PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Government Money Trust. This report covers the first half of the fund's fiscal
year, which is the six-month period ended January 31, 1998. It begins with an
investment review of the short-term government market from the fund's portfolio
manager. Following the investment review are the fund's portfolio of investments
and its financial statements.
Over the six-month reporting period, dividends paid to shareholders totaled
$0.03 per share. In addition, the fund maintained its AAAm by Standard & Poor's
and Aaa rating by Moody's Investor's Service, the highest ratings possible for a
money market mutual fund.* At the end of the period, the fund's net assets
totaled $2.4 billion.
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 per share.** At the end of the period, more than 84% of the fund's net
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, 1998
* 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, which means
they are of the best quality. Ratings are subject to change and do not remove
market risks.
** Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Automated Government Money Trust, (the "Trust"), 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, 1998, the Federal Reserve
Board, (the "Fed"), stood pat in the face of economic growth that continued to
exceed the 21U2% pace thought to be the non-inflationary potential. The federal
funds target rate remained at 5.5%, where it has been since the Fed last
tightened monetary policy in March 1997. With Gross Domestic Product growth at
3.1% over the third quarter, expectation built for the need for an additional
tightening from the Fed as added insurance against inflation. However, dramatic
declines in the Asian equity markets curtailed this expectation, and overseas
developments dominated the rest of the fourth quarter. Although Gross Domestic
Product growth expanded at close to 4.0% over this period, the Fed kept monetary
policy unchanged.
Aside from economic fundamentals, movements in short term interest rates on
Treasury securities were driven by other factors as well over the reporting
period. The yield on the three-month Treasury bill, for example, began the
reporting period at 5.2% and traded down to 4.9% by late September in response
to quarter-end window-dressing and a reduction in the overall supply of Treasury
bills. It rose briefly to 5.1% in early October, but was driven downward to
below 5.0% again, as the alarming declines in the overseas markets resulted in a
flight to quality to Treasuries. The yield rose to 5.2% by early November as the
immediate crisis subsided, and then climbed steadily to 5.4% as overseas
investors, primarily Japanese, sold their Treasury holdings to help meet
liquidity needs back home. Early in January the pendulum swung back again, as
growing speculation that the impact on the domestic economy from the troubles in
Asia might be so great that the Fed might actually have to ease monetary policy
gripped the market. The yield on the three-month Treasury bill fell again to
5.0% as a result. These fears receded somewhat by mid-month, and the yield rose
to close the reporting period at 5.2%. Movements in longer-term securities in
the money market universe (i.e., those between six months and one year) were
slightly less affected by the technical supply and flight-to-quality influences,
but traded overall along with the shorter security and maintained a healthy bid.
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 maximizes 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 combines a
significant percentage in these repurchase agreements, primarily on an overnight
basis, with purchases of securities with 6- to 12-month maturities. This
portfolio structure continues to provide a competitive yield.
The risks to the Fed at this juncture appear to be balanced, with the threat of
higher inflation stemming from tight labor markets being potentially offset by
the as-yet-unknown impact of the Asian "flu." The Fed should be content to "wait
and see" until the effects on the domestic economy are better understood, which
should become more clear over the second quarter. We would expect to maintain
our current neutral positioning over this period. However, changing economic and
market developments are continuously monitored to best serve our clients
attracted to the short term U.S.
government market.
PORTFOLIO OF INVESTMENTS
AUTOMATED GOVERNMENT MONEY TRUST
JANUARY 31, 1998 (UNAUDITED)
AUTOMATED GOVERNMENT MONEY TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY--15.6%
(A)U.S. TREASURY BILLS--0.9%
$ 23,000,000 5.330% - 5.625%, 5/28/1998 - 6/25/1998 $ 22,538,394
U.S. TREASURY NOTES--14.7%
354,000,000 4.750% - 9.250%, 3/31/1998 - 11/30/1998 354,118,070
Total U.S. Treasury 376,656,464
(B)REPURCHASE AGREEMENTS84.5%
115,000,000 Aubrey G. Lanston and Company, Inc., 5.600%, dated 115,000,000
1/30/1998, due 2/2/1998
72,000,000 BA Securities, Inc., 5.600%, dated 1/30/1998, due 2/2/1998 72,000,000
87,960,000 BT Securities Corp., 5.610%, dated 1/30/1998, due 2/2/1998 87,960,000
115,000,000 CIBC Wood Gundy Securities Corp., 5.600%, dated 1/30/1998, 115,000,000
due 2/2/1998
110,000,000 Deutsche Bank Government Securities, Inc., 5.600%, dated 110,000,000
1/30/1998, due 2/2/1998
115,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.600%, 115,000,000
dated 1/30/1998, due 2/2/1998
115,000,000 First Union Capital Markets, 5.600%, dated 1/30/1998, due 115,000,000
2/2/1998
10,000,000 (c)Goldman Sachs Group, LP, 5.440%, dated 1/30/1998, due 10,000,000
4/30/1998
68,000,000 (c)Goldman Sachs Group, LP, 5.480%, dated 1/6/1998, due 68,000,000
2/5/1998
75,000,000 Goldman Sachs Group, LP, 5.550%, dated 1/30/1998, due 75,000,000
2/2/1998
80,000,000 Goldman Sachs Group, LP, 5.600%, dated 1/30/1998, due 80,000,000
