FEDERATED INVESTORS
LIberty
U.S. Government
Money Market
Trust
15th Annual Report
March 31, 1995
Established 1980
MONEY MARKET
President's Message
[INSERT PHOTO]
Dear Fellow Shareholder:
I'm pleased to present the 15th Annual Report to Shareholders for Liberty U.S.
Government Money Market Trust, which covers the 12-month period ended March 31,
1995. The report begins with an interview with the Trust's co-portfolio manager
and follows with a listing of portfolio holdings and Financial Statements.
The Trust invests in a diversified portfolio of short-term U.S. government
securities to put your cash to work every day. This portfolio pursues income on
a daily basis and stability of your principal while giving you convenient
access to your money.*
At the end of the period, the Trust's total net assets stood at $715.4 million.
Distributions paid during the period by Class A Shares totaled $0.04 per share.
Distributions paid during the period by Class B Shares totaled $0.01 per share.
Of course, as a shareholder, you have 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 Liberty U.S. Government Money Market Trust.
We'll continue to keep you up to date on your investment, and welcome your
comments and suggestions.
Sincerely,
J. Christopher Donahue
President
May 15, 1995
* 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.
** This privilege may be modified or discontinued at any time.
Investment Review
[INSERT PHOTO]
Susan R. Hill,
CFA
Assistant Vice President
Federated Advisers
Q. During the period, interest rates finally turned up in a dramatic fashion,
thanks to a series of rate increases by the Federal Reserve Board (the
``Fed''). Can you comment?
A. Since February 1994, the Fed has hiked the Federal Funds target rate on
seven separate occasions from 3% to its current 6% level. Over that same
period, banks followed suit by raising the prime rate from 6% to 9%.
Concerned by strength in the economy and the potential of that strength
creating inflationary pressures, the Fed took what were thought to be
preemptive steps in the first half of 1994 to control the rise of inflation
by removing what many market participants thought to be an accommodative
stance in monetary policy. In the face of resiliency in economic growth and
pressures on resource utilization, the Fed continued to tighten monetary
policy throughout the year and into 1995. The most recent move by the Fed
on February 1, 1995, increased the target rate 50 basis points to 6%. Over
the period of tightenings, short-term interest rates reflected the Fed's
upward moves. The yield on the three-month Treasury bill rose from 3.56% at
the beginning of the reporting period to 6.06% on February 1, 1995. February
and March, however, brought economic reports that pointed to a slowing in
sectors of the economy, an indication that the policy moves by the Fed over
the previous 12 months are starting to take hold. As a result, short-term
interest rates declined over this period, as market participants adjusted
their expectations regarding the extent of future tightenings by the Fed.
The yield on the three-month Treasury bill stood at 5.88% on March 31, 1995.
Q. How has the Trust's yield reacted to this rate rise? Did you make any
strategic changes to the Trust's portfolio in this rate atmosphere?
A. The portfolio of the Trust responded relatively well to the increase in
short-term interest rates over the period. The seven-day yield of the Trust's
Class A Shares rose from 2.56% at the beginning of the reporting period to
5.09% on March 31, 1995.* The seven-day yield of the Trust's Class B Shares
was 4.28% on March 31, 1995.* We added to the Trust's holdings of government
agency floating rate securities in order to increase its responsiveness to
changes in short-term interest rates. The Trust also had a significant
portion of its assets invested in overnight repurchase agreements, which
adjust immediately to changes in Fed policy.
The average maturity of the Trust was targeted within a range of 30 to 40
days over the period of increasing interest rates, with an emphasis on the
shorter end of the target range. We shortened the average maturity of the
Trust in expectation of the Fed moves. At the beginning of the reporting
period, the average maturity of the Trust was 41 days, while on February 1,
1995, the date of the most recent rate hike by the Fed, the average
maturity of the Trust stood at 33 days.
Q. What is your overall outlook for rates in the near future?
A. Amid reports of a slightly slowing economy and restrained inflation, it
appears that the Fed may be nearing the end of its tightening cycle. We would
expect that Fed policy will be neutral in the near term, as the Fed
scrutinizes upcoming releases on the economy and inflation for signs that
either one is stronger than expectations. As such, short-term interest rates
should trade within a range in the near future. We have extended the average
maturity of the Trust recently in a modest way to reflect this more neutral
outlook, emphasizing the longer end of the target range. On March 31, 1995,
the end of the reporting period, the average maturity of the Trust was 38
days.
*Performance quoted is past performance and is not indicative of future
results. Yield will vary.
