[LOGO] FEDERATED
LIBERTY
U.S. GOVERNMENT
MONEY MARKET
TRUST
14th SEMI-ANNUAL REPORT
September 30, 1994
Established 1980
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Liberty U.S.
Government Money Market Trust (the "Trust"). This report covers the period of
April 1, 1994 to September 30, 1994.
The report starts with an interview with the Trust's portfolio manager, Susan
R. Hill, Assistant Vice President, Federated Advisers. It 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 with the added advantages of daily liquidity and stability of
principal.* While no money market mutual fund can guarantee a stable net asset
value, the Trust has done so since its inception in 1980. The Trust seeks to
achieve its financial objective through a portfolio of short-term U.S.
government securities.
On September 30, 1994, the Trust's net assets stood at $747.4 million.
Dividends paid to shareholders during the period totaled $12.3 million, or
$0.02 per share.
Liberty U.S. Government Money Market Trust offers you all the advantages of the
entire Liberty Family of Funds (the "Family"), including convenient exchange
privileges that let you move all or part of your assets in the Trust to other
funds in the Family.**
Thank you for participating in the Trust. We will keep you updated on your
investment and, as always, encourage your comments and suggestions.
Sincerely,
J. Christopher Donahue
President
November 15, 1994
* No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Trust is neither insured nor guaranteed
by the U.S. government.
** These privileges may be modified or discontinued at any time. Exchanges may
be subject to a sales charge.
INVESTMENT REVIEW
Q Recently, there has been a lot of concern, as well as news coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally refer
to adjustable rate securities designed to speculate on changes in interest
rates. These speculative derivatives provide above-market yields when interest
rates fall or remain stable, or when the yield curve is steep. They provide
below-market yields, however, when interest rates rise or become more volatile,
or when the yield curve flattens. All three of these conditions occurred in
1994. As a result, many of these speculative securities lost a significant part
of their value, enough to threaten the $1.00 per share price of some money
market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should
approximate their par value in all reasonably foreseeable market conditions.
Money market funds have used these securities for decades, through several
interest rate cycles, without jeopardizing their stable net asset value.
Q Do Federated Investors' ("Federated") money market funds invest in the
derivatives that have been in the headlines recently?
A No. None of Federated's money market funds has invested in any of the types
of derivatives that have been in the headlines lately. Our mutual funds only
invest in adjustable rate securities that track changes in money market
interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the
rules governing the use of variable rate securities by money market funds. We
also realized the potential for these securities to deviate significantly from
par and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
Q What is your outlook for short-term rates generally, and the Trust
specifically?
A Amid signs of upward pressures on capacity utilization and prices and solid
economic growth, it is expected that the Federal Reserve Board ("the Fed") will
act to tighten monetary policy again before the end of the year. As a result,
the Trust is expected to continue to maintain its conservative posture in the
near future, while maximizing performance through ongoing relative value
analysis. However, changing economic and market developments are continuously
monitored to best serve our clients attracted to the short-term U.S. government
securities market.
Q The Fed has increased interest rates five times so far this year. How has
this affected the Trust?
A 1994 brought with it the first changes in Fed policy since September, 1992.
Faced with the potential of rising inflation sparked by a strengthening
economy, in early February the Fed took what was to be the first in a series of
tightenings in monetary policy, raising the Fed funds target rate by 1/4 point
to 3.25%. Further tightenings ensued in March, April, May, and August, with the
Fed funds target rate standing at 4.75% at the end of the semi-annual reporting
period in August. The policy moves in May and August were accompanied by 1/2
point hikes in the discount rate, which currently rests at 4%.
The investments in the Trust have proven to be quite responsive to the changes
in policy by the Fed. Over the semi-annual reporting period, the seven-day net
yield of the Trust has risen from 2.56% to 3.72%.*
* Data quoted represent past performance and are not indicative of future
results. Yield will vary.
Q In this rising rate atmosphere, have you made any strategic changes to the
Trust's portfolio?
A The Trust's average maturity drifted shorter over the reporting period in
response to the uncertain environment created by the Fed, and is currently
being targeted within a rather conservative 30-40 day average maturity range.
The Trust continued to combine attractive yields from repurchase agreements
collateralized by U.S. government mortgage-backed securities with short-term
agency floating- rate notes and Treasury and agency securities with longer
maturities of six to twelve months. The Trust added to its positions in both
repurchase agreements and agency floating-rate notes to increase its
responsiveness to changes in short-term interest rates as well as to maintain
the flexibility to reinvest at anticipated higher interest rates. A yield
advantage continued to exist for investments in repurchase agreements versus
direct investments in short-term fixed-rate Treasury and agency securities.
This portfolio structure has performed well in the current interest rate
environment.
Q What distinguishes Federated's fund management?
A Federated currently manages 18 government money market funds totaling almost
$20 billion in assets. Our substantial experience and market presence allow us
to enhance the performance of our funds through security selection and
economies of scale.
Federated takes a conservative approach with respect to their funds' credit
quality and ability to maintain a stable net asset value. Federated manages its
government money market funds, including Liberty U.S. Government Money Market
Trust, within the rather narrow normal average maturity range of 20-60 days.
