AUTOMATED
GOVERNMENT
CASH
RESERVES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1993
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
0112708 (12/93)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Government Cash Reserves (the "Fund"), for the six-month period ended October
31, 1993. The Report begins with our Investment Review, in which the Fund's
portfolio manager provides a brief commentary on the short-term government
market. Following the Investment Review, you will find Financial Statements
containing the Fund's Portfolio of Investments.
On behalf of investors, the Fund pursues current income, consistent with
stability of principal and liquidity.* It invests exclusively in a portfolio of
securities issued or guaranteed as to payment of principal and interest by the
U.S. government or its agencies. Of course, the portfolio itself is not
guaranteed.
During the six-month reporting period, dividends paid to shareholders totaled
$5.6 million. At the end of the period, the Fund's net assets rose to $467
million, representing an increase of more than $70 million over the net assets
at the start of the period.
We appreciate your participation in Automated Government Cash Reserves, and
welcome your questions, comments, or suggestions.
Sincerely,
Glen R. Johnson
President
December 8, 1993
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, Automated Government Cash Reserves has done so since its
inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Automated Government Cash Reserves, which is rated AAAm by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc.,* is invested only in
direct issues of the U.S. Treasury and government securities whose interest is
exempt from various states' personal income tax if owned directly. The Fund's
acceptable investments do not include repurchase agreements, because it was
created to meet the needs of tax-sensitive investors in states which consider
income from all repurchase agreements as taxable. The Fund continues to
emphasize issues of the Student Loan Marketing Association, Federal Farm Credit
Bank, and Federal Home Loan Bank.
During the semi-annual reporting period, the Federal Reserve (the "Fed")
continued to target a federal funds rate of 3.0%. The Fed's monetary policy has
remained on hold at the current 3.0% target since early September 1992.
Following a steady decline, short-term interest rates began to rise in April,
1993, when data showing higher inflation fueled market speculation that the Fed
would have to increase the federal funds rate. The 3-month Treasury bill rate
increased from just under 3.0% at the end of April 1993 to 3.2% in early June,
and then decreased to 3.1% at the end of October 1993.
Even with Fed policy on hold, short-term rates have been on the rise recently,
due to stronger economic statistics. The fourth quarter of 1993 is beginning to
look like the fourth quarter of 1992 with much stronger economic growth than
earlier in the year. If this stronger growth is sustainable, unlike last year,
the Fed's next move could be an increase in the federal funds rate. Also, the
short end of the Treasury yield curve has been vulnerable to increased supply
given the decreased supply in the long end, which puts upward pressure on rates.
The Fund's Treasury bill position has increased as bill rates have looked more
attractive due to increased bill issuance. The Fund is invested in a mixture of
agency floating rate notes, 1-to 3-month agency discount notes and 6-to 12-month
Treasury and agency securities. Recently, the Fund has been managed with an
average maturity of 45-55 days, based on relative market opportunities. However,
changing economic and market developments are continuously monitored to best
serve our clients attracted to the short-term government market.
* Ratings are subject to change.
AUTOMATED GOVERNMENT CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ --------------------------------------------------------------- ------------
SHORT-TERM OBLIGATIONS--99.8%
<C> <C> <S> <C>
- ------------------------------------------------------------------------------------
$117,000,000 * Federal Farm Credit Bank, Discount Notes, 3.00%-3.32%,
11/1/93-8/10/94 $116,436,261
---------------------------------------------------------------
96,125,000 * Federal Home Loan Bank, Discount Notes, 3.02%-3.35%,
11/4/93-8/1/94 95,707,480
---------------------------------------------------------------
6,500,000 Federal Home Loan Bank Notes, 8.62%-12.00%,
2/25/94-6/27/94 6,695,833
---------------------------------------------------------------
53,350,000 ** Student Loan Marketing Association, Floating Rate Notes,
3.65%, 11/2/93 54,413,788
---------------------------------------------------------------
71,850,000 ** Student Loan Marketing Association Floating Rate Master Notes,
3.15%, 11/2/93 71,850,000
---------------------------------------------------------------
33,730,000 * Tennessee Valley Authority Discount Notes, 3.00%-3.03%,
11/2/93-11/23/93 33,692,854
---------------------------------------------------------------
34,900,000 * U.S. Treasury Bills, 3.14%-3.51%, 12/2/93-9/22/94 34,535,183
---------------------------------------------------------------
52,500,000 U.S. Treasury Notes, 4.25%-9.00%, 11/15/93-7/31/94 52,907,294
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $466,238,693+
--------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
** Current rate and next demand date shown.
+ Also represents cost for federal tax purposes.