Liberty U.S. Government Money Market Trust
Portfolio of Investments
--------------------------------------------------------------------------------
March 31, 1995
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--40.4%
-------------------------------------------------------------------------------------------------
@FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--1.3%
---------------------------------------------------------------------------------
$ 9,900,000 5.88%-6.58%, 4/25/1995-2/23/1996 $ 9,600,498
--------------------------------------------------------------------------------- --------------
@FEDERAL HOME LOAN BANK, DISCOUNT NOTES--5.7%
---------------------------------------------------------------------------------
41,500,000 6.27%-7.03%, 5/22/1995-12/26/1995 40,483,863
--------------------------------------------------------------------------------- --------------
*FEDERAL HOME LOAN BANK, FLOATING RATE NOTE--2.0%
---------------------------------------------------------------------------------
14,000,000 5.87%, 4/4/1995 13,997,750
--------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK NOTE--0.6%
---------------------------------------------------------------------------------
4,000,000 6.85%, 2/28/1996 4,008,193
--------------------------------------------------------------------------------- --------------
@FEDERAL HOME LOAN MORTGAGE, DISCOUNT NOTES--2.9%
---------------------------------------------------------------------------------
21,500,000 5.81%-7.04%, 4/4/1995-2/8/1996 21,187,251
--------------------------------------------------------------------------------- --------------
*FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTE--2.3%
---------------------------------------------------------------------------------
16,500,000 6.29%, 4/3/1995 16,494,078
--------------------------------------------------------------------------------- --------------
@FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--12.2%
---------------------------------------------------------------------------------
88,500,000 5.74%-6.98%, 4/5/1995-12/29/1995 87,152,093
--------------------------------------------------------------------------------- --------------
*FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--4.2%
---------------------------------------------------------------------------------
30,000,000 5.92%-6.28%, 4/3/1995-4/4/1995 29,995,575
--------------------------------------------------------------------------------- --------------
*GOVERNMENT GUARANTEED FLOATING RATE NOTES--1.8%
---------------------------------------------------------------------------------
13,124,000 Overseas Private Investment Corp., 6.52%-7.17%, 4/4/1995 13,124,000
--------------------------------------------------------------------------------- --------------
STUDENT LOAN MARKETING ASSOCIATION NOTE--0.5%
---------------------------------------------------------------------------------
4,000,000 6.94%, 2/21/1996 4,006,201
--------------------------------------------------------------------------------- --------------
*STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--2.7%
---------------------------------------------------------------------------------
19,220,000 5.97%-6.03%, 4/4/1995-4/7/1995 19,259,552
--------------------------------------------------------------------------------- --------------
</TABLE>
Liberty U.S. Government Money Market Trust
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
-------------- --------------------------------------------------------------------------------- --------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--CONTINUED
-------------------------------------------------------------------------------------------------
@UNITED STATES TREASURY BILLS--3.2%
---------------------------------------------------------------------------------
$ 23,000,000 5.19%-6.87%, 5/4/1995-8/24/1995 $ 22,608,201
--------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY NOTE--1.0%
---------------------------------------------------------------------------------
7,000,000 8.50%, 5/15/1995 7,026,604
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 288,943,859
--------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENTS--59.4%
-------------------------------------------------------------------------------------------------
3,900,000 BZW Securities, Inc., 6.28%, dated 3/31/1995, due 4/3/1995 3,900,000
---------------------------------------------------------------------------------
20,000,000 Goldman, Sachs & Co., 6.35%, dated 3/31/1995, due 4/3/1995 20,000,000
---------------------------------------------------------------------------------
50,000,000 Greenwich Capital Markets, Inc., 6.35%, dated 3/31/1995,
due 4/3/1995 50,000,000
---------------------------------------------------------------------------------
18,000,000 Lehman Brothers, Inc., 6.05%, dated 2/1/1995, due 4/3/1995 18,000,000
---------------------------------------------------------------------------------
35,000,000 Morgan Stanley & Co., Inc., 6.35%, dated 3/31/1995, due 4/3/1995 35,000,000
---------------------------------------------------------------------------------
150,000,000 PaineWebber, Inc., 6.30%, dated 3/31/1995, due 4/3/1995 150,000,000
---------------------------------------------------------------------------------
35,000,000 S.G. Warburg & Co., Inc., 6.37%, dated 3/31/1995, due 4/3/1995 35,000,000
---------------------------------------------------------------------------------
50,000,000 Smith Barney, Inc., 6.35%, dated 3/31/1995, due 4/3/1995 50,000,000
---------------------------------------------------------------------------------
17,000,000 +CS First Boston Corp., 6.10%, dated 2/17/1995, due 5/18/1995 17,000,000
---------------------------------------------------------------------------------
17,000,000 +CS First Boston Corp., 6.05%, dated 3/22/1995, due 5/22/1995 17,000,000
---------------------------------------------------------------------------------
14,000,000 +Goldman, Sachs & Co., 6.15%, dated 3/13/1995, due 5/26/1995 14,000,000
---------------------------------------------------------------------------------
15,000,000 +Merrill Lynch Government Securities, Inc., 6.05%, dated 3/1/1995, due 5/30/1995 15,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 424,900,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $ 713,843,859
--------------------------------------------------------------------------------- --------------
</TABLE>
@ Each issue shows the rate of discount at the 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 with other Federated funds.
+ Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($715,443,040) at March 31, 1995.
(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, 1995
<TABLE>
<S> <C> <C>
ASSETS:
-------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 424,900,000
---------------------------------------------------------------------------------
Investments in securities 288,943,859
--------------------------------------------------------------------------------- --------------
Total investments in securities, at value and amortized cost $ 713,843,859
-------------------------------------------------------------------------------------------------
Cash 722,657
-------------------------------------------------------------------------------------------------
Income receivable 1,645,909
-------------------------------------------------------------------------------------------------
Receivable for shares sold 1,015,805
------------------------------------------------------------------------------------------------- --------------
Total assets 717,228,230
-------------------------------------------------------------------------------------------------
LIABILITIES:
-------------------------------------------------------------------------------------------------
Payable for shares redeemed 1,002,829
---------------------------------------------------------------------------------
Income distribution payable 296,531
---------------------------------------------------------------------------------
Accrued expenses 485,830
--------------------------------------------------------------------------------- --------------
Total liabilities 1,785,190
------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 715,443,040 shares outstanding $ 715,443,040
------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Offering Price per Share:
-------------------------------------------------------------------------------------------------
CLASS A SHARES: ($715,256,636 / 715,256,636 shares outstanding) $ 1.00
------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES: ($186,404 / 186,404 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
--------------------------------------------------------------------------------
Year Ended March 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
---------------------------------------------------------------------------------------------------
Interest $ 37,359,475
---------------------------------------------------------------------------------------------------
EXPENSES:
---------------------------------------------------------------------------------------------------
Investment advisory fee $ 3,708,178
-------------------------------------------------------------------------------------
Administrative personnel and services fee 571,385
-------------------------------------------------------------------------------------
Custodian fees 204,601
-------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 3,187,428
-------------------------------------------------------------------------------------
Directors'/Trustees' fees 15,523
-------------------------------------------------------------------------------------
Auditing fees 25,595
-------------------------------------------------------------------------------------
Legal fees 11,767
-------------------------------------------------------------------------------------
Portfolio accounting fees 50,527
-------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 403,573
-------------------------------------------------------------------------------------
Share registration costs 44,468
-------------------------------------------------------------------------------------
Printing and postage 172,614
-------------------------------------------------------------------------------------
Insurance premiums 15,797
-------------------------------------------------------------------------------------
Taxes 12,772
-------------------------------------------------------------------------------------
Miscellaneous 11,815
------------------------------------------------------------------------------------- ------------
Total expenses 8,436,043
--------------------------------------------------------------------------------------------------- -------------
Net investment income $ 28,923,432
--------------------------------------------------------------------------------------------------- -------------
</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 $ 28,923,432 $ 19,549,592
------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
-------------------------------------------------------------------------------
Class A Shares--Distributions from net investment income (28,922,672) (19,549,592)
-------------------------------------------------------------------------------
Class B Shares--Distributions from net investment income (760) (0)
------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (28,923,432) (19,549,592)
------------------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
-------------------------------------------------------------------------------
Proceeds from sale of Shares 353,799,566 361,379,933
-------------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 25,919,444 17,378,344
-------------------------------------------------------------------------------
Cost of Shares redeemed (470,182,983) (492,734,547)
------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions (90,463,973) (113,976,270)
------------------------------------------------------------------------------- --------------- ---------------
Change in net assets (90,463,973) (113,976,270)
-------------------------------------------------------------------------------
NET ASSETS:
-------------------------------------------------------------------------------
Beginning of period 805,907,013 919,883,283
------------------------------------------------------------------------------- --------------- ---------------
End of period $ 715,443,040 $ 805,907,013
------------------------------------------------------------------------------- --------------- ---------------
</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>
YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987
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 INVESTMENT
OPERATIONS
-----------------------
Net investment
income 0.04 0.02 0.03 0.05 0.07 0.08 0.07 0.06 0.05
----------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
-----------------------
Distributions to
shareholders from net
investment income (0.04) (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06) (0.05)
----------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
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) 3.93% 2.34% 2.71% 4.66% 7.11% 8.24% 7.44% 6.07% 5.48%
