President's Message
- - --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the 14th Annual Report to Shareholders for Liberty U.S.
Government Money Market Trust (the "Trust"), which covers the 12-month period
ended March 31, 1994. The Report begins with an interview with the Trust's
portfolio manager, Deborah A.Cunningham, Vice President, Federated Advisers and
follows with a listing of portfolio holdings and financial statements.
The Trust is managed to put your cash to work every day by pursuing current
income along with the additional advantages of daily liquidity and stability of
principal*--all through a portfolio of short-term U.S. government securities.
At the end of the reporting period, more than half of the portfolio was
invested in repurchase agreements backed by U.S. government securities because
of their yield advantage.
At the end of the period, the Trust's net assets stood at $805.9 million.
Dividends paid to shareholders during the period totaled $19.5 million, or
$0.02 per share.
Should you decide to pursue additional investments, Liberty U.S. Government
Money Market Trust offers convenient exchange privileges that allow you to move
all or part of your assets in the Trust to other funds in the entire Liberty
Family of Funds.**
Thank you for your participation in the Trust. We will continue to keep you up
to date on your investment and welcome your comments and suggestions.
Sincerely,
J. Christopher Donahue
President
May 16, 1994
*Of course, while no money market mutual fund can guarantee a stable net asset
value of $1.00, the Trust has done so since its inception in 1980.
**This exchange privilege may be modified or discontinued at any time. Some
exchanges may be subject to a sales charge.
Investment Review
- - --------------------------------------------------------------------------------
Q. AFTER BOTTOMING OUT, INTEREST RATES FINALLY SEEM
TO BE ON THE UPSWING. CAN YOU COMMENT ON THE
FACTORS THAT LED TO THE RISE IN RATES?
A. 1994 brought about the first changes in monetary
policy by the Federal Reserve Board (the "Fed")
since September 1992. Fed officials indicated
an uneasiness with what they perceived to be the
"accommodative" nature of the current monetary policy
stance, and sought to move toward a more "neutral"
policy. The Fed began what is anticipated to be a
series of gradual tightenings in early February, by
moving the Fed funds target rate from 3% to 3.25%.
Deborah A. The Fed followed that move with another tightening in
Cunningham, CFA late March, target rate from 3.25% to 3.50%. The
Vice President, actions by the Fed were viewed as being preemptive
Federated Advisers strikes against the forces of inflation.
While short-term rates remained fairly stable throughout
1993, with movements driven largely by market sentiment,
short-term rates in 1994 have tracked the policy
tightenings by the Fed. Rates on the 3-month Treasury
bill ranged from just under 3% to 3.2% from March 1993
through December 1993, closing the year at 3%. Rates then
rose from 3% at the end of January to close to 3.6% at
the end of March 1994. The yield on the 30-year Treasury
bond declined steadily from 7% in March 1993 to a low of
5.8% in October 1993, and then rose to 6.2% by the end of
January. The yield then returned to 7% by the end of
March 1994, as Treasury securities across the yield curve
were unsettled by the Fed tightenings.
- - --------------------------------------------------------------------------------
Q. WHAT DOES THE RISE IN INTEREST RATES MEAN TO
SHAREHOLDERS IN
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST?
A. The rise in short-term rates has been favorable
for shareholders in Liberty U.S. Government Money
Market Trust. The Trust holds a significant
portion of its portfolio in repurchase agreements,
investments which are very responsive to changes in
short-term interest rates. Furthermore, the Trust has
been able to purchase fixed U.S. government securities
at higher yields because of the Fed tightenings. As a
result, the yield of the Trust has risen over the
reporting period, particularly in the first quarter of
1994.*
Q. HOW ARE YOU MANAGING THE PORTFOLIO TO CAPITALIZE
ON THE HIGHER RATE ENVIRONMENT?
A. The average maturity of the portfolio has drifted
shorter in response to the uncertain Federal
Reserve outlook, in order to increase the Trust's
responsiveness to changes in short-term interest rates
and to capitalize on opportunities presented by higher
interest rates.
