averaging 7.8%.
During the semi-annual reporting period, the Trust took the opportunity to
selectively add mortgage-backed securities with favorable convexity
characteristics. In particular, seasoned discount GNMA securities were added to
the portfolio in lieu of newly originated discount securities. GNMA securities
are comprised of low- to moderate-income borrowers. This typical borrower has
experienced several consecutive years of strong home price appreciation,
particularly in the Midwest. Since the financial position of these borrowers is
largely determined by the amount of equity they have in their homes, the "paper
wealth effect" has been created. Given the current state of near record levels
of consumer confidence and historically attractive levels of home affordability,
the discount GNMA sector has experienced very attractive returns. This portfolio
strategy, during the semi-annual reporting period, produced a net total rate of
return of 4.68%** on the Institutional Shares and 4.57%** for the Institutional
Service Shares versus the Lehman Brothers GNMA Index* return of 5.12%.
Overall, our view on the mortgage-backed securities market is one of fair value
when viewed from a historical perspective. The tight spreads in other
fixed-income markets combined with the general desire for higher yields portrays
a favorable outlook for the mortgage-backed securities market moving through the
remainder of 1997. The one caveat to this outlook for mortgages would be a
pickup in volatility.
As of July 31, 1997, total net assets were $1.2 billion and the average 30-day
net yield as calculated under Securities and Exchange Commission guidelines was
6.59% for Institutional Shares and 6.41% for Institutional Service Shares.**
Rated AAAf by Standard & Poor's for credit qualities, the Trust remains
committed to competitive yields and daily liquidity.***
* The Lehman Brothers GNMA Index is a total, comprehensive GNMA index comprised
of 30-year GNMA pass-throughs, 15-year GNMA pass-throughs, and GNMA GPM's.
This index is unmanaged and investments cannot be made in an index.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
*** An AAAf rating means that the Trust's portfolio holdings and counterparties
provide extremely strong protection against losses from credit defaults.
Ratings are subject to change, and do not remove market risks.
FEDERATED GNMA TRUST
PORTFOLIO OF INVESTMENTS
JULY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
LONG-TERM GOVERNMENT OBLIGATIONS--98.4%
(A)GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--98.4%
$ 17,122,903 6.000%, 12/15/2023 $ 16,480,794
123,907,792 6.500%, 10/15/2023 - 5/15/2024 122,395,919
255,147,053 7.000%, 5/15/2023 - 10/15/2024 256,315,025
322,395,150 7.500%, 5/15/2022 - 10/15/2026 329,438,917
174,367,637 8.000%, 3/15/2017 - 7/15/2026 181,310,405
49,229,938 8.500%, 10/15/2017 - 2/15/2022 52,079,638
77,355,337 9.000%, 6/15/2016 - 12/15/2026 83,361,164
52,958,990 9.500%, 5/15/2016 - 10/15/2026 57,597,382
16,200,000 (b)10.000%, 12/15/2026 17,789,544
12,517,522 10.000%, 1/15/2018 - 1/15/2026 13,759,897
5,615,596 10.500%, 1/15/2016 - 8/15/2019 6,223,281
12,059,562 11.000%, 12/15/2009 - 10/15/2019 13,603,345
10,180,549 11.500%, 4/15/2010 - 4/15/2016 11,626,647
16,390,506 12.000%, 7/15/2011 - 12/15/2015 19,009,627
7,011,014 12.500%, 1/15/2010 - 10/15/2015 8,191,559
881,248 13.000%, 12/15/2010 - 3/15/2015 1,035,030
1,237,330 13.500%, 5/15/2010 - 8/15/2014 1,454,359
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(IDENTIFIED COST $1,162,942,656) 1,191,672,533
</TABLE>
<TABLE>
<CAPTION>
FEDERATED GNMA TRUST
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--4.2%
$ 34,835,000 BT Securities Corp., 5.790%, dated 7/31/1997, due $ 34,835,000
8/1/1997
16,000,000 (d)Goldman Sachs Group, 5.510%, dated 7/22/1997,
due 8/25/1997 16,000,000
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 50,835,000
TOTAL INVESTMENTS (IDENTIFIED COST $1,213,777,656)(E) $ 1,242,507,533
</TABLE>
(a) Because of monthly principal payments, the average lives of the Government
National Mortgage Association Modified Pass-Through Securities (based upon
Federal Housing Authority/Veterans Administration historical
experience) are less than the stated maturities.
(b) Indicates securities subject to dollar roll transactions.
(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 joint
accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in the transaction to permit termination of the repurchase
agreement within seven days if creditworthiness of the issuer is downgraded.
(e) The cost of investments for federal tax purposes amounts to $1,213,777,656.
