SEMI-ANNUAL REPORT
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, 1999. 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 financial statements.
Over the six-month reporting period, dividends paid to shareholders
totaled $0.02 per share. The fund's 7-day net yield on the last day of the
reporting period was 4.28%. 1
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. 2 The fund's portfolio maintained its AAAm rating by Standard &
Poor's and Aaa rating by Moody's Investors Service, Inc.-the highest ratings
possible for a money market fund.3 At the end of the six-month reporting period,
more than 80% of the fund's $2.3 billion in assets were invested in repurchase
agreements backed by U.S. Treasury obligations because of their yield advantage.
The remainder of the portfolio was invested in direct U.S. Treasury notes.
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, 1999
1 Performance quoted represents past performance and is not indicative of future
results. Yield will vary. Yields quoted for money market funds must closely
reflect the fund's current earnings.
2 An investment in the fund is neither insured nor guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund.
3 The Standard & Poor's 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
Investors Service, Inc. are judged to be of an investment quality similar to
Aaa-rated fixed income obligations, which means 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 Investors Service, Inc., is invested in direct obligations of the
U.S. Treasury either in the form of notes and bills or as collateral for
repurchase agreements.
There were two central themes in the short-term government markets over the
reporting period ended January 31, 1999. First, the economy continued to advance
at a robust pace of growth, with gross domestic product expanding in the third
and fourth quarters of 1998 at 3.7% and 6.1%, respectively, and all indications
that this same strength had spilled over into 1999. Although the manufacturing
sector was soft, the housing and retail sectors continued to propel the economy
forward. While this pace of growth is in excess of what has traditionally been
viewed to be the non-inflationary potential of the economy, inflation
nevertheless remained benign, perhaps reflecting advances in productivity that
have enabled growth to be achieved without upward pressure on prices. Under
normal circumstances, however, the growth trajectory of the economy would have
been sufficient to make Federal Reserve Board (the "Fed") officials concerned
about the inflationary threat that could result from such above-trend growth.
Circumstances were not normal, however, as economic crises in countries overseas
and in Latin America were the second, and ultimately more dominant, theme over
the reporting period. In August 1998, the economic troubles in Asia spread to
encompass Russia and then Latin America. As fears that the United States could
not continue to be immune from what had become a global economic crisis weighed
heavily on the U.S. equity market, investors both domestic and abroad fled to
the perceived safety of the U.S. Treasury market. Yields on U.S. Treasury
securities were driven sharply downward, as investors shunned credit-sensitive
markets in favor of the safe haven of U.S. Treasuries, and a credit/liquidity
crisis in the U.S. financial markets became evident. Faced with this scenario,
the Fed voted to ease monetary policy by 25 basis points, bringing the federal
funds target rate down to 5.25% in late September, in an attempt to calm
investor fears. Market participants viewed this move to be too tentative,
however, and it was not until the Fed took two additional easing steps in
mid-October and November, bringing the federal funds target rate to 4.75%, that
some semblance of calm returned to the markets. Credit spreads narrowed over
this period, albeit not back to levels that pre-dated the crisis.
One additional factor that influenced movements in rates on U.S. Treasury
securities over this period-and in fact exacerbated the sharp decline in rates
on these instruments in October-was the reduced supply of U.S. Treasury
securities as a result of the vastly improved budget situation. With projections
for the 1999 fiscal year for the U.S. government for a surplus in the
neighborhood of $100 billion, the paydown of debt by the Treasury over this
period kept the market well-bid.
Movements in short-term interest rates reflected the turbulent economic
conditions early in the reporting period, and then the relative tranquillity of
the markets once the Fed moves had their desired effect. The yield on the
one-year Treasury bill began the reporting period at 5.40%, but was driven
downward by the onslaught of investors-both domestic and abroad-seeking a safe
haven from the world economic uncertainty and the instability of the U.S. equity
market. The yield on this security reached a low of 3.85% by mid-October. As the
additional easing steps by the Fed calmed investors, the yield on this security
rose moderately to 4.60% by early November. Although the Fed took one additional
easing step in mid- November, the yield on this security traded within a
relatively narrow range of 4.40% to 4.60% for the remainder of the reporting
period.