Note: The category of investments is shown as a percentage of net assets
($467,204,551) at
October 31, 1993.
(See Notes which are an integral part of the Financial Statements.)
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $466,238,693
- -------------------------------------------------------------------------------
Cash 11,774
- -------------------------------------------------------------------------------
Interest receivable 1,808,675
- -------------------------------------------------------------------------------
Deferred expenses (Note 2E) 4,303
- -------------------------------------------------------------------------------
Receivable for Fund shares sold 312
- ------------------------------------------------------------------------------- ------------
Total assets 468,063,757
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Dividends payable $797,376
- --------------------------------------------------------------------
Accrued expenses and other liabilities 61,830
- -------------------------------------------------------------------- --------
Total liabilities 859,206
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 467,204,551 shares of beneficial interest outstanding $467,204,551
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($467,204,551 / 467,204,551 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income (Note 2B) $6,817,715
- ----------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------
Investment advisory fee (Note 5) $1,052,070
- ---------------------------------------------------------------------
Trustees' fees 5,026
- ---------------------------------------------------------------------
Administrative personnel and services (Note 5) 165,014
- ---------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 67,903
- ---------------------------------------------------------------------
Fund share registration costs 12,512
- ---------------------------------------------------------------------
Legal fees 5,633
- ---------------------------------------------------------------------
Auditing fees 12,800
- ---------------------------------------------------------------------
Printing and postage 4,885
- ---------------------------------------------------------------------
Insurance premiums 7,360
- ---------------------------------------------------------------------
Miscellaneous 2,311
- --------------------------------------------------------------------- ----------
Total expenses 1,335,514
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 158,365
- --------------------------------------------------------------------- ----------
Net expenses 1,177,149
- ---------------------------------------------------------------------------------- ----------
Net investment income $5,640,566
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
10/31/93 YEAR ENDED
(UNAUDITED) 4/30/93
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 5,640,566 $ 10,785,703
- ------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income (5,640,566) (10,785,703)
- ------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -------------------------------------------------------------
Proceeds from sale of shares 713,278,654 1,371,972,505
- -------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 1,115,423 2,671,141
- -------------------------------------------------------------
Cost of shares redeemed (643,559,313) (1,286,898,427)
- ------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 70,834,764 87,745,219
- ------------------------------------------------------------- ------------- -------------
Change in net assets 70,834,764 87,745,219
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 396,369,787 308,624,568
- ------------------------------------------------------------- ------------- -------------
End of period $ 467,204,551 $ 396,369,787
- ------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT CASH RESERVES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------------------------------
1994* 1993 1992 1991 1990**
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.01 0.03 0.05 0.07 0.02
- ------------------------------------------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------
Dividends to shareholders from net
investment income (0.01) 0.03 (0.05) (0.07) (0.02)
- ------------------------------------------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------ ------ ------ ------ ------ ------
TOTAL RETURN 1.35%(a) 2.92% 4.79% 7.20% 1.93%(a)
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.56%(b) 0.57% 0.58% 0.55% 0.32%(b)
- ------------------------------------------
Net investment income 2.68%(b) 2.87% 4.58% 6.70% 8.02%(b)
- ------------------------------------------
Expense waiver/reimbursement(c) 0.08%(b) 0.08% 0.14% 0.31% 0.89%(b)
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) 467,205 396,370 308,625 206,694 34,053
- ------------------------------------------
</TABLE>
* For six months ended October 31, 1993 (unaudited).
** Reflects operations for the period from February 15, 1990 (date of initial
public investment) to April 30, 1990. For the period from the start of
business, January 23, 1990 to February 14, 1990, net investment income
aggregating $.006 per share ($502) was distributed to the Fund's adviser.
(a) Cumulative total return.
(b) Computed on an annualized basis.
