PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Government Cash Reserves for the six-month period ended October 31, 1995. The
Report begins with a brief commentary by the fund's portfolio manager on the
short-term government market, followed by a complete list of the fund's
investments and its financial statements.
On behalf of its investors, the fund pursues current income, a high level of
liquidity, and a stable net asset value of $1.00 per share. It invests
exclusively in a portfolio of securities issued or guaranteed by the U.S.
government or its agencies.* Of course, the fund itself is not guaranteed.
During the six-month reporting period, dividends paid to shareholders totaled
$15.0 million, or $0.03 per share. At the end of the reporting period, the
fund's net assets stood at $521.7 million.
Thank you for selecting Automated Government Cash Reserves as a high-quality
cash investment. As always, we welcome your questions, comments, or suggestions.
Sincerely,
[GLEN R. JOHNSON SIGNATURE]
Glen R. Johnson
President
December 15, 1995
*ALTHOUGH MONEY MARKET MUTUAL 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.
INVESTMENTS IN MUTUAL FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Automated Government Cash Reserves, which is rated AAAm by Standard & Poor's
Ratings Group* 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, Farm Credit Banks,
and Federal Home Loan Banks. We continue to maintain a small Treasury position
within the Fund's portfolio when agency spreads are narrow.
Over the six months ended October 31, 1995, the Federal Reserve Board (the
"Fed") reversed its course in monetary policy, lowering the Federal funds target
rate by 25 basis points in early July from 6% to 5.75%. This easing in monetary
policy came on the heels of seven consecutive tightenings from February 1994 to
February 1995, which brought the Fed funds target rate from 3% to 6%. The Fed
cited receding inflationary pressures as the reason for the ease, although weak
economic reports in the second quarter of 1995 were also thought to have had an
influence.
Short-term interest rates led the Fed's move downward. The rate on the
three-month Treasury bill declined by 30 basis points over the reporting period,
from 5.8% to 5.5%. The front end of the yield curve flattened significantly over
the reporting period; the spread between the one-year Treasury bill and the
three-month Treasury bill narrowed from 44 basis points at the beginning of May
to only 4 basis points at the end of October. This change in shape was a result
of growing market expectations that the Fed had ended its tightening cycle and
entered into an easing cycle, albeit a gradual one. Also influencing short-term
interest rates, particularly toward the end of the reporting period, were the
ongoing budget negotiations in Washington. In spite of the political struggle
between the White House and Congress and the resulting disruptions in the
Treasury auction schedule, expectations for a positive outcome toward credible
deficit reduction have been priced into the market.
Recently, the Fund has been managed with a 40 to 50 day average maturity target
range, a moderately bullish stance in anticipation of further gradual eases by
the Fed. In spite of third quarter Gross Domestic Product growth at 4.2%, recent
data on the economy has been somewhat mixed, with the retail sector and
manufacturing relatively sluggish. Fourth quarter growth is expected to be
closer to the 2 1/2% rate of growth considered by many to be non-inflationary. A
credible outcome toward deficit reduction from the ongoing budget negotiations
in Congress could also exert an influence with respect to the timing of the next
policy change from the Fed. The fund structure continues to be barbelled in
nature, and maximizes performance through ongoing relative value analysis.
*THIS 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. THIS RATING, HOWEVER, DOES
NOT REMOVE MARKET RISKS.
**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. RATINGS
ARE SUBJECT TO CHANGE AND DO NOT REMOVE MARKET RISKS.
+INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX AND LOCAL TAXES.