With the flight to quality to U.S. Treasury securities driving yields on these
securities down to extreme levels, repurchase agreements remained a preferred
investment in spite of the easing steps eventually taken by the Fed. The average
maturity for the fund drifted lower as yields dropped below 4%-well below any
expectation for the federal funds target rate. The average maturity for the fund
then extended out again as yields on short-term U.S. Treasuries returned to
relative value. Overall, the average maturity target range for the fund was 35
to 45 days over the reporting period. The fund's structure remained barbelled,
with a significant position in repurchase agreements combined with purchases of
securities with 6- to 12-month maturities. With the credit crisis now past, we
would expect the Fed to keep monetary policy unchanged in upcoming months.
Barring a sudden economic collapse in a major trading partner, the focus of the
market is likely to return to the strength of the domestic economy and its
implications for inflation. 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
JANUARY 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY NOTES-17.4%
$ 391,500,000 United States Treasury Notes, 5.625% - 7.750%, 4/30/1999-
11/30/1999 $ 393,954,408
TOTAL U.S. TREASURY NOTES 393,954,408
REPURCHASE AGREEMENTS-83.2% 1
96,000,000 ABN AMRO, Inc., 4.740%, dated 1/29/1999, due 2/1/1999 96,000,000
105,000,000 Barclays Capital, Inc., 4.740%, dated 1/29/1999, due
2/1/1999 105,000,000
105,000,000 Bear, Stearns and Co., 4.760%, dated 1/29/1999, due 2/1/1999 105,000,000
105,000,000 CIBC Wood Gundy Securities Corp., 4.720%, dated 1/29/1999,
due 2/1/1999 105,000,000
105,000,000 Credit Suisse First Boston, Inc., 4.750%, dated 1/29/1999,
due 2/1/1999 105,000,000
32,040,000 Deutsche Morgan Grenfell, 4.740%, dated 1/29/1999, due
2/1/1999 32,040,000
105,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 4.730%,
dated 1/29/1999, due 2/1/1999 105,000,000
100,000,000 First Chicago Capital Markets, Inc., 4.720%, dated
1/29/1999, due 2/1/1999 100,000,000
105,000,000 First Union Capital Markets, 4.730%, dated 1/29/1999, due
2/1/1999 105,000,000
61,500,000 2 Goldman Sachs Group, LP, 4.680%, dated 1/29/1999, due
3/31/1999 61,500,000
55,000,000 2 Goldman Sachs Group, LP, 4.880%, dated 11/30/1998, due
2/3/1999 55,000,000
105,000,000 Greenwich Capital Markets, Inc., 4.740%, dated 1/29/1999,
due 2/1/1999 105,000,000
90,000,000 2 J.P. Morgan & Co., Inc., 4.740%, dated 11/17/1998, due
2/17/1999 90,000,000
30,000,000 2 Lehman Brothers, Inc., 4.700%, dated 1/21/1999, due 3/1/1999 30,000,000
105,000,000 Paribas Corp., 4.750%, dated 1/29/1999, due 2/1/1999 105,000,000
105,000,000 Salomon Smith Barney Holdings, Inc., 4.750%, dated
1/29/1999, due 2/1/1999 105,000,000
100,000,000 Scotia McLeod (USA), Inc., 4.720%, dated 1/29/1999, due
2/1/1999 100,000,000
105,000,000 Societe Generale Securities Corp., 4.730%, dated 1/29/1999,
due 2/1/1999 105,000,000
105,000,000 Toronto Dominion Securities (USA) Inc., 4.730%, dated
1/29/1999, due 2/1/1999 105,000,000
54,000,000 2 Warburg Dillon Reed LLC, 4.740%, dated 11/19/1998, due
2/18/1999 54,000,000
105,000,000 Westdeutsche Landesbank Girozentrale, 4.730%, dated
1/29/1999, due 2/1/1999 105,000,000
TOTAL REPURCHASE AGREEMENTS 1,878,540,000
TOTAL INVESTMENTS (AT AMORTIZED COST) 3 $ 2,272,494,408
</TABLE>
1 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.