(c) The voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
AUTOMATED GOVERNMENT CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
Effective May 14, 1991, the Trust offered separate portfolios with differing
investment objectives and policies. The financial statements included herein are
only those of Automated Government Cash Reserves (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated, and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Board of Trustees (the "Trustees") has determined that the
best method currently available for valuing portfolio securities is amortized cost. The
Fund's use of the amortized cost method to value its portfolio securities is conditioned
on its compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended.
B. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), including original issue discount as
required by the Internal Revenue Code, as amended, plus realized net gains if any, on
portfolio securities.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code, as amended, applicable to regulated investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no provision for
federal income tax is necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. To the extent the Fund engages in such transactions, it
will do so for the purpose of acquiring portfolio securities consistent with its
investment objective and policies and not for the purpose of investment leverage. The
Fund will record a when-issued security and the related liability on the trade date.
Until the securities are received and paid for, the Fund will maintain 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.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the shares,
have been deferred and are being amortized using the straight-line method through
February 1995.
</TABLE>
AUTOMATED GOVERNMENT CASH RESERVES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. OTHER--Investment transactions are accounted for on the date of the transaction.
</TABLE>
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) 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
October 31, 1993, the Fund's capital paid-in aggregated $467,204,551.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
10/31/93 4/30/93
- -------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Shares outstanding, beginning of period 396,369,787 308,624,568
- --------------------------------------------------------------
Shares sold 713,278,654 1,371,972,505
- --------------------------------------------------------------
Shares issued to shareholders electing to receive payment of
dividends in Fund shares 1,115,423 2,671,141
- --------------------------------------------------------------
Shares redeemed (643,559,313) (1,286,898,427)
- -------------------------------------------------------------- ------------ --------------
Shares outstanding, end of period 467,204,551 396,369,787
- -------------------------------------------------------------- ------------ --------------
</TABLE>
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to .50 of 1% of the
Fund's average daily net assets. The Adviser has voluntarily agreed to waive a
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time in its sole discretion. For the six months ended October 31, 1993, the
investment advisory fee amounted to $1,052,070, of which $158,365 was
voluntarily waived in accordance with such undertaking.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain of the officers and Trustees of
the Trust are officers and directors of the above corporations.
<TABLE>
<S> <C>
Trustees Officers
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
John A. Staley, IV Vice President and Secretary
John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Robert C. Rosselot
Assistant Secretary
</TABLE>
Mutual Funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or
accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
AUTOMATED
TREASURY
CASH
RESERVES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1993
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
2112509 (12/93)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Treasury Cash Reserves (the "Fund"), for the six-month period ended October 31,
1993. The Report begins with our Investment Review, in which the Fund's
portfolio manager provides a brief commentary on the short-term government
market. Following the Investment Review, you will find Financial Statements
containing the Fund's Portfolio of Investments.
On behalf of investors, the Fund pursues current income consistent with
stability of principal and liquidity*--all through a portfolio of U.S. Treasury
obligations.
During the six-month reporting period, dividends paid to shareholders totaled
$3.3 million. At the end of the period, net assets stood at $265 million.
Thank you for your confidence in Automated Treasury Cash Reserves. Your
questions, comments, or suggestions are always welcome.
Sincerely,
Glen R. Johnson
President
December 15, 1993
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, Automated Treasury Cash Reserves has done so since its
inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Automated Treasury Cash Reserves, which is rated AAAm by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc.,* is invested only in
direct issues of the U.S. Treasury. The Fund was created to meet the needs of
tax-sensitive investors in states which consider income from all repurchase
agreements as taxable. Therefore, the Fund's acceptable investments do not
include repurchase agreements, and liquidity is maintained by including a
laddered position of short-term Treasury securities, which are typically
Treasury bills.
During the semi-annual reporting period, the Federal Reserve (the "Fed")
continued to target a federal funds rate of 3.0%. The Fed's monetary policy has
remained on hold at the current 3.0% target since early September 1992.
Following a steady decline, short-term interest rates began to rise in April
1993, when data showing higher inflation fueled market speculation that the Fed
would have to increase the federal funds rate. The 3-month Treasury bill rate
increased from just under 3.0% at the end of April 1993 to 3.2% in early June,
and then decreased to 3.1% at the end of October 1993.