2
AUTOMATED GOVERNMENT CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ---------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM GOVERNMENT AND AGENCY OBLIGATIONS--100.1%
- -----------------------------------------------------------------------
$ 49,500,000 (a) Federal Farm Credit Bank, Discount Notes,
5.51%-6.38%, 11/21/1995-2/22/1996 $ 49,207,141
----------------------------------------------------
10,000,000 (b) Federal Farm Credit Bank, Floating Rate Notes,
5.76%, 11/1/1995 9,995,081
----------------------------------------------------
18,800,000 Federal Home Loan Bank Note, 6.015%-6.85%,
2/28/1996-6/13/1996 18,809,283
----------------------------------------------------
261,370,000 (a) Federal Home Loan Bank, Discount Notes, 5.39%-6.06%,
11/1/1995-4/11/1996 259,130,872
----------------------------------------------------
19,000,000 (b) Federal Home Loan Bank, Floating Rate Notes,
5.725%-5.80%, 11/1/1995 18,992,998
----------------------------------------------------
3,000,000 Student Loan Marketing Association Note, 6.943%,
2/21/1996 3,001,598
----------------------------------------------------
50,800,000 Student Loan Marketing Association Master Notes,
5.60%, 10/7/1996 50,800,000
----------------------------------------------------
96,550,000 (b) Student Loan Marketing Association, Floating Rate
Notes, 5.60%-5.875%, 11/7/1995 96,615,594
----------------------------------------------------
10,000,000 (a) U.S. Treasury Bills, 5.45%-5.795%,
1/11/1996-5/30/1996 9,783,140
----------------------------------------------------
6,000,000 U.S. Treasury Notes, 7.75%, 3/31/1996 6,050,984
---------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(c) $522,386,691
---------------------------------------------------- ------------
------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($521,732,373) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
3
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------
Total investments in securities, at amortized cost
and value $522,386,691
- -----------------------------------------------------------------
Cash 238,682
- -----------------------------------------------------------------
Income receivable 1,715,201
- ----------------------------------------------------------------- ------------
Total assets 524,340,574
- -----------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Income distribution payable $2,431,588
- ----------------------------------------------------
Accrued expenses 176,613
- ---------------------------------------------------- ----------
Total liabilities 2,608,201
- ----------------------------------------------------------------- ------------
NET ASSETS for 521,732,373 shares outstanding $521,732,373
- ----------------------------------------------------------------- ------------
------------
NET ASSETS VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- -----------------------------------------------------------------
$521,732,373 DIVIDED BY 521,732,373 shares
outstanding $ 1.00
- ----------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
4
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------
Interest $16,600,744
- ------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------
Investment advisory fee $1,409,679
- -----------------------------------------------------
Administrative personnel and services fee 213,425
- -----------------------------------------------------
Custodian fees 52,471
- -----------------------------------------------------
Transfer and dividend disbursing agent fees and
expenses 41,916
- -----------------------------------------------------
Directors'/Trustees' fees 3,680
- -----------------------------------------------------
Auditing fees 6,624
- -----------------------------------------------------
Legal fees 6,072
- -----------------------------------------------------
Portfolio accounting fees 49,290
- -----------------------------------------------------
Shareholder services fee 704,840
- -----------------------------------------------------
Share registration costs 11,545
- -----------------------------------------------------
Printing and postage 3,312
- -----------------------------------------------------
Insurance premiums 5,336
- -----------------------------------------------------
Miscellaneous 2,024
- ----------------------------------------------------- ----------
Total expenses 2,510,214
- -----------------------------------------------------
Waivers--
- -----------------------------------------------------
Waiver of investment advisory fee (865,212)
- ----------------------------------------------------- ----------
Net expenses 1,645,002
- ------------------------------------------------------------------ -----------
Net investment income $14,955,742
- ------------------------------------------------------------------ -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
5
AUTOMATED GOVERNMENT CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------
OPERATIONS--
- ----------------------------------------------------
Net investment income $ 14,955,742 $ 23,502,455
- ---------------------------------------------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------
Distributions from net investment income (14,955,742) (23,502,455)
- ---------------------------------------------------- ---------------- ---------------
SHARE TRANSACTIONS--
- ----------------------------------------------------
Proceeds from sale of shares 1,585,046,653 1,984,550,122
- ----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 2,317,999 4,439,144
- ----------------------------------------------------
Cost of shares redeemed (1,669,481,341) (1,843,084,556)
- ---------------------------------------------------- ---------------- ---------------
Change in net assets resulting from share
transactions (82,116,689) 145,904,710
- ---------------------------------------------------- ---------------- ---------------
Change in net assets (82,116,689) 145,904,710
- ----------------------------------------------------
NET ASSETS:
- ----------------------------------------------------
Beginning of period 603,849,062 457,944,352
- ---------------------------------------------------- ---------------- ---------------
End of period $ 521,732,373 $ 603,849,062
- ---------------------------------------------------- ---------------- ---------------
---------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
6
AUTOMATED GOVERNMENT CASH RESERVES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
------------ --------------------------------------------------------------------
1995 1995 1994 1993 1992 1991 1990(a)
- -------------------------------------------- ------------ --------- --------- --------- --------- --------- --------
<S> <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
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.03 0.05 0.03 0.03 0.05 0.07 0.02
- --------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions from net investment income (0.03) (0.05) (0.03) (0.03) (0.05) (0.07) (0.02)
- -------------------------------------------- ------------ --------- --------- --------- --------- --------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------- ------------ --------- --------- --------- --------- --------- --------
------------ --------- --------- --------- --------- --------- --------
TOTAL RETURN (b) 2.70% 4.68% 2.77% 2.92% 4.79% 7.20% 1.93%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.58%* 0.58% 0.57% 0.57% 0.58% 0.55% 0.32%*
- --------------------------------------------
Net investment income 5.29%* 4.70% 2.75% 2.87% 4.58% 6.70% 8.02%*
- --------------------------------------------
Expense waiver/reimbursement (c) 0.31%* 0.32% 0.09% 0.08% 0.14% 0.30% 0.89%*
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $521,732 $603,849 $457,944 $396,370 $308,625 $206,694 $34,053
- --------------------------------------------
<FN>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 15, 1990 (date of initial
public investment) to April 30, 1990.