2 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.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,258,605,687) at January 31, 1999.
The following acronyms are used throughout this portfolio:
LLC -Limited Liability Corporation
LP -Limited Partnership
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
JANUARY 31, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 1,878,540,000
Investments in securities 393,954,408
Total investments in securities, at amortized cost and value $ 2,272,494,408
Income receivable 9,237,883
Receivable for investments sold 2,051,611
Receivable for shares sold 13,745
TOTAL ASSETS 2,283,797,647
LIABILITIES:
Payable for investments purchased 16,341,216
Income distribution payable 8,396,838
Payable to Bank 33,852
Accrued expenses 420,054
TOTAL LIABILITIES 25,191,960
Net assets for 2,258,605,687 shares outstanding $ 2,258,605,687
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PROCEEDS PER SHARE:
$2,258,605,687 / 2,258,605,687 shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 62,551,741
EXPENSES:
Investment advisory fee $ 6,042,711
Administrative personnel and services fee 911,241
Custodian fees 77,179
Transfer and dividend disbursing agent fees and expenses 97,217
Directors'/Trustees' fees 14,639
Auditing fees 6,710
Legal fees 4,662
Portfolio accounting fees 76,087
Shareholder services fee 3,021,355
Share registration costs 17,200
Printing and postage 6,500
Insurance premiums 8,358
Miscellaneous 8,028
TOTAL EXPENSES 10,291,887
WAIVERS:
Waiver of investment advisory fee $ (2,987,457)
Waiver of shareholder services fee (120,855)
TOTAL WAIVERS (3,108,312)
Net expenses 7,183,575
Net investment income $ 55,368,166
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
JANUARY 31, JULY 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 55,368,166 $ 116,645,750
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (55,368,166) (116,645,750)
SHARE TRANSACTIONS:
Proceeds from sale of shares 5,125,650,835 11,944,665,534
Net asset value of shares issued to shareholders in payment
of distributions declared 19,843,957 53,212,969
Cost of shares redeemed (5,254,202,528) (12,043,220,842)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (108,707,736) (45,342,339)
Change in net assets (108,707,736) (45,342,339)
NET ASSETS:
Beginning of period 2,367,313,423 2,412,655,762
End of period $ 2,258,605,687 $ 2,367,313,423
</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,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.33% 5.13% 4.97% 5.15% 5.10% 2.95%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.59% 2 0.59% 0.59% 0.57% 0.57% 0.57%
Net investment income 4.58% 2 5.00% 4.86% 5.03% 4.97% 2.88%
Expense waiver/reimbursement 3 0.26% 2 0.26% 0.27% 0.28% 0.29% 0.06%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $2,258,606 $2,367,313 $2,412,656 $2,478,477 $2,448,873 $2,640,384
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 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
JANUARY 31, 1999 (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, 1999, capital paid-in aggregated $2,258,605,687.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
JANUARY 31, JULY 31,
1999 1998
<S> <C> <C>
Shares sold 5,125,650,835 11,944,665,534
Shares issued to shareholders in
payment of distributions declared 19,843,957 53,212,969
Shares redeemed (5,254,202,528) (12,043,220,842)
NET CHANGE RESULTING FROM SHARE TRANSACTIONS (108,707,736) (45,342,339)
</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, Inc. for the period.
The administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Trust will pay FSSC up to 0.25% of average daily
net assets of the Trust for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Trust. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Trust's accounting records for which it receives a fee. The
fee is based on the level of the Trust's average daily net assets for the
period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000
Similar to other financial organizations, the Trust could be adversely affected
if the computer systems used by the Trust's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Trust's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Trust's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
WILLIAM J. COPELAND
JAMES E. DOWD, ESQ.
LAWRENCE D. ELLIS, M.D.
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
JOHN E. MURRAY, JR., J.D., S.J.D.
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 and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
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 investment risk,
including the 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.
SEMI-ANNUAL REPORT
[Graphic]
Automated Government Money Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1999
[Graphic]
Automated Government Money Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 052831104
8022501 (3/99)
[Graphic]