Even with Fed policy on hold, short-term rates have been on the rise recently
due to stronger economic statistics. The fourth quarter of 1993 is beginning to
look like the fourth quarter of 1992 with much stronger economic growth than
earlier in the year. If this stronger growth is sustainable, unlike last year,
the Fed's next move could be an increase in the federal funds rate. Also, the
short end of the Treasury yield curve has been vulnerable to increased supply
given the decreased supply in the long end, which puts upward pressure on rates.
The Fund's Treasury bill position has increased as Treasury bill rates have
looked more attractive versus notes due to increased Treasury bill issuance.
Recently, the Fund has been managed with an average maturity of 40-50 days,
based on relative market opportunities. However, changing economic and market
developments are continuously being monitored to best serve our clients
attracted to the short-term government market.
* Ratings are subject to change.
AUTOMATED TREASURY CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--99.7%
- -------------------------------------------------------------------------------------
U.S. TREASURY NOTES--7.5%
-----------------------------------------------------------------
$20,000,000 9.00%,11/15/93 $ 20,044,163
-----------------------------------------------------------------
* U.S. TREASURY BILLS--92.2%
-----------------------------------------------------------------
3,750,000 3.02%-3.04%, 11/04/93 3,749,056
-----------------------------------------------------------------
24,550,000 3.00%-3.02%, 11/12/93 24,527,439
-----------------------------------------------------------------
21,850,000 2.97%-2.99%, 11/18/93 21,819,332
-----------------------------------------------------------------
30,300,000 2.99%-3.01%, 11/26/93 30,237,072
-----------------------------------------------------------------
32,950,000 2.93%-2.98%, 12/02/93 32,865,560
-----------------------------------------------------------------
24,050,000 2.94%-2.97%, 12/09/93 23,975,035
-----------------------------------------------------------------
23,700,000 2.93%-2.95%, 12/16/93 23,612,889
-----------------------------------------------------------------
13,550,000 2.91%-2.99%, 12/23/93 13,492,047
-----------------------------------------------------------------
8,800,000 2.91%, 12/30/93 8,758,031
-----------------------------------------------------------------
17,900,000 2.98%, 01/06/94 17,802,206
-----------------------------------------------------------------
12,800,000 2.99%-3.01%, 01/13/94 12,722,151
-----------------------------------------------------------------
30,200,000 3.03%-3.05%, 01/20/94 29,995,654
-----------------------------------------------------------------
1,475,000 3.03%, 01/27/94 1,464,199
----------------------------------------------------------------- ------------
Total 245,020,671
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $265,064,834+
----------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($265,810,094)
at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $265,064,834
- -------------------------------------------------------------------------------
Cash 12,264
- -------------------------------------------------------------------------------
Interest receivable 831,522
- -------------------------------------------------------------------------------
Deferred expenses (Note 2E) 12,211
- ------------------------------------------------------------------------------- ------------
Total assets 265,920,831
- -------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Dividends payable $62,247
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 48,490
- --------------------------------------------------------------------- -------
Total liabilities 110,737
- ------------------------------------------------------------------------------- ------------
NET ASSETS FOR 265,810,094 shares of beneficial interest outstanding $265,810,094
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Price Per Share
($265,810,094 / 265,810,094 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2B) $4,084,958
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 5) $670,004
- ----------------------------------------------------------------------
Trustees' fees 5,600
- ----------------------------------------------------------------------
Administrative personnel and service fees (Note 5) 183,095
- ----------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 47,762
- ----------------------------------------------------------------------
Fund share registration costs 14,883
- ----------------------------------------------------------------------
Legal fees 4,640
- ----------------------------------------------------------------------
Auditing fees 8,297
- ----------------------------------------------------------------------
Printing and postage 3,438
- ----------------------------------------------------------------------
Insurance premiums 4,674
- ----------------------------------------------------------------------
Miscellaneous 4,219
- ---------------------------------------------------------------------- --------
Total expenses 946,612
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 190,050
- ---------------------------------------------------------------------- --------
Net expenses 756,562
- --------------------------------------------------------------------------------- ----------
Net investment income $3,328,396
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------
1994* 1993
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 3,328,396 $ 2,799,520
- --------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ---------------------------------------------------------------
Dividends to shareholders from net investment income (3,328,396) (2,799,520)
