[LOGO] FEDERATED INVESTORS
Liberty
U.S. Government
Money Market
Trust
15th Semi-Annual Report
September 30, 1995
Established 1980
MONEY MARKETS
President's Message
Dear Shareholder:
I am pleased to present the 15th Semi-Annual Report to Shareholders for Liberty
U.S. Government Money Market Trust, which covers the six-month period ended
September 30, 1995.
The report begins with an interview with the fund's portfolio manager, Susan R.
Hill, Assistant Vice President, Federated Advisers, and follows with a
complete list of the fund's holdings and its Financial Statements.
As a shareholder in this money market mutual fund, you are putting your cash to
work pursuing daily income from a portfolio of short-term U.S. government
securities. In addition, you have daily access to your invested cash, which is
managed to remain stable in value, and the fund has done so since its
inception.* 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.
During the six-month reporting period, dividends paid to Class A shareholders
totaled $0.03 per share, while dividends paid to Class B shareholders totaled
$0.02 per share. At the end of the period, the fund's net assets stood at more
than $700 million.
Please remember, this fund offers you access to the entire Liberty Family of
Funds. Should you feel it's time to pursue a more aggressive approach to
investing, you can easily move all or part of your assets in this fund to
others that invest in different types of stocks and bonds.**
Thank you for selecting Liberty U.S. Government Money Market Trust as a
convenient investment for your cash. We welcome your comments and suggestions.
Sincerely,
J. Christopher Donahue
President
November 15, 1995
* 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. An
investment in this fund is neither insured nor guaranteed by the U.S.
government.
** This privilege may be modified or discontinued at any time. Investment
Review
Investment Review
Susan R. Hill, CFA
Assistant Vice President
Federated Advisers
Q. Let's begin with an overview of the interest rate environment during the
six-month reporting period.
A. The semi-annual reporting period saw a change in the course of monetary
policy by the Federal Reserve Board (the "Fed") as the Fed eased the Federal
Funds target rate 25 basis points to 5.75% on July 6, 1995, after remaining
steady at a 6% target rate since the Fed last tightened in early February,
1995. 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. The rate on the three-month Treasury bill fell over
the reporting period from 5.9% to 5.4%, reflecting the notch downward in rates
by the Fed in July, 1995, as well as the anticipation of additional Fed easings
down the road.
Q. Have you made any strategic changes to the fund's portfolio?
A. We extended the average maturity target range of the fund from 30-40 days
to 40-50 days in the face of slower economic growth and still restrained
inflation. This strategy has served the fund well in light of the rather
significant decline in interest rates in recent months. The fund's average
maturity, which was 38 days at the beginning of the reporting period, stood at
43 days at the end of September, 1995.
We reinforced the barbelled structure of the fund's portfolio over the
reporting period. The fund 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. 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. As we approach 1996, what is your outlook for rates in the near future?
A. Fears of a recession subsided as the third quarter progressed amid
promising signs suggesting the economy had stabilized, and the inventory
correction was largely over. The economy seems to be on a moderate growth/low
inflation trajectory for the next few quarters. With a monetary policy still
considered by historical measures to be moderately restrictive, but having
seemingly engineered a "soft landing" for the economy at this juncture, the
Fed should feel no urgency to lower the Federal Funds target rate further in
the immediate future based on the fundamentals of the economy. Rather, they
will likely focus on upcoming economic and inflation releases for additional
clues as to the sustainability of growth and the force of inflationary
pressures. The Fed will also be particularly interested in the outcome of the
ongoing budget negotiations in Congress in order to assess the potential
impact on economic growth.