(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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
7
AUTOMATED GOVERNMENT CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of three diversified portfolios. 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. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund'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 Fund'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 Fund may engage in
when-issued or delayed delivery transactions. The Fund 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.
OTHER--Investment transactions are accounted for on the trade date.
8
AUTOMATED GOVERNMENT CASH RESERVES
- ---------------------------------------------------------
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1995, capital paid-in aggregated $521,732,373. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
- ------------------------------------------- ---------------- --------------
<S> <C> <C>
Shares sold 1,585,046,653 1,984,550,122
- -------------------------------------------
Shares issued to shareholders in payment of
distributions declared 2,317,999 4,439,144
- -------------------------------------------
Shares redeemed (1,669,481,341) (1,843,084,556)
- ------------------------------------------- ---------------- --------------
Net change resulting from share
transactions (82,116,689) 145,904,710
- ------------------------------------------- ---------------- --------------
---------------- --------------
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--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 may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services, under the Administrative
Services Agreement, provides the Fund with administrative personnel and
services. This fee 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 Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
This fee is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Fund are Officers and
Directors or Trustees of the above companies.
9
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley CHAIRMAN
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland PRESIDENT
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. EXECUTIVE VICE PRESIDENT
Edward L. Flaherty, Jr. Edward C. Gonzales
Glen R. Johnson EXECUTIVE VICE PRESIDENT
Peter E. Madden John W. McGonigle
Gregor F. Meyer EXECUTIVE VICE PRESIDENT AND
John E. Murray, Jr. SECRETARY
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts VICE PRESIDENT
David M. Taylor
TREASURER
S. Elliott Cohan
ASSISTANT SECRETARY
</TABLE>
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 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 Fund's
prospectus which contains facts concerning its objective and
policies, management fees, expenses and other information.
10
-----------------------------------
- ------------------------------------------- -----------------------------------
AUTOMATED
- ------------------------------------------- -----------------------------------
GOVERNMENT
- ------------------------------------------- -----------------------------------
CASH
- ------------------------------------------- -----------------------------------
RESERVES
-----------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
[FEDERATED LOGO] -----------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
-----------------------------------
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
-----------------------------------
[RECYCLED LOGO]
RECYCLED
PAPER
Cusip 314186107
0112708 (12/95)
-----------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Automated
Treasury Cash Reserves for the six-month period ended October 31, 1995. The
Report begins with a brief commentary by the fund's portfolio manager on the
short-term government market, followed by a complete list of the fund's
investments and its financial statements.
On behalf of its investors, the fund pursues current income, a high level of
liquidity, and a stable net asset value of $1.00 per share* -- all through a
portfolio of U.S. Treasury obligations. At the end of the reporting period,
93.2% of fund net assets were invested in U.S. Treasury bills, while the
remaining assets were invested in U.S. Treasury notes.
During the six-month reporting period, dividends paid to shareholders totaled
$5.0 million, or $0.03 per share. At the end of the reporting period, the fund's
net assets stood at $214.4 million.
Thank you for your confidence in Automated Treasury Cash Reserves. Your
questions, comments, or suggestions are always welcome.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
December 15, 1995
*ALTHOUGH MONEY MARKET MUTUAL 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.
INVESTMENTS IN MUTUAL FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Automated Treasury Cash Reserves, which is rated AAAm by Standard & Poor's
Ratings Group* 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.
Over the six months ended October 31, 1995, the Federal Reserve Board (the
"Fed") reversed its course in monetary policy, lowering the Federal funds target
rate by 25 basis points in early July from 6% to 5.75%. This easing in monetary
policy came on the heels of seven consecutive tightenings from February 1994 to
February 1995, which brought the Fed funds target rate from 3% to 6%. The Fed
cited receding inflationary pressures as the reason for the ease, although weak
economic reports in the second quarter of 1995 were also thought to have had an
influence.
