PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Government Money Trust for the six-month period ended January 31, 1996. The
Report begins with an investment review on the short-term government market from
the Trust's portfolio manager. Following the investment review, you will find
the Trust's portfolio of investments and its financial statements.
In Automated Government Money Trust, your ready cash is at work pursuing daily
income, along with a high level of liquidity and a stable net asset value of
$1.00.* At the end of the period, more than three-quarters of the Trust's assets
were invested in repurchase agreements backed by Treasury obligations because of
their yield advantage. The remainder of the portfolio was invested in direct
U.S. Treasury obligations.
In addition, the Trust maintained its AAAm by Standard & Poor's Ratings Group
("Standard & Poor's") and Aaa rating by Moody's Investors Service, Inc.
("Moody's")--the highest ratings possible for a money market mutual fund.**
During the six-month reporting period, dividends paid to shareholders totaled
$0.03 per share. At the end of the period, net assets stood at $2.4 billion.
Thank you for participating in the daily earning power of Automated Government
Money Trust. As always, we welcome your questions, comments, or suggestions.
Sincerely,
LOGO
Glen R. Johnson
President
March 15, 1996
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the Trust is neither insured nor guaranteed by the U.S. government.
** This rating is obtained after Standard & Poor's evaluates a number of
factors, including credit quality, market price exposure and management.
Standard & Poor's monitors the portfolio weekly for developments that could
cause changes in ratings. Money market funds rated Aaa by Moody's 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. Ratings are subject to
change and do not remove market risks.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Automated Government Money Trust, which is rated AAAm by Standard & Poor's and
Aaa by Moody's, is invested in direct obligations of the U.S. Treasury either in
the form of notes and bills or as collateral for repurchase agreements.
Recently, the Trust has been managed within a 40-50 day average maturity range.
The semi-annual reporting period brought continued signs of a moderation in the
economy, as softening in the manufacturing, housing, and consumer sectors
restrained growth. Gross Domestic Product came in at less than the 2-2 1/2% pace
generally considered to be the potential, noninflationary rate of growth for the
economy. The National Association of Purchasing Managers Index* registered
readings of below 50 since last July were thought to be indicative of a
contracting economy. Inflation remained quite friendly, with prices at the
consumer level rising less than 3%. Against this backdrop, the Federal Reserve
Board (the "Fed") eased monetary policy on two occasions by 25 basis points
each--in late December and January--bringing the Fed funds target rate down from
5.75% to 5.25% by the end of the period. In July of 1995, the Fed had reversed
course in monetary policy by lowering the Fed funds target rate from 6% to
5.75%, after seven consecutive tightenings throughout 1994 and early 1995.
The combination of a sluggish economy and benign inflation drove short-term
interest rates downward over the period, as the market anticipated the easings
by the Fed in an attempt to move monetary policy closer to a neutral stance. The
yield on the three-month Treasury bill fell by over 50 basis points over the
period, from 5.57% to close to 5%. Yields on the six-month and one-year Treasury
bills declined even more, by 63 and 75 basis points, respectively. The front end
of the yield curve ended the period inverted, with the one-year Treasury bill
trading roughly 15 basis points below the three-month Treasury bill at the end
of January. Aside from the underlying fundamental factors, movements in market
rates were also influenced by the budget negotiations in Washington and the
disruption to the Treasury auction schedule in October and November.
The Trust was targeted in a 40-50 day average maturity target range--a modestly
bullish stance--throughout the period, as we expected to see additional easings
from the Fed. However, with short-term interest rates very often anticipating a
more aggressive forecast regarding future easing in monetary policy than was
consistent with our own outlook, we felt that a yield advantage continued to
exist for investments in repurchase agreements versus direct investments in
short-term Treasury securities. The Trust reinforced its barbelled structure by
combining this position in repurchase agreements with purchases in an area of
the yield curve that offered relative value, securities with longer maturities
of six to 12 months. This portfolio structure provided a competitive yield for
the Trust.
With harsh winter weather likely to be a drag on the economy and inflation
remaining under control, we would anticipate additional easings in monetary
policy by the Fed in the future. Without a notable change in the underlying
economic fundamentals, the Trust would look to reinforce its barbelled structure
should market opportunities permit, and will attempt to continue to maximize
performance through ongoing relative value analysis. However, changing economic
and market developments are continuously monitored to best serve our clients
attracted to the short-term U.S. government market.
* The National Association of Purchasing Managers Index is a diffusion index
that measures the economic activity of the largest manufacturers in the United
States.