Liberty U.S. Government Money Market Trust
Portfolio of Investments
- --------------------------------------------------------------------------------
September 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- --------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--37.2%
- ------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.7%
--------------------------------------------------------------------------------
$ 5,000,000 (a)6.66%, 2/23/1996 $ 4,875,743
-------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK NOTES--3.2%
--------------------------------------------------------------------------------
22,700,000 6.015%-6.85%, 2/28/1996-6/13/1996 22,714,104
-------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.0%
--------------------------------------------------------------------------------
21,750,000 (a)6.288%-7.125%, 11/22/1995-1/5/1996 21,453,379
-------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--2.0%
--------------------------------------------------------------------------------
14,000,000 (b)6.07%, 10/2/1995 13,997,073
-------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--2.2%
--------------------------------------------------------------------------------
15,500,000 (a)5.81%-7.13%, 11/1/1995-2/8/1996 15,227,981
-------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--5.3%
--------------------------------------------------------------------------------
37,000,000 (b)5.39%-6.55%, 10/2/1995-9/27/1996 36,975,109
-------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--10.5%
--------------------------------------------------------------------------------
75,100,000 (a)5.686%-6.456%, 10/23/1995-4/15/1996 73,812,396
-------------------------------------------------------------------------------- --------------
GOVERNMENT GUARANTEED FLOATING RATE NOTES--1.5%
--------------------------------------------------------------------------------
10,728,000 (b)Overseas Private Investment, (Guaranteed by United States Treasury),
5.99%-6.50%, 10/3/1995 10,728,000
-------------------------------------------------------------------------------- --------------
STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--4.2%
--------------------------------------------------------------------------------
29,220,000 (b)5.44%-5.69%, 10/3/1995-10/6/1995 29,243,476
-------------------------------------------------------------------------------- --------------
STUDENT LOAN MARKETING ASSOCIATION NOTE--0.6%
--------------------------------------------------------------------------------
4,000,000 6.943%, 2/21/1996 4,002,720
-------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY BILLS--2.1%
--------------------------------------------------------------------------------
15,000,000 (a)5.27%-5.45%, 12/14/1995-6/27/1996 14,589,354
-------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY NOTES--1.9%
--------------------------------------------------------------------------------
13,000,000 7.375%-7.75%, 3/31/1996-5/15/1996 13,124,727
-------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 260,744,062
-------------------------------------------------------------------------------- --------------
(C) REPURCHASE AGREEMENTS--62.9%
- ------------------------------------------------------------------------------------------------
$ 100,000 BZW Securities, Inc., 6.40%, dated 9/29/1995, due 10/2/1995 $ 100,000
--------------------------------------------------------------------------------
</TABLE>
Liberty U.S. Government Money Market Trust
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- --------------
(C) REPURCHASE AGREEMENTS--CONTINUED
- ------------------------------------------------------------------------------------------------
18,000,000 (d)CS First Boston Corp., 5.78%, dated 8/29/1995 due 10/3/1995 18,000,000
--------------------------------------------------------------------------------
35,000,000 Fuji Securities, Inc., 6.50%, dated 9/29/1995, due 10/2/1995 35,000,000
--------------------------------------------------------------------------------
16,000,000 (d)Goldman, Sachs & Co., 5.74%, dated 9/1/1995, due 11/24/1995 16,000,000
--------------------------------------------------------------------------------
14,000,000 (d)Goldman, Sachs & Co., 5.75%, dated 7/25/1995, due 10/23/1995 14,000,000
--------------------------------------------------------------------------------
18,000,000 (d)Goldman, Sachs & Co., 5.75%, dated 8/25/1995, due 11/22/1995 18,000,000
--------------------------------------------------------------------------------
20,000,000 Goldman, Sachs & Co., 6.47%, dated 9/29/1995, due 10/2/1995 20,000,000
--------------------------------------------------------------------------------
35,000,000 Greenwich Capital Markets, Inc., 6.55%, dated 9/29/1995,
due 10/2/1995 35,000,000
--------------------------------------------------------------------------------
35,000,000 HSBC Securities, Inc., 6.50%, dated 9/29/1995, due 10/2/1995 35,000,000
--------------------------------------------------------------------------------
35,000,000 Harris Government Security, Inc., 6.46%, dated 9/29/1995,
due 10/2/1995 35,000,000
--------------------------------------------------------------------------------
30,000,000 Morgan Stanley & Co., Inc., 6.50%, dated 9/29/1995, due 10/2/1995 30,000,000
--------------------------------------------------------------------------------
150,000,000 PaineWebber, Inc., 6.50%, dated 9/29/1995, due 10/2/1995 150,000,000
--------------------------------------------------------------------------------
35,000,000 UBS Securities, Inc., 6.55%, dated 9/29/1995, due 10/2/1995 35,000,000
-------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 441,100,000
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 701,844,062
-------------------------------------------------------------------------------- --------------
</TABLE>
(a) Discount rate at time of purchase.
(b) Denotes variable rate securities which show current rate and next demand
date.
(c) The 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 the repurchase agreements are through
participation in joint accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the creditworthiness of the issuer is
downgraded.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($701,542,458) at September 30, 1995.