- --------------------------------------------------------------- ------------ ------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ---------------------------------------------------------------
Proceeds from sale of shares 622,058,061 702,487,230
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 3,158,570 2,185,822
- ---------------------------------------------------------------
Cost of shares redeemed (612,361,414) (488,521,657)
- --------------------------------------------------------------- ------------ ------------
Change in net assets from Fund share transactions 12,855,217 216,151,395
- --------------------------------------------------------------- ------------ ------------
Change in net assets 12,855,217 216,151,395
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 252,954,877 36,803,482
- --------------------------------------------------------------- ------------ ------------
End of period $265,810,094 $252,954,877
- --------------------------------------------------------------- ------------ ------------
</TABLE>
* Six months ended October 31, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
AUTOMATED TREASURY CASH RESERVES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------
1994** 1993 1992*
------ ------ ------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
Net investment income 0.01 0.03 0.03
- ----------------------------------------------------- ------ ------ ------
LESS DISTRIBUTIONS
- -----------------------------------------------------
Dividends to shareholders from
net investment income (0.01) (0.03) (0.03)
- ----------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- ----------------------------------------------------- ------ ------ ------
TOTAL RETURN*** 1.25% 2.88% 3.07%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
Expenses 0.56%(a) 0.39% 0.51%(a)
- -----------------------------------------------------
Net investment income 2.48%(a) 2.79% 3.84%(a)
- -----------------------------------------------------
Expense waiver/reimbursement(b) 0.15% 0.53% 0.30%
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
Net assets, end of period (000 omitted) $265,810 $252,955 $36,803
- -----------------------------------------------------
</TABLE>
* Reflects operations for the period from August 9, 1991 (date of initial
public investment) to April 30, 1992.
** Six months ended October 31, 1993 (unaudited).
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
AUTOMATED TREASURY CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
Effective May 14, 1991, the Trust offered separate portfolios with differing
investment objectives and policies. The financial statements included herein are
only those of Automated Treasury Cash Reserves (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Board of Trustees (the "Trustees") has determined that the
best method currently available for valuing portfolio securities is amortized cost. The
Fund's use of the amortized cost method to value its portfolio securities is conditioned
on its compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended.
B. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), including original issue discount as
required by the Internal Revenue Code, as amended, plus realized net gains if any, on
portfolio securities.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code, as amended, applicable to regulated investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no provision for
federal tax is necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. To the extent the Fund engages in such transactions, it
will do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment leverage. The
Fund will record a when-issued security and the related liability on the trade date.
Until the securities are received and paid for, the Fund will maintain 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.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense or registering the shares,
have been deferred and are being amortized on a straight-line basis through July 1996.
</TABLE>
AUTOMATED TREASURY CASH RESERVES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. OTHER--Investment transactions are accounted for on the date of the transaction.
</TABLE>
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) 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
October 31, 1993, the Fund's capital paid-in aggregated $265,810,094.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------
1994* 1993
------------ ------------
<S> <C> <C>
- -----------------------------------------------------------------
Shares outstanding, beginning of period 252,954,877 36,803,482
- -----------------------------------------------------------------
Shares sold 622,058,061 702,487,230
- -----------------------------------------------------------------
Shares issued to shareholders electing to receive payment
of dividends in Fund shares 3,158,570 2,185,822
- -----------------------------------------------------------------
Shares redeemed (612,361,414) (488,521,657)
- ----------------------------------------------------------------- ------------ ------------
Shares outstanding, end of period 265,810,094 252,954,877
- ----------------------------------------------------------------- ------------ ------------
</TABLE>
* Six months ended October 31, 1993.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to .50 of 1% of the
Fund's average daily net assets. The Adviser has voluntarily agreed to waive the
amount, limited to the amount of the advisory fee, by which the Fund's aggregate
annual operating expenses (excluding interest, taxes, brokerage commissions,
insurance premiums, expenses of registering and qualifying the Fund and its
shares under federal and state laws, expenses of withholding taxes, and
extraordinary expenses) exceed .55 of 1% of average daily net assets. For the
six months ended October 31, 1993, the investment advisory fee amounted to
$670,004, of which $190,050 was voluntarily waived.