Short-term interest rates led the Fed's move downward. The rate on the
three-month Treasury bill declined by 30 basis points over the reporting period,
from 5.8% to 5.5%. The front end of the yield curve flattened significantly over
the reporting period; the spread between the one-year Treasury bill and the
three-month Treasury bill narrowed from 44 basis points at the beginning of May
to only 4 basis points at the end of October. This change in shape was a result
of growing market expectations that the Fed had ended its tightening cycle and
entered into an easing cycle, albeit a gradual one. Also influencing short-term
interest rates, particularly toward the end of the reporting period, were the
ongoing budget negotiations in Washington. In spite of the political struggle
between the White House and Congress and the resulting disruptions in the
Treasury auction schedule, expectations for a positive outcome toward credible
deficit reduction have been priced into the market.
Recently, the fund has been managed with a 40 to 50 day average maturity target
range, a moderately bullish stance in anticipation of further gradual eases by
the Fed. In spite of third quarter Gross Domestic Product growth at 4.2%, recent
data on the economy has been somewhat mixed, with the retail sector and
manufacturing relatively sluggish. Fourth quarter growth is expected to be
closer to the 2 1/2% rate of growth considered by many to be non-inflationary. A
credible outcome toward deficit reduction from the ongoing budget negotiations
in Congress could also exert an influence with respect to the timing of the next
policy change from the Fed. The fund's Treasury bill position increased modestly
relative to Treasury notes, due to a narrowing of the yield spread between these
two instruments.
*THIS 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. THIS RATING, HOWEVER,
DOES NOT REMOVE MARKET RISKS.
**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. RATINGS ARE
SUBJECT TO CHANGE AND DO NOT REMOVE MARKET RISKS.
+INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX AND LOCAL TAXES.
2
AUTOMATED TREASURY CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------- ------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--103.9%
- ------------------------------------------------------------------
(a) U.S. TREASURY BILLS--93.2%
-----------------------------------------------------
$ 9,500,000 5.34%-5.39%, 11/2/1995 $ 9,498,585
-----------------------------------------------------
5,000,000 5.18%-5.45%, 11/9/1995 4,994,085
-----------------------------------------------------
46,600,000 5.30%-5.43%, 11/16/1995 46,495,625
-----------------------------------------------------
5,300,000 5.25%-5.59%, 11/24/1995 5,281,480
-----------------------------------------------------
22,000,000 5.22%-5.26%, 12/7/1995 21,884,960
-----------------------------------------------------
25,800,000 5.33%-5.34%, 12/14/1995 25,635,782
-----------------------------------------------------
22,800,000 5.25%-5.34%, 1/4/1996 22,585,714
-----------------------------------------------------
29,800,000 5.23%-5.33%, 1/11/1996 29,489,578
-----------------------------------------------------
21,400,000 5.25%-5.33%, 1/18/1996 21,154,920
-----------------------------------------------------
5,000,000 5.41%, 1/25/1996 4,936,132
-----------------------------------------------------
8,000,000 5.43%, 2/1/1996 7,893,040
----------------------------------------------------- ------------
Total 199,849,901
----------------------------------------------------- ------------
U.S. TREASURY NOTES--10.7%
-----------------------------------------------------
18,000,000 4.25%, 11/30/1995 17,982,453
-----------------------------------------------------
5,000,000 4.63%, 2/29/1996 4,984,101
----------------------------------------------------- ------------
Total 22,966,554
----------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(b) $222,816,455
----------------------------------------------------- ------------
------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($214,393,123) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
3
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------
Total investments in securities, at amortized cost
and value $222,816,455
- -----------------------------------------------------------------
Income receivable 748,774
- -----------------------------------------------------------------
Deferred expenses 5,743
- ----------------------------------------------------------------- ------------
Total assets 223,570,972
- -----------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for investments purchased $7,893,040
- ----------------------------------------------------
Income distribution payable 906,193
- ----------------------------------------------------
Accrued expenses 378,616
- ---------------------------------------------------- ----------
Total liabilities 9,177,849
- ----------------------------------------------------------------- ------------
NET ASSETS for 214,393,123 shares outstanding $214,393,123
- ----------------------------------------------------------------- ------------
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- -----------------------------------------------------------------
$214,393,123 DIVIDED BY 214,393,123 shares
outstanding $ 1.00
- ----------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
4
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------
Interest $5,532,499
- -------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------
Investment advisory fee $ 482,800
- -------------------------------------------------------
Administrative personnel and services fee 73,096
- -------------------------------------------------------
Custodian fees 14,574
- -------------------------------------------------------
Transfer and dividend disbursing agent fees
and expenses 11,104
- -------------------------------------------------------
Directors'/Trustees' fees 2,392
- -------------------------------------------------------
Auditing fees 6,808
- -------------------------------------------------------
Legal fees 1,016
- -------------------------------------------------------
Portfolio accounting fees 26,265
- -------------------------------------------------------
Shareholder services fee 241,400
- -------------------------------------------------------
Share registration costs 23,880
- -------------------------------------------------------
Printing and postage 2,576