(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, 1995 (unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 441,100,000
- ---------------------------------------------------------------------------------
Investments in securities 260,744,062
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 701,844,062
- -------------------------------------------------------------------------------------------------
Cash 730,667
- -------------------------------------------------------------------------------------------------
Income receivable 2,301,594
- ------------------------------------------------------------------------------------------------- --------------
Total assets 704,876,323
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Income distribution payable 2,796,269
- ---------------------------------------------------------------------------------
Accrued expenses 537,596
- --------------------------------------------------------------------------------- --------------
Total liabilities 3,333,865
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 701,542,458 shares outstanding $ 701,542,458
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Offering Price Per Share:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES: ($699,721,422 / 699,721,422 shares outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES: ($1,821,036 / 1,821,036 shares outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES: $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES: (94.50 / 100 of $1.00)* $0.95
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
*Under certain limited conditions, a Contingent Deferred Sales Charge of up to
5.50% may be imposed. See "How to Redeem 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, 1995 (unaudited)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 21,578,481
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 1,751,958
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 269,213
- -------------------------------------------------------------------------------------
Custodian fees 86,957
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 1,508,512
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,182
- -------------------------------------------------------------------------------------
Auditing fees 11,823
- -------------------------------------------------------------------------------------
Legal fees 5,739
- -------------------------------------------------------------------------------------
Portfolio accounting fees 59,224
- -------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 7,483
- -------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 886,583
- -------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 2,494
- -------------------------------------------------------------------------------------
Share registration costs 19,476
- -------------------------------------------------------------------------------------
Printing and postage 77,034
- -------------------------------------------------------------------------------------
Insurance premiums 7,380
- -------------------------------------------------------------------------------------
Taxes 7,008
- -------------------------------------------------------------------------------------
Miscellaneous 4,749
- ------------------------------------------------------------------------------------- ------------
Total expenses 4,712,815
- -------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee $ (4,070)
- ------------------------------------------------------------------------
Waiver of shareholder services fee--Class A Shares (709,266)
- ------------------------------------------------------------------------
Waiver of shareholder services fee--Class B Shares (1,397)
- ------------------------------------------------------------------------ -----------
Total waivers (714,733)
- ------------------------------------------------------------------------------------- ------------
Net expenses 3,998,082
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 17,580,399
- --------------------------------------------------------------------------------------------------- -------------
</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>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
SEPTEMBER 30, 1995 MARCH 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------
Net investment income $ 17,580,399 $ 28,923,432
- --------------------------------------------------------------------- ----------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------
Distributions from net investment income
- ---------------------------------------------------------------------
Class A Shares (17,538,704) (28,922,672)
- ---------------------------------------------------------------------
Class B Shares (41,695) (760)
- --------------------------------------------------------------------- ----------------------- ------------------
Change in net assets resulting from distributions
to shareholders (17,580,399) (28,923,432)
- --------------------------------------------------------------------- ----------------------- ------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------
Proceeds from sale of Shares 180,957,345 353,799,566
- ---------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 13,320,804 25,919,444
- ---------------------------------------------------------------------
Cost of shares redeemed (208,178,731) (470,182,983)
- --------------------------------------------------------------------- ----------------------- ------------------
Change in net assets resulting from share transactions (13,900,582) (90,463,973)
- --------------------------------------------------------------------- ----------------------- ------------------
Change in net assets (13,900,582) (90,463,973)
- ---------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------
Beginning of period 715,443,040 805,907,013
- --------------------------------------------------------------------- ----------------------- ------------------
End of period $ 701,542,458 $ 715,443,040
- --------------------------------------------------------------------- ----------------------- ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Financial Highlights--Class A Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1995 1994 1993 1992 1991 1990 1989 1988
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------
INCOME FROM INVEST-
MENT OPERATIONS
- ---------------------
Net investment
income 0.03 0.04 0.02 0.03 0.05 0.07 0.08 0.07 0.06
- --------------------- ----- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ---------------------
Distributions from
net investment
income (0.03) (0.04) (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06)