Recently, the Trust has been managed with a 35-45 day
average maturity based on relative market opportunities.
The Trust's portfolio continues to be barbelled in
structure, as repurchase agreements collateralized by
U.S. government securities continue to out-yield shorter
term government money market securities. As a result, the
Trust combines short-term repurchase agreements with
longer maturity securities (6-12 months) making up the
long end of the barbell. Although the Trust has
maintained a Treasury position due to narrow agency yield
spreads over Treasuries, the Trust continues to invest in
issues of the Federal National Mortgage Association,
Federal Home Loan Bank System, Federal Farm Credit Bank
System, and Student Loan Marketing Association. At March
31, 1994, about 41% of the portfolio was invested in
direct U.S. government money market securities, with the
remaining 59% of the portfolio invested in repurchase
agreements.
*Of course, past performance is not indicative of future
results.
- - --------------------------------------------------------------------------------
Q. WHAT IS YOUR OUTLOOK FOR THE TRUST AND SHORT-TERM
RATES IN GENERAL?
A. It appears that the Fed is poised for additional
tightenings as it continues to move toward the
desired neutral policy stance. As economic growth
continued to remain fairly strong in the first quarter
of 1994, in spite of the adverse winter weather, we
believe that it is likely that the Fed will be anxious
to remove the stimulus that it has been providing the
economy through an accommodative monetary policy. We
will continue to monitor the changing economic and
market developments to best serve our clients who are
attracted to the short-term U.S. government market.
Liberty U.S. Government Money Market Trust
Portfolio of Investments
- - --------------------------------------------------------------------------------
March 31, 1994
The obligations listed below are issued, guaranteed or insured by the U.S.
government, its agencies or instrumentalities, or secured by such obligations.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - -------------- --------------------------------------------------------------------------------- --------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--41.1%
- - -------------------------------------------------------------------------------------------------
@FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--2.0%
---------------------------------------------------------------------------------
$ 16,000,000 3.32%-3.92%, 5/2/94-9/1/94 $ 15,900,445
--------------------------------------------------------------------------------- --------------
@FEDERAL HOME LOAN BANK, DISCOUNT NOTES--1.2%
---------------------------------------------------------------------------------
10,000,000 3.17%, 7/25/94 9,898,736
--------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK NOTE--0.4%
---------------------------------------------------------------------------------
3,225,000 9.55%, 4/25/94 3,237,996
--------------------------------------------------------------------------------- --------------
@FEDERAL HOME LOAN MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.4%
---------------------------------------------------------------------------------
3,000,000 3.31%, 9/14/94 2,954,212
--------------------------------------------------------------------------------- --------------
@FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--17.1%
---------------------------------------------------------------------------------
139,625,000 3.15%-3.93%, 4/4/94-11/25/94 138,120,060
--------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES--1.6%
---------------------------------------------------------------------------------
13,140,000 8.60%-9.60%, 4/11/94-6/10/94 13,232,168
--------------------------------------------------------------------------------- --------------
GOVERNMENT GUARANTEED FLOATING RATE NOTES--2.8%
---------------------------------------------------------------------------------
4,800,000 *All Nippon Airways, Ltd., 4.205%, 4/5/94 4,800,000
---------------------------------------------------------------------------------
9,166,000 *Overseas Private Investment Corp., 4.98%, 4/5/94 9,166,000
---------------------------------------------------------------------------------
8,750,000 *Trinidad Nitrogen Co., 4.28%, 4/5/94 8,750,000
--------------------------------------------------------------------------------- --------------
TOTAL 22,716,000
