PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for
Trust for Government Cash Reserves, which covers the six-month
reporting period from December 1, 1996, through May 31, 1997. The
report contains commentary by the portfolio manager, followed by a
complete listing of the fund's investments on the last day of the
reporting period, and the financial statements.
This money market mutual fund pursues daily income with the additional
advantages of daily liquidity and stability of principal* through a
portfolio composed exclusively of U.S. Treasury and government agency
obligations. The trust's income may be exempt from state taxes.**
Because the trust does not invest in repurchase agreements, it may be
suitable for tax-sensitive investors in states that tax the income on
these securities.
Dividends paid to shareholders during the reporting period totaled
$0.02 per share. At the end of the reporting period, the trust's net
assets stood at $625.7 million.
Thank you for selecting Trust for Government Cash Reserves as a daily
cash investment. We welcome your comments and suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
July 15, 1997
* 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.
** Shareholders should consult a tax adviser.
INVESTMENT REVIEW
Trust for Government Cash Reserves, which is rated AAAm by Standard &
Poor's Ratings Group and Aaa by Moody's Investors Service, Inc.,*
invests in U.S. Treasury and U.S. government agency obligations only.
The trust may invest in issues of the Student Loan Marketing
Association, the Federal Farm Credit Bank System, the Federal Home
Loan Bank System, and the Tennessee Valley Authority, and maintains a
small Treasury position for liquidity purposes. The trust does not
invest in repurchase agreements, and is managed to provide
distributions that may be exempt from state taxes.
After keeping monetary policy on hold for over one year, the Federal
Reserve Board (the "Fed") voted to raise the federal funds target rate
in March 1997, by 25 basis points to 5.50%. The move was viewed as a
preemptive strike against inflation in the face of persistent demand.
Early in this reporting period, the market traded within a fairly
narrow range as economic fundamentals remained relatively unchanged.
Persistent above-trend economic growth in the first quarter of 1997,
coupled with tight labor market conditions, began to weigh heavily on
the market. Short rates began to rise in mid-February 1997, a result
of the stronger economic statistics and also of hawkish comments by
Fed Chairman Alan Greenspan. By the time the Fed tightened in late
March 1997, much of the move had already been priced into the
financial markets.
In the weeks following the Fed move, short rates traded within a
narrow range. However, beginning in late April and through May 1997,
rates began to decline in response to signs of weakening consumer
demand and tame inflation measures. Technical factors exacerbated the
decline, in particular, a reduction in the overall auction sizes of
Treasury bills due to larger than expected tax receipts at the
Treasury. Movements in the six-month Treasury bill over the reporting
period reflected both shifting market sentiment regarding the Fed and
these technical influences. The yield on this security opened December
1996, at 5.20%, and traded between 5.15% and 5.35% until mid-February
1997. As fears that strong economic growth might spark inflationary
pressures unsettled the market, the yield on the six-month Treasury
bill then rose steadily to 5.60% by the time of the Fed tightening.
The yield then stayed high for several weeks before falling to close
the reporting period at 5.40%. Over the entire reporting period, the
slope of the front-end of the yield curve steepened by 61 basis
points.
The trust remained in a 35- to 45-day average maturity target range
throughout the reporting period, a neutral stance for the portfolio.
The average maturity of the trust varied within that range, based on
relative value opportunities offered in the Treasury and agency
markets. The portfolio continued to be barbelled in structure,
combining short securities like overnight agency discount notes and
floating rate securities with positions in longer, fixed rate Treasury
and agency securities. At reporting period end, 25% of the portfolio
was invested in government agency floating rate notes, including a
position in a Student Loan Marketing Association master note that
helped to provide liquidity for the trust.
With very mild inflation expectations and signs of slowing on the
demand side of the economy, we would expect the Fed to remain on hold
in the near future. The trust intends to maintain its current neutral
positioning while closely monitoring economic and market conditions.
* An AAAm rating is obtained after Standard & Poor's Ratings Group
evaluates a number of factors, including credit quality, market price
exposure and management. Standard & Poor's Ratings Group monitors the
portfolio weekly for developments that could cause changes in the
ratings . Money market funds and bond funds rated Aaa by Moody's
Investors Service, Inc. 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. These ratings do not remove market
risks and are subject to change.