- -------------------------------------------------------
Insurance premiums 2,208
- -------------------------------------------------------
Miscellaneous 13,800
- ------------------------------------------------------- ---------
Total expenses 901,919
- -------------------------------------------------------
Waivers--
- -------------------------------------------
Waiver of investment advisory fee $(342,077)
- -------------------------------------------
Waiver of shareholder services fee (9,656)
- ------------------------------------------- ---------
Total waivers (351,733)
- ------------------------------------------------------- ---------
Net expenses 550,186
- ------------------------------------------------------------------- ----------
Net investment income $4,982,313
- ------------------------------------------------------------------- ----------
----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
5
AUTOMATED TREASURY CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------
OPERATIONS--
- ------------------------------------------
Net investment income $ 4,982,313 $ 7,864,070
- ------------------------------------------ ----------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------
Distributions from net investment income (4,982,313) (7,864,070)
- ------------------------------------------ ----------------- ---------------
SHARE TRANSACTIONS--
- ------------------------------------------
Proceeds from sale of shares 447,318,512 676,882,602
- ------------------------------------------
Net asset value of shares issued to
shareholders in payment of distributions
declared 1,481,761 4,267,547
- ------------------------------------------
Cost of shares redeemed (401,915,256) (704,481,817)
- ------------------------------------------ ----------------- ---------------
Change in net assets resulting from
share transactions 46,885,017 (23,331,668)
- ------------------------------------------ ----------------- ---------------
Change in net assets 46,885,017 (23,331,668)
- ------------------------------------------
NET ASSETS:
- ------------------------------------------
Beginning of period 167,508,106 190,839,774
- ------------------------------------------ ----------------- ---------------
End of period $ 214,393,123 $ 167,508,106
- ------------------------------------------ ----------------- ---------------
----------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
6
AUTOMATED TREASURY CASH RESERVES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
------------ ------------------------------------------------
1995 1995 1994 1993 1992(a)
------------ ---------- ---------- ---------- ---------
<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 0.03 0.04 0.03 0.03 0.03
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.03) (0.04) (0.03) (0.03) (0.03)
- ---------------------------------------- ------------ ---------- ---------- ---------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- ------------ ---------- ---------- ---------- ---------
------------ ---------- ---------- ---------- ---------
TOTAL RETURN (b) 2.61% 4.37% 2.58% 2.88% 3.07%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.57%* 0.56% 0.57% 0.39% 0.51%*
- ----------------------------------------
Net investment income 5.15%* 4.29% 2.55% 2.79% 3.84%*
- ----------------------------------------
Expense waiver/ reimbursement (c) 0.36%* 0.32% 0.13% 0.53% 0.30%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $214,393 $167,508 $190,840 $252,955 $36,803
- ----------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 9, 1991 (date of initial
public investment) to April 30, 1992.
(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)
7
AUTOMATED TREASURY CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of three diversified portfolios. 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. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund'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 Fund'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 Fund may engage in
when-issued or delayed delivery transactions. The Fund 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.
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 its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
8
AUTOMATED TREASURY CASH RESERVES
- ---------------------------------------------------------
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1995, capital paid-in aggregated $214,393,123. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
- -------------------------------------------- ---------------- --------------
<S> <C> <C>
Shares sold 447,318,512 676,882,602
- --------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,481,761 4,267,547
- --------------------------------------------
Shares redeemed (401,915,256) (704,481,817)
- -------------------------------------------- ---------------- --------------
Net change resulting from share
transactions 46,885,017 (23,331,668)
- -------------------------------------------- ---------------- --------------
---------------- --------------
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--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 may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services, under the Administrative
Services Agreement, provides the Fund with administrative personnel and
services. This fee 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 Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a 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--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
This fee is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Fund are Officers and
Directors or Trustees of the above companies.
9
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley CHAIRMAN
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland PRESIDENT
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. EXECUTIVE VICE PRESIDENT
Edward L. Flaherty, Jr. Edward C. Gonzales
Glen R. Johnson EXECUTIVE VICE PRESIDENT
Peter E. Madden John W. McGonigle
Gregor F. Meyer EXECUTIVE VICE PRESIDENT AND
John E. Murray, Jr. SECRETARY
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts VICE PRESIDENT
David M. Taylor
TREASURER
S. Elliott Cohan
ASSISTANT SECRETARY
</TABLE>
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 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 Fund's
prospectus which contains facts concerning its objective and
policies, management fees, expenses and other information.