--------------------------------------------------------------------------------- --------------
*STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--7.8%
---------------------------------------------------------------------------------
62,800,000 4.08%-4.18%, 4/5/94 62,764,289
--------------------------------------------------------------------------------- --------------
@UNITED STATES TREASURY BILLS--4.0%
---------------------------------------------------------------------------------
32,500,000 3.15%-3.60%, 5/5/94-2/9/95 32,122,989
--------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY NOTES--3.8%
---------------------------------------------------------------------------------
30,500,000 4.25%-7.00%, 4/30/94-11/15/94 30,652,934
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 331,599,829
--------------------------------------------------------------------------------- --------------
</TABLE>
Liberty U.S. Government Money Market Trust
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - -------------- --------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENTS--58.4%
- - -------------------------------------------------------------------------------------------------
$ 800,000 BZW Securities, Inc., 3.57%, dated 3/31/94, due 4/4/94 $ 800,000
---------------------------------------------------------------------------------
40,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 4.00%,
dated 3/31/94, due 4/4/94 40,000,000
---------------------------------------------------------------------------------
40,000,000 Greenwich Capital Markets, Inc., 3.60%, dated 3/31/94,
due 4/4/94 40,000,000
---------------------------------------------------------------------------------
70,000,000 Greenwich Capital Markets, Inc., 3.70%, dated 3/31/94,
due 4/4/94 70,000,000
---------------------------------------------------------------------------------
20,000,000 J.P. Morgan Securities, Inc., 3.60%, dated 3/31/94,
due 4/4/94 20,000,000
---------------------------------------------------------------------------------
100,000,000 Nomura Securities International, Inc., 3.68%, dated 3/31/94,
due 4/4/94 100,000,000
---------------------------------------------------------------------------------
20,000,000 PaineWebber, Inc., 3.825%, dated 3/31/94, due 4/4/94 20,000,000
---------------------------------------------------------------------------------
30,000,000 S.G. Warburg & Co., Inc., 3.67%, dated 3/31/94, due 4/4/94 30,000,000
---------------------------------------------------------------------------------
35,000,000 Smith Barney, Harris Upham & Co., Inc., 3.65%, dated 3/31/94,
due 4/4/94 35,000,000
---------------------------------------------------------------------------------
35,000,000 UBS Securities, Inc., 3.60%, dated 3/31/94, due 4/4/94 35,000,000
---------------------------------------------------------------------------------
15,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 3.65%, dated
3/18/94, due 4/19/94 15,000,000
---------------------------------------------------------------------------------
18,000,000 Goldman, Sachs & Co., 3.72%, dated 3/30/94, due 5/27/94 18,000,000
---------------------------------------------------------------------------------
17,000,000 Goldman, Sachs & Co., 3.80%, dated 3/4/94, due 6/2/94 17,000,000
---------------------------------------------------------------------------------
15,000,000 Greenwich Capital Markets, Inc., 3.19%, dated 1/28/94, due 4/28/94 15,000,000
---------------------------------------------------------------------------------
</TABLE>
Liberty U.S. Government Money Market Trust
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - -------------- --------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENTS--CONTINUED
- - -------------------------------------------------------------------------------------------------
$ 15,000,000 \Morgan Stanley & Co., Inc., 3.81%, dated 3/31/94, due 6/29/94 $ 15,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 470,800,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (NOTE 2A) $ 802,399,829\\
--------------------------------------------------------------------------------- --------------
</TABLE>
@ Each issue shows the rate of discount at time of purchase.
* Current rate and next reset date shown.
** Repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in repurchase agreements are through
participation in joint accounts.
\ Although final maturity falls beyond seven days, a liquidity feature
is
included in each transaction to permit termination of the repurchase
agreement.