AUTOMATED GOVERNMENT MONEY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------ --------------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--24.7%
- --------------------------------------------------------------------------------
(A) US TREASURY BILLS--16.5%
------------------------------------------------------------
$405,000,000 4.85%-6.05%, 4/4/1996-11/14/1996 $ 395,828,426
------------------------------------------------------------
US TREASURY NOTES--8.2%
------------------------------------------------------------
196,000,000 5.50%-9.375%, 4/15/1996-10/31/1996 197,396,773
------------------------------------------------------------ --------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 593,225,199
------------------------------------------------------------ --------------
(B)REPURCHASE AGREEMENTS--75.7%
- --------------------------------------------------------------------------------
64,700,000 BT Securities Corporation, 5.93%, dated 1/31/1996, due
2/1/1996 64,700,000
------------------------------------------------------------
150,000,000 BZW Securities, Inc., 5.92%, dated 1/31/1996, due 2/1/1996 150,000,000
------------------------------------------------------------
100,000,000 Bank of America NT & SA, 5.90%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
100,000,000 Bear, Stearns and Co., Inc., 5.85%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
100,000,000 Bear, Stearns and Co., Inc., 5.90%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
100,000,000 CIBC Wood Gundy Securities Corp., 5.90%, dated 1/31/1996,
due 2/1/1996 100,000,000
------------------------------------------------------------
100,000,000 Chemical Securities, Inc., 5.90%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
115,000,000 Daiwa Securities America, Inc., 5.90%, dated 1/31/1996, due
2/1/1996 115,000,000
------------------------------------------------------------
100,000,000 Dresdner Securities (USA), Inc., 5.90%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
100,000,000 First Chicago Capital Markets, Inc., 5.90%, dated 1/31/1996,
due 2/1/1996 100,000,000
------------------------------------------------------------
55,000,000 Nikko Securities Co. International, Inc., 5.90%, dated
1/31/1996, due 2/1/1996 55,000,000
------------------------------------------------------------
120,000,000 Nomura Securities International, Inc., 5.90%, dated
1/31/1996, due 2/1/1996 120,000,000
------------------------------------------------------------
100,000,000 Sanwa Securities USA Co., L.P., 5.85%, dated 1/31/1996, due
2/1/1996 100,000,000
------------------------------------------------------------
50,000,000 State Street Bank and Trust Co., 5.90%, dated 1/31/1996, due
2/1/1996 50,000,000
------------------------------------------------------------
</TABLE>
AUTOMATED GOVERNMENT MONEY TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------ --------------
<C> <C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
- --------------------------------------------------------------------------------
$ 65,000,000 Swiss Bank Corp., New York, 5.90%, dated 1/31/1996, due
2/1/1996 $ 65,000,000
------------------------------------------------------------
120,000,000 Swiss Bank Corp., New York, 5.92%, dated 1/31/1996, due
2/1/1996 120,000,000
------------------------------------------------------------
260,000,000 UBS Securities, Inc., 5.90%, dated 1/31/1996, due 2/1/1996 260,000,000
------------------------------------------------------------
21,000,000 (c) Lehman Brothers, Inc., 5.55%, dated 12/21/1995, due
2/20/1996 21,000,000
------------------------------------------------------------ --------------
TOTAL REPURCHASE AGREEMENTS 1,820,700,000
------------------------------------------------------------ --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $2,413,925,199
------------------------------------------------------------ --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) 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.
(c) 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 if the creditworthiness of the issuer is
downgraded.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,406,744,049) at January 31, 1996.