Organization expenses of $14,017 and start-up administrative service expenses of
$14,125 were borne initially by the Adviser. The Fund agreed to pay the Adviser,
at an annual rate of .005 of 1% of average daily net assets and .01 of 1% of
average daily net assets, for organization expenses and start-up administrative
service expenses, respectively, until expenses borne by the Adviser were
reimbursed.
AUTOMATED TREASURY CASH RESERVES
- --------------------------------------------------------------------------------
This commitment will expire five years from August 5, 1991, the date the Trust's
portfolio became effective. For the six months ended October 31, 1993, the Fund
paid the Adviser $6,583 and $13,167, respectively, pursuant to this agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain of the officers and Trustees of
the Trust are officers and directors of the above corporations.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
John A. Staley, IV Vice President and Secretary
John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Robert C. Rosselot
Assistant Secretary
</TABLE>
Mutual Funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
U.S.
TREASURY
CASH
RESERVES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
October 31, 1993
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
2112510 (12/93)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for U.S. Treasury
Cash Reserves (the "Fund") for the six-month period ended October 31, 1993. The
Report begins with our Investment Review, in which the Fund's portfolio manager
provides a brief commentary on the short-term Treasury market. Following the
Investment Review, you will find Financial Statements containing the Fund's
Portfolio of Investments.
On behalf of investors, the Fund continues to pursue current income, consistent
with stability of principal and liquidity*--all through a portfolio consisting
primarily of U.S. Treasury bills and notes.
During the six-month reporting period, dividends paid to shareholders totaled $3
million. Net assets rose from $177 million at the beginning of the reporting
period to $217 million at the end of the period.
Thank you for your confidence in U.S. Treasury Cash Reserves. As always, we
welcome your questions, comments, or suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1993
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, U.S. Treasury Cash Reserves has done so since its
inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
U.S. Treasury Cash Reserves, which is rated AAAm by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc.,* is invested only in
direct issues of the U.S. Treasury. The Fund was created to meet the needs of
tax-sensitive investors in states which consider income from all repurchase
agreements as taxable. Therefore, the Fund's acceptable investments do not
include repurchase agreements, and liquidity is maintained by including a
laddered position of short-term Treasury securities, which are typically
Treasury bills.
During the semi-annual reporting period, the Federal Reserve (the "Fed")
continued to target a federal funds rate of 3.0%. The Fed's monetary policy has
remained on hold at the current 3.0% target since early September 1992.
Following a steady decline, short-term interest rates began to rise in April,
1993, when data showing higher inflation fueled market speculation that the Fed
would have to increase the federal funds rate. The 3-month Treasury bill rate
increased from just under 3.0% at the end of April, 1993 to 3.2% in early June,
and then decreased to 3.1% at the end of October, 1993.
Even with Fed policy on hold, short-term rates have been on the rise recently
due to stronger economic statistics. The fourth quarter of 1993 is beginning to
look like the fourth quarter of 1992 with much stronger economic growth than
earlier in the year. If this stronger growth is sustainable, unlike last year,
the Fed's next move could be an increase in the federal funds rate. Also, the
short end of the Treasury yield curve has been vulnerable to increased supply
given the decreased supply in the long end, which puts upward pressure on rates.
The majority of the Fund continues to be invested in Treasury bills as Treasury
bill rates have looked attractive versus notes due to increased Treasury bill
issuance. Recently, the Fund has been managed with an average maturity of 40-50
days, based on relative market opportunities. However, changing economic and
market developments are continuously monitored to best serve our clients
attracted to the short-term government market.
* Ratings are subject to change.