\\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($805,907,013) at March 31, 1994.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Statement of Assets and Liabilities
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<S> <C> <C>
ASSETS:
- - -------------------------------------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost and value (Note 2B) $ 470,800,000
- - ---------------------------------------------------------------------------------
Investments in other securities, at amortized cost and value 331,599,829
- - --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value (Note 2A) $ 802,399,829
- - -------------------------------------------------------------------------------------------------
Cash 154,339
- - -------------------------------------------------------------------------------------------------
Interest receivable 1,680,577
- - -------------------------------------------------------------------------------------------------
Receivable for Trust shares sold 4,676,065
- - ------------------------------------------------------------------------------------------------- --------------
Total assets 808,910,810
- - -------------------------------------------------------------------------------------------------
LIABILITIES:
- - -------------------------------------------------------------------------------------------------
Payable for Trust shares redeemed 2,233,636
- - ---------------------------------------------------------------------------------
Dividends payable 171,941
- - ---------------------------------------------------------------------------------
Accrued expenses and other liabilities 598,220
- - --------------------------------------------------------------------------------- --------------
Total liabilities 3,003,797
- - ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 805,907,013 shares of beneficial interest outstanding $ 805,907,013
- - ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Offering Price Per Share
($805,907,013 / 805,907,013 shares of beneficial interest outstanding) $ 1.000
- - ------------------------------------------------------------------------------------------------- --------------
Computation of Proceeds on Redemption:
Redemption Proceeds Per Share (99.5/100 of 1.00)* $ 0.995
- - ------------------------------------------------------------------------------------------------- --------------
</TABLE>
* Under certain limited conditions, a contingent deferred sales charge of .50 of
1% was imposed. See "Contingent Deferred Sales Charge" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Statement of Operations
- - --------------------------------------------------------------------------------
Year Ended March 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- - ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 28,138,584
- - ---------------------------------------------------------------------------------------------------
EXPENSES:
- - ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 4,147,512
- - -------------------------------------------------------------------------------------
Trustees' fees 15,338
- - -------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 985,326
- - -------------------------------------------------------------------------------------
Custodian and recordkeeping fees and expenses 250,006
- - -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 2,951,336
- - -------------------------------------------------------------------------------------
Shareholder services fees (Note 4) 44,736
- - -------------------------------------------------------------------------------------
Trust share registration costs 28,561
- - -------------------------------------------------------------------------------------
Auditing fees 21,495
- - -------------------------------------------------------------------------------------
Legal fees 19,922
- - -------------------------------------------------------------------------------------
Printing and postage 74,797
- - -------------------------------------------------------------------------------------
Taxes 14,905
- - -------------------------------------------------------------------------------------
Insurance premiums 19,736
- - -------------------------------------------------------------------------------------
Miscellaneous 15,322
- - ------------------------------------------------------------------------------------- ------------
Total expenses 8,588,992
- - --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 19,549,592
- - --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Statement of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------
1994 1993
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- - ------------------------------------------------------------------------------
OPERATIONS--
- - ------------------------------------------------------------------------------
Net investment income $ 19,549,592 $ 28,125,169
- - ------------------------------------------------------------------------------ --------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- - ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (19,549,592) (28,125,169)
- - ------------------------------------------------------------------------------ --------------- ----------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- - ------------------------------------------------------------------------------
Net proceeds from sales of shares 361,379,933 332,831,734
- - ------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Trust shares 17,378,344 25,027,665
- - ------------------------------------------------------------------------------
Cost of shares redeemed (492,734,547) (611,661,566)
- - ------------------------------------------------------------------------------ --------------- ----------------
Change in net assets from Trust share transactions (113,976,270) (253,802,167)
- - ------------------------------------------------------------------------------ --------------- ----------------
Change in net assets (113,976,270) (253,802,167)
- - ------------------------------------------------------------------------------
NET ASSETS:
- - ------------------------------------------------------------------------------
Beginning of period 919,883,283 1,173,685,450
- - ------------------------------------------------------------------------------ --------------- ----------------
End of period $ 805,907,013 $ 919,883,283
- - ------------------------------------------------------------------------------ --------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Financial Highlights
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- - ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- - ----------------------
INCOME FROM INVESTMENT
OPERATIONS
- - ----------------------
Net investment
income 0.02 0.03 0.05 0.07 0.08 0.07 0.06 0.05 0.07 0.09
- - ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- - ----------------------
Dividends to
shareholders from net
investment income (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06) (0.05) (0.07) (0.09)
- - ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- - ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN* 2.34% 2.71% 4.66% 7.11% 8.24% 7.44% 6.07% 5.48% 7.16% 9.50%
- - ----------------------
RATIOS TO AVERAGE NET
ASSETS
- - ----------------------
Expenses 1.01% 1.04% 1.03% 1.01% 1.02% 1.01% 1.01% 1.01% 0.98% 0.88%
- - ----------------------
Net investment
income 2.31% 2.69% 4.59% 6.89% 7.94% 7.19% 5.90% 5.39% 6.95% 9.11%
- - ----------------------
SUPPLEMENTAL DATA
- - ----------------------
Net assets, end of
period (000 omitted) $805,907 $919,883 $1,173,685 $1,393,380 $1,443,347 $1,386,704 $1,358,694 $1,467,182 $2,069,333 $2,989,596
- - ----------------------
</TABLE>
* Based on net asset value which does not include the sales load or contingent
deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Notes to Financial Statements
- - --------------------------------------------------------------------------------
March 31, 1994
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Trust's use of the amortized cost method to
value its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Trust to monitor on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed
by the Trust's adviser to be creditworthy pursuant to guidelines
established by the Board of Trustees ("Trustees").
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and
estimated expenses are accrued daily. Bond premium and discount are
amortized as required by the Internal Revenue Code. Distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of
the Internal Revenue Code ("Code") applicable to regulated investment
companies and to distribute to shareholders each year substantially all of
its taxable income. Accordingly, no provisions for federal tax are
necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities 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.
F. OTHER--Investment transactions are accounted for on the trade date.
Liberty U.S. Government Money Market Trust
- - --------------------------------------------------------------------------------
(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 March
31, 1994, capital paid in aggregated $805,907,013. Transactions in Trust shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1994 1993
- - ---------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 919,883,283 1,173,685,450
- - ----------------------------------------------------------------------------------
Shares sold 361,379,933 332,831,734
- - ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 17,378,344 25,027,665
- - ----------------------------------------------------------------------------------
Shares redeemed (492,734,547) (611,661,566)
- - ---------------------------------------------------------------------------------- -------------- --------------
Shares outstanding, end of period 805,907,013 919,883,283
- - ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Advisers, the Trust's investment adviser ("Adviser"),
receives for its services an annual investment advisory fee based on the average
daily net assets of the Trust as follows: .50% on the first $500 million, .475%
on the next $500 million, .45% on the next $500 million, .425% on the next $500
million and .40% thereafter.
ADMINISTRATION FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the 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 any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICE PLAN--Under the terms of a shareholder service agreement
with Federated Shareholder Services ("FSS") the Trust will pay FSS up to 0.25 of
1% of the level of average net assets of the Trust for the period. This fee is
to obtain certain personal services for shareholders and the maintenance of
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEE--Federated Services Company serves as
transfer agent and dividend disbursing agent for the Trust. The fee is based on
the size, type and number of accounts and transactions made by shareholders.
Certain of the Officers and Trustees of the Trust are Officers and Directors of
the above companies.
Report of Independent Public Accountants
- - --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST:
We have audited the accompanying statement of assets and liabilities of Liberty
U.S. Government Money Market Trust (a Massachusetts business trust), including
the schedule of portfolio of investments, as of March 31, 1994, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the ten years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1994, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Liberty U.S. Government Money Market Trust as of March 31, 1994, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the ten years in the period then ended, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
May 13, 1994
Trustees Officers
- - -----------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
James E. Dowd President
Lawrence D. Ellis, M.D. Richard B. Fisher
Edward L. Flaherty, Jr. Vice President
Edward C. Gonzales Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
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.
[LOGO] LIBERTY
U.S. GOVERNMENT
MONEY MARKET
TRUST
14TH ANNUAL REPORT
March 31, 1994
Established 1980
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Recycled Paper Logo
8042603 (5/94)
