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, 1997.
First, you will find an investment review on the short-term government
market from the fund's portfolio manager. Following the investment review
are the fund's portfolio of investments and financial statements.
Over the six-month reporting period, dividends paid to shareholders totaled
$0.02 per share. At the end of the reporting period, net assets stood at
$2.4 billion. In addition, the fund maintained its AAAm rating by Standard &
Poor's Ratings Group ("Standard & Poor's") and Aaa rating by Moody's
Investor's Service, Inc. ("Moody's") -- the highest ratings possible for a
money market mutual fund.*
This high-quality money market fund keeps investor cash 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, the fund's assets were heavily
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.
Thank you for participating in the daily earning power of Automated
Government Money Trust. As always, we welcome your questions, comments, or
suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
March 15, 1997
* These ratings are obtained after Standard & Poor's and Moody's evaluate 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, which means they are of the best quality. Ratings are subject
to change and do not remove market risks.
** Although money market funds seek to maintain a share value of $1.00,
there is no guarantee that they will be able to do so. An investment in the
fund is neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
Automated Government Money Trust (the "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 35-45
day average maturity range, a neutral stance for the Trust.
Over the six-month reporting period ended January 31, 1997, the Federal
Reserve Board (the "Fed") stood pat in the face of economic growth that
exceeded the 21/2% pace thought to be the non-inflationary potential.
Confronted with persistent strength in the interest rate-sensitive sectors,
the Fed stuck to its belief that economic growth would return to a more
moderate pace. Early in the reporting period, the market itself was not so
sure, and movements in interest rates proved to be rather volatile as
expectations regarding the timing and extent of the next policy move from
the Fed swayed back and forth with each new piece of economic data. When
signs of the long-awaited slowdown finally began to emerge, the market then
fretted that it might not be occurring quickly enough to prevent the need
for the Fed to tighten in order to ward off inflationary pressures. By the
end of the reporting period, however, the market calmed itself once more as
growth in employment and housing moderated and inflation remained tame.
While the advance release for fourth quarter gross domestic product was a
robust 4.7%, it was boosted by net exports and a number of one-time factors,
and the underlying fundamentals point to more sedate growth in the first
quarter. Overall, the federal funds target rate remained unchanged over the
period, at 5.25%, where it has been since late January 1996.
Movements in interest rates early in the reporting period reflected the
market uncertainty. The yield on the three-month Treasury bill peaked at
5.35% in early September 1996 amid fears that the robust economy might spark
inflation, particularly in the face of tight labor market conditions. The
yield then plunged to 5% in late September 1996 and early October 1996 as
signs of tempered growth began to appear and relief finally took hold. The
yield then rebounded to a more realistic 5.15%, and traded within a fairly
narrow range -- with the exception of a technically-driven drop at year-end
- -- for the remainder of the reporting period as the market embraced the idea
that the Fed was likely to be on hold indefinitely. Overall, the yields at
the front-end of the Treasury yield curve ended the period 0.16% to 0.26%
lower, reflecting the market's retreat from expectations of an imminent
tightening in monetary policy.
The Trust was targeted in a 35-45 day average maturity target range over the
reporting period, essentially a neutral stance for the portfolio. Once an
average maturity range is established, the Trust attempts to maximize
performance through ongoing relative value analysis. The Trust's structure
remained barbelled over the reporting period, as a yield advantage continued
to exist for repurchase agreements relative to other short-term investments.
The Trust combined a significant percentage in these repurchase agreements
- -- primarily on an overnight basis -- with purchases of securities with six-
to twelve-month maturities. This portfolio structure has continued to
provide a competitive yield.
The Fed is likely to be fairly content with the present trend of moderating
growth and benign inflation, and, in our opinion should not be moved to
change monetary policy in the near term. We expect they will continue to
keep a watchful eye on potential inflationary pressures, however, in light
of continued tight labor market conditions. We would expect the front-end of
the market to continue to be range-bound with a slight positive slope, and
we will likely maintain our current neutral positioning. However, changing
economic and market developments are continuously monitored to best serve
our clients attracted to the short-term U.S. government market.
