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Liberty U.S. Government Money Market Trust
17TH SEMI-ANNUAL REPORT
SEPTEMBER 30, 1997
ESTABLISHED 1980
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Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for the Liberty
U.S. Government Money Market Trust, which was established in 1980. This report
covers the period from April 1, 1997, through September 30, 1997, which is the
first six months of the trust's fiscal year. The report begins with an interview
with the trust's portfolio manager, Susan R. Hill, Vice President, Federated
Advisers, and follows with a complete listing of the trust's holdings and its
financial statements.
This money market fund keeps your cash at work pursuing daily income from a
portfolio of short-term U.S. government securities. In addition, the trust is
managed to keep the value of your principal stable,* while giving you daily
access to your invested cash.
Dividends paid to both Class A and Class B shareholders of the trust, during the
six-month reporting period totaled $0.02 per share. At the end of the reporting
period, the trust's net assets totaled $622.2 million.
Thank you for selecting Liberty U.S. Government Money Market Trust to keep your
ready cash working and accessible.
As always, we welcome your comments and suggestions.
Sincerely,
[Graphic]
J. Christopher Donahue
President
November 15, 1997
* 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 the trust is not insured or guaranteed by the U.S. government.
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Susan R. Hill, CFA
Vice President
Federated Advisers
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WHAT IS YOUR ANALYSIS OF THE ECONOMIC ENVIRONMENT DURING THE PERIOD BETWEEN
APRIL 1 AND SEPTEMBER 30, 1997, AND ITS EFFECT ON THE SHORT-TERM MARKETPLACE?
The economy remained robust over the reporting period, posting a rate of growth
of 3.6% for the second quarter and is expected to continue at this above-trend
pace in the third quarter. At the same time, however, inflationary pressures
remained quite benign over the reporting period in spite of the impressive
performance of the economy and what has generally been thought to be tight labor
market conditions. Early in the reporting period, in the wake of the Federal
Reserve Board's (the "Fed") 25 basis point increase in the federal funds target
rate on March 25, 1997, short-term interest rates remained relatively high, as
market participants sought to ascertain whether another move was soon to follow.
As inflationary pressures remained mild, however, fears of a near-term
tightening by the Fed gradually receded and all but vanished by late June. For
the remainder of the reporting period, short-term interest rates traded within a
rather narrow range. Movements in the one-year Treasury bill over the reporting
period best revealed the market's shifting sentiment. The one-year T-bill traded
as high as 6% in late April 1997, but then fell as low as 5.4% before closing
the reporting period at 5.45%.
In addition to economic fundamentals, very short-term Treasury securities were
quite strongly influenced by technical factors over this reporting period, most
notably due to a reduction in the size of Treasury bill auctions. The
three-month Treasury bill began the reporting period at approximately 5.3%,
plummeted to 4.8% in late May, rose back to 5.3% in mid-August and fell to 4.9%
in late September 1997, amid quarter-end pressures. Spreads on similar maturity
U.S. government agency securities widened over the reporting period, and
remained reflective of the overall economic fundamental outlook in the
marketplace.
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WHAT STRATEGIES GUIDED THE TRUST DURING THE REPORTING PERIOD?
The trust remained in a 35- to 45-day average maturity target range over the
reporting period, a neutral stance, and moved within that range according to
relative value opportunities. While the average maturity for the trust was in
the lower half of the target range prior to the tightening move by the Fed, the
reporting period ended with the average maturity mostly in the upper half of
that range. We reinforced the barbelled structure of the trust's portfolio,
combining a significant position in repurchase agreements with purchases of
longer term securities, with maturities between six and twelve months. Because
of the technical influences in the Treasury market, we concentrated our
purchases in fixed- and floating-rate U.S. government agency securities.
[Graphic]
AS WE MOVE TOWARD THE END OF 1997, WHERE DOES THE SHORT-TERM MARKET APPEAR TO BE
HEADING?
With one preemptive tightening under their belt, Fed officials now appear to be
debating, both publicly and privately, whether or not the conditions at hand,
strong growth yet little to no price inflation, would indicate that the
non-inflationary potential of the economy is actually greater than previously
thought. Growth of 2.0% to 2.5% has generally been embraced as this
non-inflationary potential. As the Fed continues to analyze the situation, the
front end of the Treasury and government markets are destined to be range-bound,
absent from any signs of upward pressures on prices.