Once a specific average maturity is targeted, the portfolio maximizes
performance through ongoing relative value analysis. This relative value
approach is preferred over making dramatic shifts in the average maturity and
composition of the funds.
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
September 30, 1994
(unaudited)
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--38.4%
- -------------------------------------------------------------------------------------------------
@FEDERAL HOME LOAN BANK, DISCOUNT NOTE--1.3%
---------------------------------------------------------------------------------
$ 10,000,000 4.90%, 2/21/95 $ 9,805,361
--------------------------------------------------------------------------------- --------------
*FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTE--2.2%
---------------------------------------------------------------------------------
16,500,000 4.88%, 10/3/94 16,485,851
--------------------------------------------------------------------------------- --------------
@FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--15.3%
---------------------------------------------------------------------------------
116,125,000 3.34%-5.41%, 10/19/94-3/22/95 114,560,515
--------------------------------------------------------------------------------- --------------
*FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTE--1.8%
---------------------------------------------------------------------------------
13,000,000 4.80%, 10/3/94 12,994,017
--------------------------------------------------------------------------------- --------------
GOVERNMENT GUARANTEED FLOATING RATE NOTES--2.5%
---------------------------------------------------------------------------------
3,200,000 *Export Import Bank, 5.545%, 10/4/94 3,200,000
---------------------------------------------------------------------------------
15,520,000 *Overseas Private Investment Corp., 5.62%-6.53%, 10/4/94 15,520,000
--------------------------------------------------------------------------------- --------------
Total 18,720,000
--------------------------------------------------------------------------------- --------------
*STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--8.3%
---------------------------------------------------------------------------------
62,020,000 5.07%-5.61%, 10/4/94 62,057,836
--------------------------------------------------------------------------------- --------------
@UNITED STATES TREASURY BILLS--3.1%
---------------------------------------------------------------------------------
24,000,000 3.38%-5.37%, 11/17/94-8/24/95 23,311,086
--------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY NOTES--3.9%
---------------------------------------------------------------------------------
29,000,000 5.50%-8.50%, 11/15/94-5/15/95 29,183,090
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 287,117,756
--------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENTS--61.4%
- -------------------------------------------------------------------------------------------------
30,000,000 BT Securities, Inc., 5.00%, dated 9/30/94, due 10/3/94 30,000,000
---------------------------------------------------------------------------------
2,000,000 Barclays Bank, PLC, 4.85%, dated 9/30/94, due 10/3/94 2,000,000
---------------------------------------------------------------------------------
15,000,000 BZW Securities, Inc., 4.90%, dated 9/30/94, due 10/3/94 15,000,000
---------------------------------------------------------------------------------
20,000,000 First Boston Corp., 4.80%, dated 9/2/94, due 10/3/94 20,000,000
---------------------------------------------------------------------------------
$ 105,000,000 Greenwich Capital Markets, Inc., 4.90%, dated 9/30/94, due 10/3/94 $ 105,000,000
---------------------------------------------------------------------------------
100,000,000 PaineWebber, Inc., 4.93%, dated 9/30/94, due 10/3/94 100,000,000
---------------------------------------------------------------------------------
50,000,000 PaineWebber, Inc., 4.96%, dated 9/30/94, due 10/3/94 50,000,000
---------------------------------------------------------------------------------
35,000,000 S.G. Warburg & Co., Inc., 4.92%, dated 9/30/94, due 10/3/94 35,000,000
---------------------------------------------------------------------------------
35,000,000 UBS Securities, Inc., 5.00%, dated 9/30/94, due 10/3/94 35,000,000
---------------------------------------------------------------------------------
15,000,000 Fuji Securities, Inc., 4.82%, dated 8/10/94, due 11/17/94 15,000,000
---------------------------------------------------------------------------------
14,000,000 Goldman, Sachs & Co., 4.875%, dated 9/22/94, due 10/11/94 14,000,000
---------------------------------------------------------------------------------
19,000,000 Goldman, Sachs & Co., 4.90%, dated 9/14/94, due 11/15/94 19,000,000
---------------------------------------------------------------------------------
19,000,000 UBS Securities, Inc., 4.85%, dated 9/29/94, due 10/20/94 19,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 459,000,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 746,117,756+
--------------------------------------------------------------------------------- --------------
</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
($747,408,247) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
September 30, 1994
(unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 459,000,000
- ---------------------------------------------------------------------------------
Investments in other securities 287,117,756
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $ 746,117,756
- -------------------------------------------------------------------------------------------------
Cash 259,215
- -------------------------------------------------------------------------------------------------
Interest receivable 1,190,860
- -------------------------------------------------------------------------------------------------
Receivable for Trust shares sold 1,234,583
- ------------------------------------------------------------------------------------------------- --------------
Total assets 748,802,414
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for Trust shares redeemed 959,514
- ---------------------------------------------------------------------------------
Dividends payable 222,254
- ---------------------------------------------------------------------------------
Accrued expenses 212,399
- --------------------------------------------------------------------------------- --------------
Total liabilities 1,394,167
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 747,408,247 shares of beneficial interest outstanding $ 747,408,247
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Offering Price per Share:
($747,408,247 / 747,408,247 shares of beneficial interest outstanding) $ 1.000
- ------------------------------------------------------------------------------------------------- --------------
REDEMPTION PROCEEDS per Share (99.5/100 of 1.00)* $ 0.995
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