2/2/1998
35,000,000 (c)Goldman Sachs Group, LP, 5.660%, dated 12/2/1997, due 35,000,000
2/2/1998
110,000,000 Harris Government Securities, Inc., 5.600%, dated 110,000,000
1/30/1998, due 2/2/1998
44,000,000 (c)J.P. Morgan & Co., Inc., 5.480%, dated 1/7/1998, due 44,000,000
2/6/1998
62,000,000 (c)Merrill Lynch, Pierce, Fenner and Smith, 5.450%, dated 62,000,000
1/13/1998, due 2/12/1998
34,000,000 (c)Morgan Stanley Group, Inc., 5.480%, dated 1/6/1998, due 34,000,000
2/5/1998
115,000,000 Salomon Smith Barney Holdings, Inc., 5.610%, dated 115,000,000
1/30/1998, due 2/2/1998
117,000,000 Societe Generale, New York, 5.600%, dated 1/30/1998, due 117,000,000
2/2/1998
15,000,000 State Street Bank and Trust Co., 5.600%, dated 1/30/1998, 15,000,000
due 2/2/1998
100,000,000 Swiss Bank Capital Markets, 5.550%, dated 1/30/1998, due 100,000,000
2/2/1998
131,800,000 Swiss Bank Capital Markets, 5.610%, dated 1/30/1998, due 131,800,000
2/2/1998
100,000,000 UBS Securities, Inc., 5.590%, dated 1/30/1998, due 100,000,000
2/2/1998
</TABLE>
AUTOMATED GOVERNMENT MONEY TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS CONTINUED
$ 100,000,000 UBS Securities, Inc., 5.620%, dated 1/30/1998, due $ 100,000,000
2/2/1998
115,000,000 Westdeutsche Landesbank Girozentrale, 5.600%, dated 115,000,000
1/30/1998, due 2/2/1998
Total Repurchase Agreements 2,041,760,000
Total Investments (at amortized cost)(d) $ 2,418,416,464
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) The repurchase agreements are fully collateralized by the 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 creditworthiness of the issurer is downgraded.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,416,931,897) at January 31, 1998.
The following acronym is used throughout this portfolio:
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
AUTOMATED GOVERNMENT MONEY TRUST
JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 2,041,760,000
Investments in securities 376,656,464
Total investments in securities, at amortized cost and value $ 2,418,416,464
Cash 906,047
Income receivable 8,543,946
Receivable for shares sold 1,707
Total assets 2,427,868,164
LIABILITIES:
Income distribution payable 10,370,188
Accrued expenses 566,079
Total liabilities 10,936,267
Net Assets for 2,416,931,897 shares outstanding $ 2,416,931,897
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
$2,416,931,897 / 2,416,931,897 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
AUTOMATED GOVERNMENT MONEY TRUST
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 67,109,419
EXPENSES:
Investment advisory fee $ 5,975,991
Administrative personnel and services fee 901,957
Custodian fees 96,694
Transfer and dividend disbursing agent fees and 107,020
expenses
Directors'/Trustees' fees 21,896
Auditing fees 6,808
Legal fees 6,992
Portfolio accounting fees 72,691
Shareholder services fee 2,987,995
Share registration costs 22,632
Printing and postage 6,992
Insurance premiums 8,108
Taxes 15,364
Miscellaneous 14,168
Total expenses 10,245,308
Waivers --
Waiver of investment advisory fee $ (3,024,280)
Waiver of shareholder services fee (119,520)
Total waivers (3,143,800)
Net expenses 7,101,508
Net investment income $ 60,007,911
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
AUTOMATED GOVERNMENT MONEY TRUST
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
JANUARY 31, 1998 JULY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 60,007,911 $ 119,034,104
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (60,007,911) (119,034,104)
SHARE TRANSACTIONS--
Proceeds from sale of shares 6,283,705,895 12,580,252,469
Net asset value of shares issued to shareholders in 21,824,926 44,052,959
payment of distributions declared
Cost of shares redeemed (6,301,254,686) (12,690,126,232)
Change in net assets resulting from share transactions 4,276,135 (65,820,804)
Change in net assets 4,276,135 (65,820,804)
NET ASSETS:
Beginning of period 2,412,655,762 2,478,476,566
End of period $ 2,416,931,897 $ 2,412,655,762
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JANUARY 31, YEAR ENDED JULY 31,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993
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 0.03 0.05 0.05 0.05 0.03 0.03
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.05) (0.05) (0.05) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.56% 4.97% 5.15% 5.10% 2.95% 2.79%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.59%* 0.59% 0.57% 0.57% 0.57% 0.55%
Net investment income 5.02%* 4.86% 5.03% 4.97% 2.88% 2.75%
Expense waiver/reimbursement(b) 0.26%* 0.27% 0.28% 0.29% 0.06% 0.01%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $2,416,932 $2,412,656 $2,478,477 $2,448,873 $2,640,384 $3,115,772
</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)
NOTES TO FINANCIAL STATEMENTS
AUTOMATED GOVERNMENT MONEY TRUST
JANUARY 31, 1998 (UNAUDITED)
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.
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
January 31, 1998, capital paid-in aggregated $2,416,931,897. Transactions in
shares were as follows:
<TABLE>
<CAPTION> Six Months
Ended Year Ended
January 31, 1998 July 31,1997
<S> <C> <C>
Shares sold 6,283,705,895 12,580,252,469
Shares issued to shareholders in payment of 21,824,926 44,052,959
distributions declared
Shares redeemed (6,301,254,686) (12,690,126,232)
Net change resulting from share transactions 4,276,135 (65,820,804)
</TABLE>
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
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Matthew S. Hardin
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[Graphic]
Automated Government Money Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS JANUARY 31, 1998
[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 052831104
8022501 (3/98)
[Graphic]