U.S. TREASURY CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
UNITED STATES TREASURY OBLIGATIONS--99.4%
- -------------------------------------------------------------------------------------
U.S. TREASURY NOTES--18.5%
-----------------------------------------------------------------
$40,000,000 9.00%-11.75%, 11/15/93 $ 40,108,863
-----------------------------------------------------------------
* U.S. TREASURY BILLS--80.9%
-----------------------------------------------------------------
450,000 3.05%, 11/4/93 449,886
-----------------------------------------------------------------
1,400,000 3.00%, 11/12/93 1,398,717
-----------------------------------------------------------------
9,900,000 2.97%-2.98%, 11/18/93 9,886,110
-----------------------------------------------------------------
20,625,000 2.99%-3.01%, 11/26/93 20,582,126
-----------------------------------------------------------------
18,150,000 2.925%-2.98%, 12/2/93 18,103,489
-----------------------------------------------------------------
16,750,000 2.925%-2.96%, 12/9/93 16,697,716
-----------------------------------------------------------------
33,500,000 2.92%-2.945%, 12/16/93 33,376,855
-----------------------------------------------------------------
10,250,000 2.91%-2.96%, 12/23/93 10,206,587
-----------------------------------------------------------------
15,000,000 2.91%, 12/30/93 14,928,462
-----------------------------------------------------------------
22,800,000 2.98%, 1/6/94 22,675,436
-----------------------------------------------------------------
13,550,000 3.005%-3.01%, 1/13/94 13,467,424
-----------------------------------------------------------------
14,350,000 3.035%-3.05%, 1/20/94 14,252,852
----------------------------------------------------------------- ------------
Total 176,025,660
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $216,134,523+
----------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at time of purchase.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($217,475,982) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
U.S. TREASURY CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $216,134,523
- -------------------------------------------------------------------------------
Cash 10,190
- -------------------------------------------------------------------------------
Interest receivable 1,917,119
- -------------------------------------------------------------------------------
Deferred expenses (Note 2E) 24,110
- -------------------------------------------------------------------------------
Receivable from Adviser (Note 5) 10,525
- ------------------------------------------------------------------------------- ------------
Total assets 218,096,467
- -------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Dividends payable $550,242
- --------------------------------------------------------------------
Accrued expenses and other liabilities 70,243
- -------------------------------------------------------------------- --------
Total liabilities 620,485
- ------------------------------------------------------------------------------- ------------
NET ASSETS FOR 217,475,982 shares of beneficial interest outstanding $217,475,982
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Price Per Share
($217,475,982 / 217,475,982 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
U.S. TREASURY CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest income (Note 2B) $3,274,187
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee (Note 5) $428,151
- -----------------------------------------------------------------------
Trustees' fees 2,500
- -----------------------------------------------------------------------
Administrative personnel and service fee (Note 5) 160,976
- -----------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 52,100
- -----------------------------------------------------------------------
Fund share registration costs 32,000
- -----------------------------------------------------------------------
Legal fees 4,800
- -----------------------------------------------------------------------
Auditing fees 8,300
- -----------------------------------------------------------------------
Printing and postage 4,400
- -----------------------------------------------------------------------
Insurance premiums 4,300
- -----------------------------------------------------------------------
Miscellaneous 7,320
- ----------------------------------------------------------------------- --------
Total expenses 704,847
- -----------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $428,151
- ------------------------------------------------------------
Reimbursement of other operating expenses (Note 5) 62,625 490,776
- ------------------------------------------------------------ -------- --------
Net expenses 214,071
- ----------------------------------------------------------------------------------- ----------
Net investment income $3,060,116
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
U.S. TREASURY CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------
1994* 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 3,060,116 $ 4,087,405
- ------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income (3,060,116) (4,087,405)
- ------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -------------------------------------------------------------
Proceeds from sale of shares 355,277,350 415,811,738
- -------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 83,663 87,318
- -------------------------------------------------------------
Cost of shares redeemed (315,356,212) (321,671,827)
- ------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 40,004,801 94,227,229
- ------------------------------------------------------------- ------------- -------------
Change in net assets 40,004,801 94,227,229
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 177,471,181 83,243,952
- ------------------------------------------------------------- ------------- -------------
End of period $ 217,475,982 $ 177,471,181
- ------------------------------------------------------------- ------------- -------------
</TABLE>
* Six months ended October 31, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
U.S. TREASURY CASH RESERVES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------
1994** 1993 1992*
------ ------ -----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
Net investment income 0.01 0.03 0.04
- ----------------------------------------------------- ----- ------ ----
LESS DISTRIBUTIONS
- -----------------------------------------------------
Dividends to shareholders from
net investment income (0.01 ) (0.03) (0.04)
- ----------------------------------------------------- ----- ------ ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- -----------------------------------------------------
TOTAL RETURN*** 1.44 % 3.13% 4.24 %
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
Expenses 0.20 %(a) 0.20% 0.16 %(a)
- -----------------------------------------------------
Net investment income 2.86 %(a) 3.03% 4.42 %(a)
- -----------------------------------------------------
Expenses adjustment(b) 0.46 % 0.50% 0.52 %
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
Net assets, end of period (000 omitted) $217,476 $177,471 $83,244
- -----------------------------------------------------
</TABLE>
* Reflects operations for the period from June 11, 1991 (date of initial
public investment) to
April 30, 1992.