TRUST FOR GOVERNMENT CASH RESERVES
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
<C> <S>
<CAPTION>
SHORT-TERM GOVERNMENT OBLIGATIONS -- 97.2%
$ 51,000,000(a)Federal Farm Credit Bank Discount Notes, 5.390% - 5.790%,
6/12/1997 - 9/30/1997 $
50,734,624
12,000,000 (b)Federal Farm Credit Bank Floating Rate Note, 5.520%, 6/3/1997
11,994,190
3,000,000 Federal Farm Credit Bank Note, 5.600%, 6/3/1997
2,999,977
329,695,000(a)Federal Home Loan Bank System Discount Notes, 5.410% - 5.880%,
6/2/1997 - 11/13/1997
327,955,964
18,500,000 (b)Federal Home Loan Bank System Floating Rate
Notes, 5.349% - 5.563%, 6/4/1997 - 6/23/1997
18,492,361
10,750,000 Federal Home Loan Bank System Notes, 5.460% - 6.025%,
11/18/1997 - 4/15/1998
10,741,952
51,305,000 (a)Student Loan Marketing Association Discount Notes, 5.520% - 5.570%,
6/3/1997 - 6/20/1997
51,232,395
83,215,000 (b)Student Loan Marketing Association Floating Rate Notes,
5.330% - 5.410%, 6/3/1997
83,180,090
45,500,000 Student Loan Marketing Association Master Note, 5.385%, 6/3/1997
45,500,000
5,500,000 Student Loan Marketing Association, 5.535%, 2/25/1998
5,483,768
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS
608,315,321
U.S. TREASURY OBLIGATIONS -- 2.8%
5,000,000 (a)United States Treasury Bills, 5.600% - 5.670%, 3/5/1998
4,794,712
12,500,000 United States Treasury Notes, 6.125% - 7.875%, 11/15/1997-5/15/1998
12,615,011
TOTAL U.S. TREASURY OBLIGATIONS
17,409,723
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $
625,725,044
</TABLE>
(a) Each issue shows the effective yield.
(b) Denotes variable rate securities which show current rate and next
demand date.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($625,748,224) at May 31, 1997.
(See Notes which are an integral part of the Financial Statements)
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $
625,725,044
Cash
1,407,978
Income receivable
1,346,918
Total assets
628,479,940
LIABILITIES:
Income distribution payable $ 2,640,699
Accrued expenses 91,017
Total liabilities
2,731,716
NET ASSETS for 625,748,224 shares outstanding $
625,748,224
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$625,748,224 / 625,748,224 shares
outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $
17,800,992
EXPENSES:
Investment advisory fee $ 1,307,958
Administrative personnel and services fee 246,877
Custodian fees 38,742
Transfer and dividend disbursing agent fees and expenses 5,789
Directors'/Trustees' fees 12,012
Auditing fees 7,462
Legal fees 2,548
Portfolio accounting fees 50,538
Shareholder services fee 817,474
Share registration costs 21,486
Printing and postage 3,458
Insurance premiums 3,458
Taxes 790
Miscellaneous 7,462
Total expenses 2,526,054
Waivers --
Waiver of investment advisory fee $ (373,156)
Waiver of shareholder services fee (653,979)
Total waivers (1,027,135)
Net expenses
1,498,919
Net investment income $
16,302,073
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, NOVEMBER 30,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 16,302,073 $ 30,337,887
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (16,302,073) (30,337,887)
SHARE TRANSACTIONS --
Proceeds from sale of shares 1,341,044,782 2,047,837,147
Net asset value of shares issued to shareholders
in payment of distributions declared 1,163,073 1,970,553
Cost of shares redeemed (1,316,009,841) (2,189,810,436)
Change in net assets resulting from share
transactions 26,198,014 (140,002,736)
Change in net assets 26,198,014 (140,002,736)
NET ASSETS:
Beginning of period 599,550,210 739,552,946
End of period $ 625,748,224 $ 599,550,210
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TRUST FOR GOVERNMENT CASH RESERVES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED NOVEMBER 30,
MAY 31,
1997 1996 1995 1994 1993 1992 1991
1990 1989(A)
<S> <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
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.02 0.05 0.05 0.04 0.03 0.04 0.06
0.08 0.06
LESS DISTRIBUTIONS
Distributions
from net
investment
income (0.02) (0.05) (0.05) (0.04) (0.03) (0.04) (0.06)
(0.08) (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
TOTAL RETURN(B) 2.51% 5.08% 5.60% 3.74% 2.87% 3.58% 5.95%
7.94% 5.93%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.46%* 0.46% 0.45% 0.45% 0.45% 0.47% 0.47%
0.45% 0.43%*
Net investment
income 4.99%* 4.99% 5.45% 3.68% 2.83% 3.54% 5.76%
7.65% 8.34%*
Expense waiver/
reimbursement(c) 0.31%* 0.32% 0.32% 0.10% 0.03% 0.02% 0.02%
0.08% 0.19%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $625,748 $599,550 $739,553 $978,691 $1,060,355 $1,145,009 $1,251,692 $880,997
$331,860
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 30, 1989 (date of
initial public investment) to November 30, 1989. For the period
from start of business March 20, 1989, to March 29, 1989, the net
investment income was distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TRUST FOR GOVERNMENT CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
1. ORGANIZATION
Trust for Government Cash Reserves (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 high current income consistent with stability of
principal and liquidity.
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.
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 Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest
(without par value). At May 31, 1997, capital paid-in aggregated
$625,748,224.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER
30,
MAY 31, 1997 1996
<S> <C> <C>
Shares sold 1,341,044,782
2,047,837,147
Shares issued to shareholders in payment of distributions declared 1,163,073
1,970,553
Shares redeemed (1,316,009,841)
(2,189,810,436)
Net change resulting from share transactions 26,198,014
(140,002,736)
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Research, the Trust's
investment adviser (the "Adviser"), receives for its services an
annual investment advisory fee equal to 0.40% 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.
Glen R. Johnson
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
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.
TRUST FOR GOVERNMENT CASH RESERVES
SEMI-ANNUAL REPORT TO SHAREHOLDERS
MAY 31, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 89833H108
0062905 (7/97)
[Graphic]