The net unrealized appreciation of investments on a federal tax basis
amounts to $28,729,877, which is comprised of $32,805,542 appreciation and
$4,075,665 depreciation at July 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($1,211,653,320) at July 31, 1997.
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and
tax cost $1,213,777,656) $ 1,242,507,533
Income receivable 7,428,934
Receivable for investments sold 349,555
Receivable for shares sold 1,744,551
Total assets 1,252,030,573
LIABILITIES:
Payable for investments purchased $ 13,799,848
Payable for shares redeemed 163,924
Income distribution payable 6,554,075
Payable to Bank 1,737,374
Payable for dollar roll transactions 17,839,934
Accrued expenses 282,098
Total liabilities 40,377,253
NET ASSETS for 107,496,112 shares outstanding $ 1,211,653,320
NET ASSETS CONSIST OF:
Paid in capital $ 1,307,256,868
Net unrealized appreciation of investments 28,729,877
Accumulated net realized loss on investments (124,361,670)
Undistributed net investment income 28,245
Total Net Assets $ 1,211,653,320
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,140,364,627 / 101,169,850 shares outstanding $11.27
INSTITUTIONAL SERVICE SHARES:
$71,288,693 / 6,326,262 shares outstanding $11.27
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of dollar roll expense of $648,773) $44,503,779
EXPENSES:
Investment advisory fee $ 2,430,188
Administrative personnel and services fee 458,698
Custodian fees 92,510
Transfer and dividend disbursing agent fees and expenses 179,234
Directors'/Trustees' fees 15,178
Auditing fees 10,937
Legal fees 2,739
Portfolio accounting fees 77,155
Distribution services fee--Institutional Service Shares 90,519
Shareholder services fee--Institutional Shares 1,428,348
Shareholder services fee--Institutional Service Shares 90,519
Share registration costs 17,007
Printing and postage 12,154
Insurance premiums 8,502
Taxes 42,840
Miscellaneous 8,207
Total expenses 4,964,735
Waivers --
Waiver of distribution services fee--Institutional $ (87,985) Service Shares
Waiver of shareholder services fee--Institutional Shares (1,104,726) Waiver
of shareholder services fee--Institutional (2,535) Service Shares
Total waivers (1,195,246)
Net expenses 3,769,489
Net investment income 40,734,290
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 3,058,505
Net change in unrealized appreciation of investments 11,704,758
Net realized and unrealized gain on investments 14,763,263
Change in net assets resulting from operations $55,497,553
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
JULY 31, 1997 JANUARY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 40,734,290 $ 91,654,297
Net realized gain (loss) on investments ($3,058,505 and
$2,951,050 net gains, respectively, as computed for federal
tax purposes) 3,058,505 2,951,050
Net change in unrealized appreciation/depreciation of
investments 11,704,758 (31,535,440)
Change in net assets resulting from operations 55,497,553 63,069,907
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (38,357,044) (84,428,204)
Institutional Service Shares (2,356,542) (7,098,006)
Change in net assets resulting from distributions to
shareholders (40,713,586) (91,526,210)
SHARE TRANSACTIONS--
Proceeds from sale of shares 93,675,364 214,663,961
Net asset value of shares issued to shareholders in payment
of distributions declared 9,988,000 25,204,908
Cost of shares redeemed (180,384,483) (414,329,714)
Change in net assets resulting from share transactions (76,721,119) (174,460,845)
Change in net assets (61,937,152) (202,917,148)
NET ASSETS:
Beginning of period 1,273,590,472 1,476,507,620
End of period (including undistributed net investment
income of $28,245 and $7,541, respectively) $ 1,211,653,320 $ 1,273,590,472
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JULY 31, YEAR ENDED JANUARY 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING $11.13 $11.34 $10.61 $11.64 $11.80 $11.64
OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.37 0.74 0.78 0.82 0.85 0.93
Net realized and
unrealized gain (loss) on
investments 0.14 (0.21) 0.73 (1.03) (0.16) 0.16
Total from investment 0.51 0.53 1.51 (0.21) 0.69 1.09
operations
LESS DISTRIBUTIONS
Distributions from net (0.37) (0.74) (0.77) (0.82) (0.85) (0.93)
investment income
Distributions in excess
of net investment
income(a) -- -- (0.01) -- -- --
Total distributions (0.37) (0.74) (0.78) (0.82) (0.85) (0.93)
NET ASSET VALUE, END OF $11.27 $11.13 $11.34 $10.61 $11.64 $11.80
PERIOD
TOTAL RETURN(B) 4.68% 4.97% 14.61% (1.71%) 6.02% 9.78%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.61%* 0.60% 0.60% 0.56% 0.51% 0.51%
Net investment income 6.72%* 6.74% 7.02% 7.51% 7.22% 7.98%
Expense 0.19%* 0.20% 0.20% -- -- --
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of period $1,140,365 $1,199,733 $1,352,894 $1,442,074 $1,910,500 $1,770,169
(000 omitted)
Portfolio turnover 22% 63% 43% 136% 117% 33%
</TABLE>
* Computed on an annualized basis.