AUTOMATED GOVERNMENT MONEY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY -- 20.9%
(A)U.S. TREASURY BILLS -- 5.8%
$ 141,000,000 5.093% - 5.766%, 4/3/1997 - 11/13/1997 $ 137,833,484
U.S. TREASURY NOTES -- 15.1%
356,000,000 5.750% - 8.625%, 4/30/1997 - 9/30/1997 357,042,913
TOTAL U.S. TREASURY 494,876,397
(B)REPURCHASE AGREEMENTS -- 80.6%
308,770,000 BT Securities Corporation, 5.580%, dated 1/31/1997, due 308,770,000
2/3/1997
100,000,000 CIBC Wood Gundy Securities Corp., 5.580%, dated 1/31/1997,
due 2/3/1997 100,000,000
75,000,000 Deutsche Bank Government Securities, Inc., 5.570%, dated
1/31/1997,
due 2/3/1997 75,000,000
100,000,000 First Union Capital Markets, 5.580%, dated 1/31/1997, due 100,000,000
2/3/1997
250,000,000 Goldman Sachs Group, LP, 5.550%, dated 1/31/1997, due 250,000,000
2/3/1997
110,000,000 Nesbitt Burns Securities, Inc., 5.570%, dated 1/31/1997, due 110,000,000
2/3/1997
115,000,000 Lehman Brothers, Inc., 5.600%, dated 1/31/1997, due 2/3/1997 115,000,000
100,000,000 Nomura Securities International, Inc., 5.580%, dated
1/31/1997,
due 2/3/1997 100,000,000
115,000,000 Societe Generale, New York, 5.580%, dated 1/31/1997, due 115,000,000
2/3/1997
30,000,000 State Street Bank and Trust Co., 5.550%, dated 1/31/1997,
due 2/3/1997 30,000,000
115,900,000 Swiss Bank Capital Markets, 5.570%, dated 1/31/1997, due 115,900,000
2/3/1997
100,000,000 Toronto Dominion Securities (USA) Inc., 5.580%, dated
1/31/1997,
due 2/3/1997 100,000,000
100,000,000 UBS Securities, Inc., 5.530%, dated 1/31/1997, due 2/3/1997 100,000,000
100,000,000 UBS Securities, Inc., 5.580%, dated 1/31/1997, due 2/3/1997 100,000,000
</TABLE>
AUTOMATED GOVERNMENT MONEY TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS -- CONTINUED
$ 54,000,000 (c)Goldman Sachs Group, LP, 5.260%, dated 1/13/1997, due $ 54,000,000
2/12/1997
60,000,000 (c)J.P. Morgan & Co., Inc., 5.300%, dated 1/30/1997, due 60,000,000
3/3/1997
51,000,000 (c)Swiss Bank Capital Markets, 5.320%, dated 1/6/1997, due 51,000,000
3/7/1997
28,000,000 (c)UBS Securities, Inc., 5.280%, dated 1/24/1997, due 28,000,000
3/25/1997
TOTAL REPURCHASE AGREEMENTS 1,912,670,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $ 2,407,546,397
</TABLE>
(a) The issue shows the rate of discount at 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.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,372,025,522) at January 31, 1997.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 1,912,670,000
Investments in securities 494,876,397
Total investments in securities, at $2,407,546,397
amortized cost and value
Income receivable 7,210,046
Receivable for investments sold 17,299,316
Receivable for shares sold 2,856
Total assets 2,432,058,615
LIABILITIES:
Payable for investments purchased $ 30,607,562
Income distribution payable 10,037,831
Payable to Bank 18,843,201
Accrued expenses 544,499
Total liabilities 60,033,093
NET ASSETS for 2,372,025,522 shares $2,372,025,522
outstanding
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$2,372,025,522 / 2,372,025,522 shares $1.00
outstanding
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT MONEY TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $65,990,696
EXPENSES:
Investment advisory fee $ 6,121,692
Administrative personnel and 925,099
services fee
Custodian fees 127,322
Transfer and dividend disbursing 75,909
agent fees and expenses
Directors'/Trustees' fees 19,136
Auditing fees 6,624
Legal fees 4,320
Portfolio accounting fees 78,491
Shareholder services fee 3,060,846
Share registration costs 23,000
Printing and postage 6,616
Insurance premiums 13,864
Taxes 12,604
Miscellaneous 13,808
Total expenses 10,489,331