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--30.7%
$ 13,000,000 (a) Federal Farm Credit Bank, Floating Rate
Note--2.1%
5.51%, 11/1/1997 $ 12,992,871
32,400,000 (b) Federal Home Loan Bank, Discount Notes--5.1%
5.56% - 5.74%, 11/26/1997 - 6/22/1998 31,905,254
12,500,000 (a) Federal Home Loan Bank, Floating Rate
Notes--2.0%
5.51% - 5.53%, 10/20/1997 - 12/4/1997 12,497,260
24,700,000 Federal Home Loan Bank Notes--4.0%
5.46% - 6.03%, 11/18/1997 - 8/12/1998 24,695,000
9,000,000 (a) Federal Home Loan Mortgage Corp., Floating
Rate Note--1.4%
5.44%, 10/20/1997 8,994,929
5,500,000 Federal Home Loan Mortgage Corp. Notes--0.9%
5.72% - 5.84%, 3/17/1998 - 4/8/1998 5,499,070
39,000,000 (b) Federal National Mortgage Association,
Discount Notes--6.2%
5.59% - 5.88%, 10/6/1997 - 6/5/1998 38,737,307
6,000,000 (a) Federal National Mortgage Association,
Floating Rate Note--1.0%
5.70%, 10/2/1997 5,999,157
23,500,000 Federal National Mortgage Association
Notes--3.8%
5.63% - 7.00%, 3/25/1998 - 9/9/1998 23,514,996
1,144,000 (a) Government Guaranteed Floating Rate
Note--0.2%
Overseas Private Investment Corp., 6.29%, 1,144,000
10/7/1997
10,000,000 (a) Student Loan Marketing Association, Floating
Rate Note--1.6%
5.25%, 10/7/1997 9,999,987
2,000,000 (b) United States Treasury Bill--0.3%
5.60%, 3/5/1998 1,954,361
13,000,000 United States Treasury Notes--2.1%
6.125% - 7.25%, 2/15/1998 - 7/31/1998 13,036,152
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 190,970,344
(C)REPURCHASE AGREEMENTS--69.3%
14,000,000 (d) Chase Government Securities, Inc., 5.56%,
dated 9/5/1997,
due 11/13/1997 14,000,000
15,000,000 (d) Credit Suisse First Boston, 5.56%, dated 15,000,000
8/8/1997, due 11/10/1997
</TABLE>
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 60,000,000 Fuji Government Securities, Inc., 6.30%, dated
9/30/1997,
due 10/1/1997 $ 60,000,000
15,000,000 (d) Goldman Sachs Group, LP, 5.53%, dated 15,000,000
8/21/1997, due 10/20/1997
17,000,000 (d) Goldman Sachs Group, LP, 5.545%, dated 17,000,000
9/25/1997, due 11/12/1997
25,000,000 (d) Goldman Sachs Group, LP, 5.55%, dated 25,000,000
9/5/1997, due 10/16/1997
30,000,000 Greenwich Capital Markets, Inc., 6.375%, dated
9/30/1997,
due 10/1/1997 30,000,000
25,000,000 Lehman Brothers, Inc., 6.25%, dated 9/30/1997, 25,000,000
due 10/1/1997
25,000,000 Morgan Stanley Group, Inc., 6.375%, dated 25,000,000
9/30/1997, due 10/1/1997
130,000,000 PaineWebber Group, Inc., 6.25%, dated 130,000,000
9/30/1997, due 10/1/1997
14,000,000 (d) Swiss Bank Capital Markets, 5.52%, dated 14,000,000
7/29/1997, due 10/1/1997
6,400,000 Swiss Bank Capital Markets, 6.07%, dated 6,400,000
9/30/1997, due 10/1/1997
25,000,000 Toronto Dominion Securities (USA) Inc.,
6.375%, dated 9/30/1997,
due 10/1/1997 25,000,000
13,000,000 (d) UBS Securities, Inc., 5.53%, dated 8/21/1997, 13,000,000
due 10/20/1997
17,000,000 (d) UBS Securities, Inc., 5.57%, dated 9/17/1997, 17,000,000
due 10/1/1997
TOTAL REPURCHASE AGREEMENTS 431,400,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 622,370,344
</TABLE>
(a) Denotes variable rate securities with current rate and next demand date.
(b) Discount rate at time of purchase.
(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.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($622,247,846) at September 30, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(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, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 431,400,000
Investments in securities 190,970,344
Total investments in securities, at amortized cost and value $ 622,370,344
Cash 451,401
Income receivable 1,994,087
Receivable for shares sold 23,200
Total assets 624,839,032
LIABILITIES:
Payable for shares redeemed 52,273
Income distribution payable 2,331,996
Accrued expenses 206,917
Total liabilities 2,591,186
NET ASSETS for 622,247,846 shares outstanding $ 622,247,846
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
CLASS A SHARES: $607,879,276 / 607,879,276 shares outstanding $1.00
CLASS B SHARES: $14,368,570 / 14,368,570 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 "Contingent Deferred Sales Charge" in the
Prospectus.