(a) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JULY 31, YEAR ENDED JANUARY
31,
1997 1997 1996 1995 1994 1993(A)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF $11.13 $11.34 $10.61 $11.64 $11.80 $11.71
PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.36 0.74 0.78 0.79 0.82 0.61
Net realized and unrealized gain
(loss) on
investments 0.14 (0.23) 0.71 (1.03) (0.16) 0.09
Total from investment operations 0.50 0.51 1.49 (0.24) 0.66 0.70
LESS DISTRIBUTIONS
Distributions from net investment (0.36) (0.72) (0.76) (0.79) (0.82) (0.61)
income
NET ASSET VALUE, END OF PERIOD $11.27 $11.13 $11.34 $10.61 $11.64 $11.80
TOTAL RETURN(B) 4.57% 4.76% 14.39% (1.92%) 5.76% 5.62%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80%* 0.80% 0.80% 0.77% 0.76% 0.76%*
Net investment income 6.52%* 6.54% 6.82% 7.32% 6.97% 7.57%*
Expense waiver/reimbursement(c) 0.25%* 0.25% 0.25% 0.14% -- --
SUPPLEMENTAL DATA
Net assets, end of period (000 $71,289 $73,857 $123,614 $120,427 $137,235 $50,166
omitted)
Portfolio turnover 22% 63% 43% 136% 117% 33%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 18, 1992 (date of initial
public investment) to January 31, 1993.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 (UNAUDITED)
1. ORGANIZATION
Federated GNMA Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The Trust offers two classes of shares: Institutional Shares
and Institutional Service Shares. The Trust's objective is to achieve current
income by investing primarily in instruments issued or guaranteed by the
Government National Mortgage Association.
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-- U.S. government securities are generally valued at the
mean of the latest bid and asked price as furnished by an independent pricing
service. Short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
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.
At January 31, 1997, the Trust, for federal tax purposes, had a capital loss
carryforward of $127,420,177, which will reduce the Trust's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Trust of any
liability for federal tax. Pursuant to the Code, such capital loss carryforward
will expire as follows:
EXPIRATION YEAR EXPIRATION AMOUNT
1998 $14,893,518
1999 $13,784,245
2001 $ 5,182,436
2003 $71,738,355
2004 $21,821,623
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.
DOLLAR ROLL TRANSACTIONS-- The Trust enters into dollar roll transactions, with
respect to mortgage securities issued by GNMA in which the Trust sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Trust will use the
proceeds generated from the transactions to invest in short-term investments,
which may enhance the Trust's current yield and total return.
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) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JULY 31, 1997 JANUARY 31, 1997
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 8,025,438 $ 89,127,745 18,461,312 $ 204,235,676
Shares issued to shareholders in
payment of distributions declared 807,492 8,923,989 2,016,195 22,248,293
Shares redeemed (15,457,509) (171,317,139) (31,975,172) (353,373,236)
Net change resulting from
Institutional Share transactions (6,624,579) $ (73,265,405) (11,497,665) $ (126,889,267)
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JULY 31, 1997 JANUARY 31, 1997
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 409,715 $ 4,547,619 943,333 $ 10,428,285
Shares issued to shareholders in
payment of distributions declared 96,291 1,064,011 267,944 2,956,615
Shares redeemed (815,657) (9,067,344) (5,475,198) (60,956,478)
Net change resulting from
Institutional Service Share
transactions (309,651) $ (3,455,714) (4,263,921) $ (47,571,578)
Net change resulting from share
transactions (6,934,230) $ (76,721,119) (15,761,586) $ (174,460,845)
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE-- Federated Management, the Trust's investment adviser,
receives for its services an annual investment advisory fee equal to 0.40% of
the Trust's average daily net assets.
ADMINISTRATIVE FEE-- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE-- The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Trust will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Trust to finance activities intended to
result in the sale of the Trust's Institutional Service Shares. The Plan
provides that the Trust may incur distribution expenses up to 0.25% of the
average daily net assets of the Institutional Service Shares, annually to
compensate FSC. FSC may voluntarily choose to waive any portion of its fee. FSC
can modify or terminate this voluntary waiver at any time at its sole
discretion.
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. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES-- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Trust. The fee paid to FSSC is based on
the size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES-- FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL-- Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended July 31, 1997, were as follows:
PURCHASES $262,472,118
SALES $336,191,944
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
Anthony R. Bosch
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.
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.
FEDERATED GNMA TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JULY 31, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 314184102
Cusip 314184201
8083002 (9/97)
[Graphic]