Waivers --
Waiver of investment advisory $(3,334,298)
fee
Waiver of shareholder services (122,434)
fee
Total waivers (3,456,732)
Net expenses 7,032,599
Net investment $58,958,097
income
</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
(UNAUDITED)
JANUARY 31, YEAR ENDED
1997 JULY 31, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 58,958,097 $ 123,107,424
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment (58,958,097) (123,107,424)
income
SHARE TRANSACTIONS --
Proceeds from sale of shares 6,014,183,090 13,616,573,501
Net asset value of shares issued to
shareholders in payment
of distributions declared 17,618,258 44,825,226
Cost of shares redeemed (6,138,252,392) (13,631,794,811)
Change in net assets resulting from (106,451,044) 29,603,916
share transactions
Change in net assets (106,451,044) 29,603,916
NET ASSETS:
Beginning of period 2,478,476,566 2,448,872,650
End of period $ 2,372,025,522 $ 2,478,476,566
</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 31, YEAR ENDED JANUARY 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
Net investment 0.02 0.05 0.05 0.03 0.03 0.04 0.07 0.08 0.08 0.06
income
LESS DISTRIBUTIONS
Distributions
from net
investment (0.02) (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.08) (0.08) (0.06)
income
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) 2.45% 5.15% 5.10% 2.95% 2.79% 4.26% 6.77% 8.21% 8.58% 6.55%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.57%* 0.57% 0.57% 0.57% 0.55% 0.57% 0.55% 0.55% 0.55% 0.55%
Net investment 4.82%* 5.03% 4.97% 2.88% 2.75% 4.17% 6.55% 7.92% 8.30% 6.39%
income
Expense waiver/
reimbursement(b) 0.28%* 0.28% 0.29% 0.06% 0.01% 0.01% 0.03% 0.03% 0.04% 0.03%
SUPPLEMENTAL DATA
Net assets, end
of period (000 $2,372,026 $2,478,477 $2,448,873 $2,640,384 $3,115,772 $3,177,695 $2,829,602 $2,596,695 $2,791,097 $2,388,700
omitted)
</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, 1997 (UNAUDITED)
1. ORGANIZATION
Automated Government Money Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The investment objective of the Trust is
stability of principal and current income consistent with stability of
principal.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- The Trust's use of the amortized cost method to
value its portfolio securities is in accordance with Rule 2a-7 under the
Act.
REPURCHASE AGREEMENTS -- It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System, or to have segregated within the custodian bank's
vault, all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES -- It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value). At
January 31, 1997, capital paid-in aggregated $2,372,025,522.
Transactions in shares were as follows:
SIX MONTHS
ENDED
JANUARY 31, YEAR ENDED
1997 JULY 31, 1996
Shares sold 6,014,183,090 13,616,573,501
Shares issued to shareholders in payment 17,618,258 44,825,226
of distributions declared
Shares redeemed (6,138,252,392) (13,631,794,811)
Net change resulting from share (106,451,044) 29,603,916
transactions
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 0.50% 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 for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS up to 0.25% of average daily net assets of the Trust for the period. 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.
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
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they
will be able to do so.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
AUTOMATED
GOVERNMENT MONEY TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1997
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 052831104
8022501 (3/97)