- --------------------- ----- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------- ----- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (A) 2.50% 3.93% 2.34% 2.71% 4.66% 7.11% 8.24% 7.44% 6.07%
- ---------------------
RATIOS TO AVERAGE NET
ASSETS
- ---------------------
Expenses 1.12%(b) 1.12% 1.01% 1.04% 1.03% 1.01% 1.02% 1.01% 1.01%
- ---------------------
Net investment
income 4.96%(b) 3.83% 2.31% 2.69% 4.59% 6.89% 7.94% 7.19% 5.90%
- ---------------------
Expense waiver/
reimbursement (c) 0.20%(b) -- -- -- -- -- -- -- --
- ---------------------
SUPPLEMENTAL DATA
- ---------------------
Net assets,
end of period
(000 omitted) $699,721 $715,257 $805,907 $919,883 $1,173,685 $1,393,380 $1,443,347 $1,386,704 $1,358,694
- ---------------------
<CAPTION>
<S> <C>
1987
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00
- ---------------------
INCOME FROM INVEST-
MENT OPERATIONS
- ---------------------
Net investment
income 0.05
- --------------------- ---------
LESS DISTRIBUTIONS
- ---------------------
Distributions from
net investment
income (0.05)
- --------------------- ---------
NET ASSET VALUE, END
OF PERIOD $ 1.00
- --------------------- ---------
TOTAL RETURN (A) 5.48%
- ---------------------
RATIOS TO AVERAGE NET
ASSETS
- ---------------------
Expenses 1.01%
- ---------------------
Net investment
income 5.39%
- ---------------------
Expense waiver/
reimbursement (c) --
- ---------------------
SUPPLEMENTAL DATA
- ---------------------
Net assets,
end of period
(000 omitted) $1,467,182
- ---------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) Computed on an annualized basis.
(c) This voluntary expense decrease for the shareholder services fee is
reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Financial Highlights--Class B Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
SEPTEMBER 30, MARCH 31,
1995 1995(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ----------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.02 0.01
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.02 ) (0.01 )
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 2.09% 1.14%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.92%(c) 1.95%(c)
- ----------------------------------------------------------------------------
Net investment income 4.16%(c) 4.15%(c)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.14%(c) --
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,821 $186
- ----------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from December 17, 1994 (date of initial
public offering) to March 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease for the shareholder services fee is
reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
September 30, 1995 (unaudited)
(1) ORGANIZATION
Liberty U.S. Government Money Market Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. Effective December 17, 1994, the Trust
added Class B Shares, consequently, the Trust offers two classes of shares:
Class A Shares and Class B Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Trust's use of the amortized cost method to
value its portfolio securities is in accordance with Rule 2a-7 under the
Act.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Trust to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Trust
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
Liberty U.S. Government Money Market Trust
- --------------------------------------------------------------------------------
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) for each
class of shares. At September 30, 1995, capital paid-in aggregated $701,542,458.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1995 1995
<S> <C> <C>
CLASS A SHARES SHARES SHARES
Shares sold 173,875,402 353,555,803
- -------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 13,291,020 25,918,684
- -------------------------------------------------------------------------------
Shares redeemed (202,701,636) (470,124,864)
- ------------------------------------------------------------------------------- ----------------- --------------
Net change resulting from Class A share transactions (15,535,214) (90,650,377)
- ------------------------------------------------------------------------------- ----------------- --------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS PERIOD
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1995 1995(A)
<S> <C> <C>
CLASS B SHARES SHARES SHARES
Shares sold 7,081,943 243,763
- --------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 29,784 760
- --------------------------------------------------------------------------------
Shares redeemed (5,477,095) (58,119)
- -------------------------------------------------------------------------------- ----------------- -------------
Net change resulting from Class B share transactions 1,634,632 186,404
- -------------------------------------------------------------------------------- ----------------- -------------
Net change resulting from share transactions (13,900,582) (90,463,973)
- -------------------------------------------------------------------------------- ----------------- -------------
</TABLE>
(a) Reflects operations for the period from December 17, 1994 (date of initial
public offering) to March 31, 1995.
Liberty U.S. Government Money Market Trust
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT 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.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Trust. 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 Trust 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.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Trust will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Trust to finance activities intended to
result in the sale of the Trust's Class B Shares. The Plan provides that the
Trust may incur distribution expenses up to .75 of 1% of average daily net
assets of the Class B Shares, annually, to compensate FSC.
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 daily average net assets of the Trust 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 this 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 Trust. This fee is based on the size, type,
and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
Trustees Officers
- -----------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. J. Christopher Donahue
William J. Copeland President
James E. Dowd Edward C. Gonzales
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts Charles H. Field
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves 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 FUNDS
Where Experts Invest
Federated Securities Corp. is the distributor of the fund.
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 531485100
Cusip 531485209