* See "Redeeming Shares" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended September 30, 1994
(unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income $ 16,558,394
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 1,900,710
- -------------------------------------------------------------------------------------
Trustees' fees 6,500
- -------------------------------------------------------------------------------------
Administrative personnel and services 292,923
- -------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 138,768
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 1,564,006
- -------------------------------------------------------------------------------------
Shareholder services fee 219,896
- -------------------------------------------------------------------------------------
Trust share registration costs 18,490
- -------------------------------------------------------------------------------------
Auditing fees 10,747
- -------------------------------------------------------------------------------------
Legal fees 7,000
- -------------------------------------------------------------------------------------
Printing and postage 37,500
- -------------------------------------------------------------------------------------
Taxes 6,289
- -------------------------------------------------------------------------------------
Insurance premiums 2,590
- -------------------------------------------------------------------------------------
Miscellaneous 6,500
- ------------------------------------------------------------------------------------- ------------
Total expenses 4,211,919
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 12,346,475
- --------------------------------------------------------------------------------------------------- -------------
</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,
1995* 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 12,346,475 $ 19,549,592
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (12,346,475) (19,549,592)
- ------------------------------------------------------------------------------- --------------- ---------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 187,123,510 361,379,933
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 11,028,839 17,378,344
- -------------------------------------------------------------------------------
Cost of shares redeemed (256,651,115) (492,734,547)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from Trust share transactions (58,498,766) (113,976,270)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets (58,498,766) (113,976,270)
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 805,907,013 919,883,283
- ------------------------------------------------------------------------------- --------------- ---------------
End of period $ 747,408,247 $ 805,907,013
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended September 30, 1994 (unaudited).
(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,
1995* 1994 1993 1992 1991 1990 1989 1988 1987 1986
<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 0.02 0.03 0.05 0.07 0.08 0.07 0.06 0.05 0.07
- ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- -------------------
Dividends to
shareholders from
net investment
income (0.02) (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06) (0.05) (0.07)
- ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
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** 1.62% 2.34% 2.71% 4.66% 7.11% 8.24% 7.44% 6.07% 5.48% 7.16%
- -------------------
RATIOS TO AVERAGE
NET ASSETS
- -------------------
Expenses 1.09%(a) 1.01% 1.04% 1.03% 1.01% 1.02% 1.01% 1.01% 1.01% 0.98%
- -------------------
Net investment
income 3.19%(a) 2.31% 2.69% 4.59% 6.89% 7.94% 7.19% 5.90% 5.39% 6.95%
- -------------------
SUPPLEMENTAL DATA
- -------------------
Net assets, end
of period
(000 omitted) $747,408 $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
- -------------------
<CAPTION>
1985
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00
- -------------------
INCOME FROM
INVESTMENT
OPERATIONS
- -------------------
Net investment
income 0.09
- ------------------- ---------
LESS DISTRIBUTIONS
- -------------------
Dividends to
shareholders from
net investment
income (0.09)
- ------------------- ---------
NET ASSET VALUE,
END OF PERIOD $ 1.00
- ------------------- ---------
TOTAL RETURN** 9.50%
- -------------------
RATIOS TO AVERAGE
NET ASSETS
- -------------------
Expenses 0.88%
- -------------------
Net investment
income 9.11%
- -------------------
SUPPLEMENTAL DATA
- -------------------
Net assets, end
of period
(000 omitted) $2,989,596
- -------------------
</TABLE>
* Six months ended September 30, 1994 (unaudited).
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1994
(unaudited)
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end, no load, 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. These
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
Act.
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 that the value
of collateral 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 the guidelines
established by the Board of Trustees (the "Trustees").
C. 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.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its 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 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.
F. OTHER--Investment transactions are accounted for on the trade date.
(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
September 30, 1994, capital paid-in aggregated $747,408,247. Transactions in
Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995* 1994
<S> <C> <C>
Shares sold 187,123,510 361,379,933
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 11,028,839 17,378,344
- ----------------------------------------------------------------------------------
Shares redeemed (256,651,115) (492,734,547)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from Trust share transactions (58,498,766) (113,976,270)
- ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
* Six months ended September 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
ADVISORY FEE--Federated Advisers, the Trust's investment adviser (the
"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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with administrative personnel and services. The FAS 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 Trust will pay FSS up to .25 of
1% of average net assets for 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 FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Trust.
The FServ 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 or
Trustees of the above companies.
Trustees Officers
- -----------------------------------------------------------------------
<TABLE>
<S> <C>
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 David M. Taylor
Assistant Treasurer
Charles H. Field
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 Trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO] FEDERATED SECURITIES CORP.
-------------------------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
531485100
8110106 (11/94)