10
-----------------------------------
- ------------------------------------------- -----------------------------------
AUTOMATED
- ------------------------------------------- -----------------------------------
TREASURY
- ------------------------------------------- -----------------------------------
CASH
- ------------------------------------------- -----------------------------------
RESERVES
-----------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
[FEDERATED LOGO] -----------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
-----------------------------------
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
-----------------------------------
[RECYCLED LOGO]
RECYCLED
PAPER
Cusip 314186404
2112509 (12/95)PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for U.S. Treasury
Cash Reserves for the six-month period ended October 31, 1995. The Report begins
with a brief commentary by the fund's portfolio manager on the short-term
government market, followed by a complete list of the fund's investments and its
financial statements.
On behalf of its investors, the fund continues to pursue current income, a high
level of liquidity, and a stable net asset value of $1.00 per share*--all
through a portfolio consisting primarily of U.S. Treasury bills and notes. At
the end of the reporting period, 92.7% of fund net assets were invested in U.S.
Treasury bills, while the remaining assets were invested in U.S. Treasury notes.
During the six-month reporting period, dividends paid to shareholders of
Institutional Shares totaled $19.7 million, or $0.03 per share. Dividends paid
to shareholders of Institutional Services Shares totaled $2.3 million, or $0.03
per share. Net assets rose from $670 million at the beginning of the reporting
period to $890 million at the end of the reporting period.
Thank you for your confidence in U.S. Treasury Cash Reserves. As always, welcome
your questions, comments, or suggestions.
Sincerely,
[GLEN R. JOHNSON SIGNATURE]
Glen R. Johnson
President
December 15, 1995
* ALTHOUGH MONEY MARKET MUTUAL 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.
INVESTMENTS IN MUTUAL FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
U.S. Treasury Cash Reserves, which is rated AAAm by Standard & Poor's Ratings
Group* 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.
Over the six months ended October 31, 1995, the Federal Reserve Board (the
"Fed") reversed its course in monetary policy, lowering the Federal funds target
rate by 25 basis points in early July from 6% to 5.75%. This easing in monetary
policy came on the heels of seven consecutive tightenings from February 1994 to
February 1995, which brought the Fed funds target rate from 3% to 6%. The Fed
cited receding inflationary pressures as the reason for the ease, although weak
economic reports in the second quarter of 1995 were also thought to have had an
influence.
Short-term interest rates led the Fed's move downward. The rate on the
three-month Treasury bill declined by 30 basis points over the reporting period,
from 5.8% to 5.5%. The front end of the yield curve flattened significantly over
the reporting period; the spread between the one-year Treasury bill and the
three-month Treasury bill narrowed from 44 basis points at the beginning of May
to only 4 basis points at the end of October. This change in shape was a result
of growing market expectations that the Fed had ended its tightening cycle and
entered into an easing cycle, albeit a gradual one. Also influencing short-term
interest rates, particularly toward the end of the reporting period, were the
ongoing budget negotiations in Washington. In spite of the political struggle
between the White House and Congress and the resulting disruptions in the
Treasury auction schedule, expectations for a positive outcome toward credible
deficit reduction have been priced into the market.
Recently, the fund has been managed with a 40 to 50 day average maturity target
range, a moderately bullish stance in anticipation of further gradual eases by
the Fed. In spite of third quarter Gross Domestic Product growth at 4.2%, recent
data on the economy has been somewhat mixed, with retail sector and
manufacturing are relatively sluggish. Fourth quarter growth is expected to be
closer to the 2 1/2% rate of growth considered by many to be non-inflationary. A
credible outcome toward deficit reduction from the ongoing budget negotiations
in Congress could also exert an influence with respect to the timing of the next
policy change from the Fed. The fund's Treasury bill position increased modestly
relative to Treasury notes, due to a narrowing of the yield spread between these
two instruments.
*THIS 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. THIS RATING, HOWEVER,
DOES NOT REMOVE MARKET RISKS.
**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.
RATINGS ARE SUBJECT TO CHANGE AND DO NOT REMOVE MARKET RISKS.
+INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX AND LOCAL TAXES.