-----------------------
RATIOS TO AVERAGE NET
ASSETS
-----------------------
Expenses 1.12% 1.01% 1.04% 1.03% 1.01% 1.02% 1.01% 1.01% 1.01%
-----------------------
Net investment
income 3.83% 2.31% 2.69% 4.59% 6.89% 7.94% 7.19% 5.90% 5.39%
-----------------------
SUPPLEMENTAL DATA
-----------------------
Net assets, end of
period (000
omitted) $715,257 $805,907 $919,883 $1,173,685 $1,393,380 $1,443,347 $1,386,704 $1,358,694 $1,467,182
-----------------------
<CAPTION>
<S> <C>
1986
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00
-----------------------
INCOME FROM INVESTMENT
OPERATIONS
-----------------------
Net investment
income 0.07
----------------------- ---------
LESS DISTRIBUTIONS
-----------------------
Distributions to
shareholders from net
investment income (0.07)
----------------------- ---------
NET ASSET VALUE, END OF
PERIOD $ 1.00
----------------------- ---------
TOTAL RETURN(A) 7.16%
-----------------------
RATIOS TO AVERAGE NET
ASSETS
-----------------------
Expenses 0.98%
-----------------------
Net investment
income 6.95%
-----------------------
SUPPLEMENTAL DATA
-----------------------
Net assets, end of
period (000
omitted) $2,069,333
-----------------------
</TABLE>
(a) Based on net asset value, which does not reflect 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
Financial Highlights--Class B Shares
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1995(A)
<S> <C>
------------------------------------------------------------------------------------------------ -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------------------------------------------------------------
Net investment income 0.01
------------------------------------------------------------------------------------------------ --------
LESS DISTRIBUTIONS
------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (0.01)
------------------------------------------------------------------------------------------------ --------
NET ASSET VALUE, END OF PERIOD $ 1.00
------------------------------------------------------------------------------------------------ --------
TOTAL RETURN(B) 1.14%
------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
------------------------------------------------------------------------------------------------
Expenses 1.95%(c)
------------------------------------------------------------------------------------------------
Net investment income 4.15%(c)
------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $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.
(See Notes which are an integral part of the Financial Statements)
Liberty U.S. Government Money Market Trust
Notes to Financial Statements
--------------------------------------------------------------------------------
March 31, 1995
(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.
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 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. 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.
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 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.
Liberty U.S. Government Money Market Trust
--------------------------------------------------------------------------------
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) for each
class of shares.
At March 31, 1995, capital paid-in aggregated $715,443,040. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994
CLASS A SHARES SHARES SHARES
<S> <C> <C>
Shares sold 353,555,803 361,379,933
----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 25,918,684 17,378,344
----------------------------------------------------------------------------------
Shares redeemed (470,124,864) (492,734,547)
---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from Class A share transactions (90,650,377) (113,976,270)
---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
MARCH 31, MARCH 31,
1995(A) 1994
CLASS B SHARES SHARES SHARES
<S> <C> <C>
Shares sold 243,763 --
-----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 760 --
-----------------------------------------------------------------------------------
Shares redeemed (58,119) --
----------------------------------------------------------------------------------- ------------- --------------
Net change resulting from Class B share transactions 186,404 --
----------------------------------------------------------------------------------- ------------- --------------
Net change resulting from Trust share transactions (90,463,973) (113,976,270)
----------------------------------------------------------------------------------- ------------- --------------
</TABLE>
(a) Reflects operations for the period from December 17, 1994 (date of initial
public offering) to March 31, 1995.
(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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The FAS
Liberty U.S. Government Money Market Trust
--------------------------------------------------------------------------------
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
the average daily net assets of the Class B Shares, annually, to compensate
FSC. For the fiscal year ended March 31, 1995, Class B Shares did not incur
a distribution services fee.
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 daily net assets of the Trust for the
period. This fee is to obtain certain services for shareholders and to
maintain the shareholder accounts. For the fiscal year ended March 31,
1995, Class B Shares did not incur a shareholder services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--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 also maintains the Trust's accounting
records for which it receives a fee. The fee is based on the level of the
Fund's average daily net assets for the period plus, out-of-pocket
expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
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 investments, as of March 31, 1995, 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 periods presented. 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 audit 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, 1995, 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, 1995, 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 the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
May 12, 1995
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 Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Edward C. Gonzales Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Assistant 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.
[LOGOS]
FEDERATED SECURITIES CORP.
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Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
531485100
531485209
8042603 (5/95)