(See Notes which are an integral part of the Financial Statements)
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $18,173,054
EXPENSES:
Investment advisory fee $ 1,606,272
Administrative personnel and services fee 245,351
Custodian fees 32,064
Transfer and dividend disbursing agent fees and expenses 1,256,381
Directors'/Trustees' fees 9,793
Auditing fees 7,411
Legal fees 2,380
Portfolio accounting fees 58,807
Distribution services fee--Class B Shares 66,447
Shareholder services fee--Class A Shares 790,272
Shareholder services fee--Class B Shares 22,149
Share registration costs 29,921
Printing and postage 60,651
Insurance premiums 4,208
Taxes 9,053
Miscellaneous 3,938
Total expenses 4,205,098
Waivers--
Waiver of investment advisory fee $ (43,120)
Waiver of shareholder services fee--Class A Shares (632,218)
Waiver of shareholder services fee--Class B Shares (5,881)
Total waivers (681,219)
Net expenses 3,523,879
Net investment income $14,649,175
</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, MARCH 31,
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 14,649,175 $ 29,009,425
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Class A Shares (14,327,292) (28,724,728)
Class B Shares (321,883) (284,697)
Change in net assets resulting from
distributions
to shareholders (14,649,175) (29,009,425)
SHARE TRANSACTIONS--
Proceeds from sale of shares 267,988,685 542,845,500
Net asset value of shares issued to
shareholders in payment
of distributions declared 11,062,937 28,470,910
Cost of shares redeemed (343,871,892) (591,179,249)
Change in net assets resulting from share (64,820,270) (19,862,839)
transactions
Change in net assets (64,820,270) (19,862,839)
NET ASSETS:
Beginning of period 687,068,116 706,930,955
End of period $ 622,247,846 $ 687,068,116
</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,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.04 0.05 0.04 0.02 0.03
LESS DISTRIBUTIONS
Distributions from net investment (0.02) (0.04) (0.05) (0.04) (0.02) (0.03)
income
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.18% 4.43% 4.89% 3.93% 2.34% 2.71%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.06%* 1.06% 1.10% 1.12% 1.01% 1.04%
Net investment income 4.53%* 4.33% 4.78% 3.83% 2.31% 2.69%
Expense waiver/reimbursement(b) 0.21%* 0.29% 0.20% -- -- --
SUPPLEMENTAL DATA
Net assets, end of period (000 $607,879 $658,731 $697,472 $715,257 $805,907 $919,883
omitted)
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
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)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.04 0.04 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.04) (0.04) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 1.84% 3.59% 4.04% 1.14%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.94%* 1.87% 1.91% 1.95%*
Net investment income 3.63%* 3.58% 3.91% 4.15%*
Expense waiver/reimbursement(c) 0.08%* 0.23% 0.14% --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $14,369 $28,337 $9,459 $186
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 (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 an open-end
management investment company. The Trust offers two classes of shares: Class A
Shares and Class B Shares. The investment objective of the Trust is stability of
principal and current income consistent with stability of principal.
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 uses the amortized cost method to value its
portfolio securities 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.
USE OF ESTIMATES-- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31,
CLASS A SHARES 1997 1997
<S> <C> <C>
Shares sold 249,047,164 503,677,965
Shares issued to shareholders in payment of distributions declared 10,796,800 28,224,483
Shares redeemed (310,695,463) (570,643,721)
Net change resulting from Class A Share transactions (50,851,499) (38,741,273)
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31,
CLASS B SHARES 1997 1997
<S> <C> <C>
Shares sold 18,941,521 39,167,535
Shares issued to shareholders in payment of distributions declared 266,137 246,427
Shares redeemed (33,176,429) (20,535,528)
Net change resulting from Class B Share transactions (13,968,771) 18,878,434
Net change resulting from share transactions (64,820,270) (19,862,839)
</TABLE>
At September 30, 1997, capital paid-in aggregated $622,247,846.
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: 0.500% on the
first $500 million, 0.475% on the next $500 million, 0.450% on the next $500
million, 0.425% on the next $500 million, and 0.400% thereafter.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE-- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ 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 0.75% of the average daily net
assets of 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 0.25%
of average daily net assets of the Trust for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES-- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Trust. The fee paid to FSSC 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
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Edward C. Gonzales
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
J. Christopher Donahue
President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Matthew S. Hardin
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 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.
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-245-7400
www.federatedinvestors.com
Cusip 531485100
Cusip 531485209
8110106 (11/97)
[Graphic]