2
U.S. TREASURY CASH RESERVES
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------- ------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--108.1%
- ------------------------------------------------------------------
(A) U.S. TREASURY BILLS--92.7%
----------------------------------------------------
$ 75,500,000 5.00%-5.40%, 11/2/1995 $ 75,489,236
----------------------------------------------------
63,000,000 5.18%-5.42%, 11/9/1995 62,924,883
----------------------------------------------------
51,300,000 5.22%-5.34%, 12/7/1995 51,031,128
----------------------------------------------------
167,800,000 5.23%-5.33%, 1/11/1996 166,052,509
----------------------------------------------------
113,600,000 5.25%-5.33%, 1/18/1996 112,300,199
----------------------------------------------------
119,000,000 5.25%-5.35%, 1/4/1996 117,876,978
----------------------------------------------------
13,500,000 5.25%-5.59%, 11/24/1995 13,453,068
----------------------------------------------------
121,400,000 5.30%-5.43%, 11/16/1995 121,129,632
----------------------------------------------------
72,000,000 5.31%-5.43%, 2/1/1996 71,035,785
----------------------------------------------------
9,000,000 5.33%, 12/14/1995 8,942,756
----------------------------------------------------
25,000,000 5.41%, 1/25/1996 24,680,660
---------------------------------------------------- ------------
Total 824,916,834
---------------------------------------------------- ------------
U.S. TREASURY NOTES--15.4%
----------------------------------------------------
67,000,000 4.25%, 11/30/1995 66,934,808
----------------------------------------------------
20,000,000 4.63%, 2/29/1996 19,936,403
----------------------------------------------------
50,000,000 5.13%, 11/15/1995 49,990,349
---------------------------------------------------- ------------
Total 136,861,560
---------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(b) $961,778,394
---------------------------------------------------- ------------
------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($889,602,076) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
3
U.S. TREASURY CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------
Total investments in securities, at amortized cost
and value $961,778,394
- -----------------------------------------------------------------
Income receivable 4,380,072
- ----------------------------------------------------------------- ------------
Total assets 966,158,466
- -----------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for investments purchased $71,035,785
- ---------------------------------------------------
Income distribution payable 3,961,827
- ---------------------------------------------------
Payable to Bank 1,505,905
- ---------------------------------------------------
Accrued expenses 52,873
- --------------------------------------------------- -----------
Total liabilities 76,556,390
- ----------------------------------------------------------------- ------------
Net Assets for 889,602,076 shares outstanding $889,602,076
- ----------------------------------------------------------------- ------------
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- -----------------------------------------------------------------
INSTITUTIONAL SHARES:
- -----------------------------------------------------------------
$772,737,649 DIVIDED BY 772,737,649 shares
outstanding $ 1.00
- ----------------------------------------------------------------- ------------
------------
INSTITUTIONAL SERVICE SHARES:
- -----------------------------------------------------------------
$116,864,427 DIVIDED BY 116,864,427 shares
outstanding $ 1.00
- ----------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
4
U.S. TREASURY CASH RESERVES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------
Interest $22,987,974
- ----------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 1,608,832
- --------------------------------------------------------------------------
Administrative personnel and services fee 304,472
- --------------------------------------------------------------------------
Custodian fees 47,384
- --------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 36,361
- --------------------------------------------------------------------------
Directors'/Trustees' fees 3,312
- --------------------------------------------------------------------------
Auditing fees 7,544
- --------------------------------------------------------------------------
Legal fees 3,864
- --------------------------------------------------------------------------
Portfolio accounting fees 58,723
- --------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 895,427
- --------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 110,092
- --------------------------------------------------------------------------
Share registration costs 91,056
- --------------------------------------------------------------------------
Printing and postage 6,624
- --------------------------------------------------------------------------
Insurance premiums 5,520
- --------------------------------------------------------------------------
Miscellaneous 1,471
- -------------------------------------------------------------------------- -----------
Total expenses 3,180,682
- --------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------
Waiver of investment advisory fee ($1,355,695)
- ------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (895,427)
- ------------------------------------------------------------ -----------
Total waivers (2,251,122)
- -------------------------------------------------------------------------- -----------
Net expenses 929,560
- ---------------------------------------------------------------------------------------- -----------
Net investment income $22,058,414
- ---------------------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
5
U.S. TREASURY CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 22,058,414 $ 19,174,852
- --------------------------------------------------------------------------- ----------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income
- ---------------------------------------------------------------------------
Institutional Shares (19,732,460) (18,188,542)
- ---------------------------------------------------------------------------
Institutional Service Shares (2,325,954) (986,310)
- --------------------------------------------------------------------------- ----------------- ---------------
Change in net assets resulting from distributions to shareholders (22,058,414) (19,174,852)
- --------------------------------------------------------------------------- ----------------- ---------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 1,540,827,486 1,756,823,729
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,833,137 1,510,042
- ---------------------------------------------------------------------------
Cost of shares redeemed (1,322,799,470) (1,353,622,888)
- --------------------------------------------------------------------------- ----------------- ---------------
Change in net assets resulting from share transactions 219,861,153 404,710,883
- --------------------------------------------------------------------------- ----------------- ---------------
Change in net assets 219,861,153 404,710,883
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 669,740,923 265,030,040
- --------------------------------------------------------------------------- ----------------- ---------------
End of period $ 889,602,076 $ 669,740,923
- --------------------------------------------------------------------------- ----------------- ---------------
----------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
6
U.S. TREASURY CASH RESERVES
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
----------- ------------------------------------------------
1995 1995 1994 1993 1992(a)
- ---------------------------------------- ----------- ---------- ---------- ---------- ---------
<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 0.03 0.05 0.03 0.03 0.04
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.03) (0.05) (0.03) (0.03) (0.04)
- ---------------------------------------- ----------- ---------- ---------- ---------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- ----------- ---------- ---------- ---------- ---------
----------- ---------- ---------- ---------- ---------
TOTAL RETURN (b) 2.79% 4.75% 2.95% 3.13% 4.24%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.20%* 0.20% 0.20% 0.20% 0.16%*
- ----------------------------------------
Net investment income 5.49%* 4.85% 2.93% 3.03% 4.42%*
- ----------------------------------------
Expense waiver/ reimbursement (c) 0.59%* 0.39% 0.43% 0.50% 0.62%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $772,738 $609,233 $265,030 $177,471 $83,244
- ----------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 11, 1991 (date of initial
public investment) to April 30, 1992.