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in repurchase agreements $1,820,700,000
- --------------------------------------------------------------
Investments in securities 593,225,199
- -------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $2,413,925,199
- -------------------------------------------------------------------------------
Income receivable 4,217,857
- -------------------------------------------------------------------------------
Receivable for shares sold 3,186
- ------------------------------------------------------------------------------- --------------
Total assets 2,418,146,242
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Income distribution payable 10,546,169
- --------------------------------------------------------------
Payable to Bank 261,903
- --------------------------------------------------------------
Accrued expenses 594,121
- -------------------------------------------------------------- --------------
Total liabilities 11,402,193
- ------------------------------------------------------------------------------- --------------
NET ASSETS for 2,406,744,049 shares outstanding $2,406,744,049
- ------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
$2,406,744,049 / 2,406,744,049 shares outstanding $1.00
- ------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest $73,075,048
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 6,248,320
- --------------------------------------------------------------------
Administrative personnel and services fee 945,579
- --------------------------------------------------------------------
Custodian fees 138,713
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 39,990
- --------------------------------------------------------------------
Directors'/Trustees' fees 17,664
- --------------------------------------------------------------------
Auditing fees 6,992
- --------------------------------------------------------------------
Legal fees 21,344
- --------------------------------------------------------------------
Portfolio accounting fees 63,733
- --------------------------------------------------------------------
Shareholder services fee 3,124,160
- --------------------------------------------------------------------
Share registration costs 28,520
- --------------------------------------------------------------------
Printing and postage 2,760
- --------------------------------------------------------------------
Insurance premiums 24,104
- --------------------------------------------------------------------
Taxes 9,384
- --------------------------------------------------------------------
Miscellaneous 9,936
- -------------------------------------------------------------------- -----------
Total expenses 10,681,199
- --------------------------------------------------------------------
WAIVERS--
- --------------------------------------------------------------------
Waiver of investment advisory fee $(3,408,153)
- ------------------------------------------------------
Waiver of shareholder services fee (94,975)
- ------------------------------------------------------ -----------
Total waivers (3,503,128)
- -------------------------------------------------------------------- -----------
Net expenses 7,178,071
- ----------------------------------------------------------------------------------- -----------
Net investment income $65,896,977
- ----------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1996 YEAR ENDED
(UNAUDITED) JULY 31, 1995
----------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 65,896,977 $ 126,451,232
- ------------------------------------------------------- ----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (65,896,977) (126,451,232)
- ------------------------------------------------------- ----------------- ----------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 7,818,473,840 15,028,371,070
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 19,321,908 39,452,485
- -------------------------------------------------------
Cost of shares redeemed (7,879,924,349) (15,259,334,772)
- ------------------------------------------------------- ----------------- ----------------
Change in net assets resulting from share
transactions (42,128,601) (191,511,217)
- ------------------------------------------------------- ----------------- ----------------
Change in net assets (42,128,601) (191,511,217)
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 2,448,872,650 2,640,383,867
- ------------------------------------------------------- ----------------- ----------------
End of period $ 2,406,744,049 $ 2,448,872,650
- ------------------------------------------------------- ----------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JANUARY YEAR ENDED JULY 31,
31, -----------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING
OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------
INCOME
FROM
INVESTMENT
OPERATIONS
- ---------
Net
investment
income 0.03 0.05 0.03 0.03 0.04 0.07 0.08 0.08 0.06 0.06
- --------- ----- --- --- --- --- --- --- --- --- ---
LESS
DISTRIBUTIONS
- ---------
Distributions
from net
investment
income (0.03) (0.05) (0.03) (0.03) (0.04) (0.07) (0.08) (0.08) (0.06) (0.06)
- --------- ----- --- --- --- --- --- --- --- --- ---
NET ASSET
VALUE,
END OF
PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------- ----- --- --- --- --- --- --- --- --- ---
TOTAL
RETURN
(A) 2.68% 5.10% 2.95% 2.79% 4.26% 6.77% 8.21% 8.58% 6.55% 5.73%
- ---------
RATIOS TO
AVERAGE
NET
ASSETS
- ---------
Expenses 0.57%* 0.57% 0.57% 0.55% 0.57% 0.55% 0.55% 0.55% 0.55% 0.55%
- ---------
Net
investment
income 5.26%* 4.97% 2.88% 2.75% 4.17% 6.55% 7.92% 8.30% 6.39% 5.59%
- ---------
Expense/waiver
reimbursement
(b) 0.28%* 0.29% 0.06% 0.01% 0.01% 0.03% 0.03% 0.04% 0.03% 0.02%
- ---------
SUPPLEMENTAL
DATA
- ---------
Net
assets,
end of
period
(000
omitted) $2,406,744 $2,448,873 $2,640,384 $3,115,772 $3,177,695 $2,829,602 $2,596,695 $2,791,097 $2,388,700 $1,536,678
- ---------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) 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)
AUTOMATED GOVERNMENT MONEY TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Automated Government Money Trust (the "Trust") is registered under the
Investment Company Act of 1940 (the "Act"), as a diversified, open-end
management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
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.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
January 31, 1996, capital paid-in aggregated $2,406,744,049.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1996 JULY 31, 1995
----------------- ---------------
<S> <C> <C>
- --------------------------------------------------------
Shares sold 7,818,473,840 15,028,371,070
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 19,321,908 39,452,485
- --------------------------------------------------------
Shares redeemed (7,879,924,349) (15,259,334,772)
- -------------------------------------------------------- ---------------- ---------------
Net change resulting from share transactions (42,128,601) (191,511,217)
- -------------------------------------------------------- ----------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% 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 Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FAS is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of daily average 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--Federated Shareholder
Services Company serves as transfer and dividend disbursing agent for the Trust.
The fee paid to Federated Shareholder Services Company is based on the size,
type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company 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.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and
Wesley W. Posvar Secretary
Marjorie P. Smuts Richard B. Fisher
Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
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 possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