** Six months ended October 31, 1993 (unaudited).
*** Based on net asset value which does not reflect the sales load or
redemption fee, if applicable.
(a) Computed on an annualized basis.
(b) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
U.S. TREASURY CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
Effective May 14, 1991, the Trust offered separate portfolios with differing
investment objectives and policies. The financial statements included herein are
only those of U.S. Treasury Cash Reserves (the "Fund"). The financial statements
of the other portfolios are presented separately. The assets of each portfolio
are segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Board of Trustees (the "Trustees") has determined that the
best method currently available for valuing portfolio securities is amortized cost. The
Fund's use of the amortized cost method to value its portfolio securities is conditioned
on its compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended.
B. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), including original issue discount as
required by the Internal Revenue Code, as amended, plus realized net gains if any, on
portfolio securities.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code, as amended, applicable to regulated investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no provision for
federal tax is necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. To the extent the Fund engages in such transactions, it
will do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment leverage. The
Fund will record a when-issued security and the related liability on the trade date.
Until the securities are received and paid for, the Fund will maintain 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.
E. DEFERRED EXPENSES--Costs incurred by the Fund in connection with its initial share
registration, other than organization expenses, were deferred and are being amortized on
a straight-line basis through May 1996.
</TABLE>
U.S. TREASURY CASH RESERVES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
G. OTHER--Investment transactions are accounted for on the date of the transaction.
</TABLE>
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) 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
October 31, 1993, the Fund's capital paid-in aggregated $217,475,982.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------
1994* 1993
- ------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares outstanding, beginning of period 177,471,181 83,243,952
- -------------------------------------------------------------
Shares sold 355,277,350 415,811,738
- -------------------------------------------------------------
Shares issued to shareholders electing to receive payment
of dividends in Fund shares 83,663 87,318
- -------------------------------------------------------------
Shares redeemed (315,356,212) (321,671,827)
- ------------------------------------------------------------- ------------ ------------
Shares outstanding, end of period 217,475,982 177,471,181
- ------------------------------------------------------------- ------------ ------------
</TABLE>
* Six months ended October 31, 1993.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to .40 of 1% of the
Fund's average daily net assets. The Adviser has voluntarily agreed to waive the
amount, limited to the amount of the advisory fee, by which the Fund's aggregate
annual operating expenses (excluding interest, taxes, brokerage commissions,
insurance premiums, expenses of registering and qualifying the Fund and its
shares under federal and state laws, expenses of withholding taxes, and
extraordinary expenses) exceed .30 of 1% of average daily net assets. For the
six months ended October 31, 1993, the investment advisory fee amounted to
$428,151, all of which was voluntarily waived in accordance with such
undertaking. In addition, the Adviser voluntarily reimbursed $62,625 of the
Fund's other operating expenses.
Organization expenses of $31,352 and start-up administrative service expenses of
$44,164 were borne initially by the Adviser. The Fund agreed to pay the Adviser,
at an annual rate of .005 of 1% of average daily net assets and .01 of 1% of
average daily net assets, for organization expenses and start-up administrative
service expenses, respectively, until expenses borne by the Adviser were
reimbursed.
U.S. TREASURY CASH RESERVES
- --------------------------------------------------------------------------------
This commitment will expire five years from May 14, 1991, the date the Trust's
portfolio became effective. During the six months ended October 31, 1993, the
Fund paid the Adviser $5,098 and $10,196, respectively, pursuant to this
agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain of the officers and Trustees of
the Trust are officers and directors of the above corporations.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
John A. Staley, IV Vice President and Secretary
John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Robert C. Rosselot
Assistant Secretary
</TABLE>
Mutual Funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
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.