(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)
7
U.S. TREASURY CASH RESERVES
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, APRIL 30,
----------- ------------
1995 1995(a)
----------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------
Net investment income 0.03 0.03
- ----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------
Distributions from net investment income (0.03) (0.03)
- ---------------------------------------------------------------------------------------------------- ----------- ------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------- ----------- ------------
----------- ------------
TOTAL RETURN (b) 2.67% 2.60%
- ----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------
Expenses 0.45%* 0.45%*
- ----------------------------------------------------------------------------------------------------
Net investment income 5.27%* 5.33%*
- ----------------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.34%* 0.39%*
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $116,864 $60,508
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 15, 1994 (date of initial
public investment) to April 30, 1995.
(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)
8
U.S. TREASURY CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Federated Government Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of three diversified portfolios. 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.
The Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares.
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. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund'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 Fund'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 Fund may engage in
when-issued or delayed delivery transactions. The Fund 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.
OTHER--Investment transactions are accounted for on the trade date.
9
U.S. TREASURY CASH RESERVES
- ---------------------------------------------------------
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1995, capital paid-in aggregated $889,602,076.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31,1995 APRIL 30, 1995
---------------- ------------------
INSTITUTIONAL SHARES SHARES SHARES
- ----------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Shares sold 1,375,929,830 1,652,377,627
- -----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,799,370 1,509,906
- -----------------------------------------------------
Shares redeemed (1,214,224,696) (1,309,684,428)
- ----------------------------------------------------- ---------------- ------------------
Net change resulting from Institutional Shares
share transactions 163,504,504 344,203,105
- ----------------------------------------------------- ---------------- ------------------
---------------- ------------------
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
OCTOBER 31, 1995 APRIL 30, 1995(A)
---------------- ------------------
INSTITUTIONAL SERVICE SHARES SHARES SHARES
- ----------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Shares sold 164,897,656 104,446,102
- -----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 33,767 136
- -----------------------------------------------------
Shares redeemed (108,574,774) (43,938,460)
- ----------------------------------------------------- ---------------- ------------------
Net change resulting from Institutional Service
Shares share transactions 56,356,649 60,507,778
- ----------------------------------------------------- ---------------- ------------------
---------------- ------------------
Net change resulting from share transactions 219,861,153 404,710,883
- ----------------------------------------------------- ---------------- ------------------
---------------- ------------------
</TABLE>
(a) Reflects operations from December 15, 1994 (date of initial public
investment) to October 31, 1995.
10
U.S. TREASURY CASH RESERVES
- ---------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--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 may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund. This fee is based on the size, type, and
number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund'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.
11
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley CHAIRMAN
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland PRESIDENT
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. EXECUTIVE VICE PRESIDENT
Edward L. Flaherty, Jr. Edward C. Gonzales
Glen R. Johnson EXECUTIVE VICE PRESIDENT
Peter E. Madden John W. McGonigle
Gregor F. Meyer EXECUTIVE VICE PRESIDENT AND
John E. Murray, Jr. SECRETARY
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts VICE PRESIDENT
David M. Taylor
TREASURER
S. Elliott Cohan
ASSISTANT SECRETARY
</TABLE>
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 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 Fund's
prospectus which contains facts concerning its objective and
policies, management fees, expenses and other information.
12
-----------------------------------
- ------------------------------------------- -----------------------------------
U.S.
- ------------------------------------------- -----------------------------------
TREASURY
- ------------------------------------------- -----------------------------------
CASH
- ------------------------------------------- -----------------------------------
RESERVES
-----------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
[FEDERATED LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 314186503
Cusip 34186305
MRECYCLED 2112510 (12/95) -----------------------------------
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