[Graphic]
J. CHRISTOPHER DONAHUE
President
Liberty U.S. Government Money Market Trust
President's Message
Dear Shareholder:
Liberty U.S. Government Money Market Trust was created in 1980, and I am pleased
to present its 19th Annual Report. This report covers the 12-month reporting
period from April 1, 1998 through March 31, 1999. It begins with an interview
with the fund's portfolio manager, Susan R. Hill, Vice President of Federated
Investment Management Company. Following her discussion you will find two
additional items of shareholder interest. First is a complete list ing of the
fund's holdings, and second is the publication of the fund's financial
statements.
This money market fund keeps your invested cash pursuing daily income through a
professionally managed portfolio of U.S. government money market securi ties.
The fund also offers you convenient access to your money, and the com fort of
knowing the fund is managed to keep the value of your investment at a stable
$1.00 per share, which the fund has maintained since its inception. 1
Over the 12-month reporting period, the fund paid Class A and Class B share
holders dividends totaling $0.04 per share and $0.03 per share, respectively. At
the end of the reporting period, the fund's net assets of more than $650 million
were invested across 17 securities.
Thank you for keeping your ready cash working for you on a daily basis with
Liberty U.S. Government Money Market Trust. As always, we welcome your com
ments and suggestions.
Sincerely,
[Graphic]
J. Christopher Donahue
President
May 15, 1999
1 An investment in the fund is neither insured nor guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund.
[Graphic]
SUSAN R. HILL, CFA
Vice President
Federated Investment Management Company
Investment Review
WHAT IS YOUR REVIEW OF THE FUND'S FISCAL YEAR?
Early in the reporting period, economic fundamentals were the driving factor
behind movements in short-term interest rates. With strong economic growth and
no evidence of inflation, market participants were convinced that the Federal
Reserve Board (the "Fed") would remain on the sidelines. Over the second quarter
of 1998, the economic crisis in Asia was a modest drag on the U.S. economy,
particularly in the manufacturing sector. This slowdown lent comfort to
investors that economic growth would not be so robust as to ignite inflationary
pressures.
By the third quarter of 1998, however, market sentiment shifted dramatically.
Uncertainty in the world economies resulted in vulnerability in the domestic
equity market, and led to a substantial "flight-to-quality" to U.S. Treasury
securities across the yield curve. As economic trouble spread from Asia to
Russia and Latin America, the uncertain world economies became an overpower ing
influence on the market and expectations regarding future U.S. growth. Although
economic fundamentals still remained fairly positive in this envi ronment, fear
dominated market sentiment during this period.
Confronted with a significant liquidity crisis, market participants abruptly
changed their expectations regarding the direction of the next change in mon
etary policy. The Fed had adopted a tightening bias in March 1998, a reflec tion
of their underlying concern about inflationary pressures. By August, the Fed had
removed its tightening bias, as Fed officials perceived that the risks to the
economy had become more balanced. By late August, however, mar ket expectations
that the Fed might eventually need to ease monetary policy to help the U.S.
economy along, as a result of the world economic struggles, had begun to grow.
This expectation intensified throughout September, and at the September 29, 1998
Federal Open Market Committee ("FOMC") meeting, the Fed voted to ease monetary
policy by a modest 25 basis points. The Fed fol lowed that move with another 25
basis point ease on October 15, 1998, which brought the Fed Funds Target Rate
down to 5.00%. The Fed also voted to cut the discount rate by the same
magnitude, from 5.00% to 4.75%, at that time. Finally, at its November 17, 1998
FOMC meeting, the Fed voted once again to reduce the Fed Funds Target Rate and
the discount rate by 25 basis points. These moves were a reflection of concern
over the potential economic impact that the crises in foreign economies would
have on U.S. domestic growth as well as with the liquidity/credit crisis evident
in the fixed-income markets.
At the end of the reporting period, the market's attention returned to domes tic
economic fundamentals, as the economic crises overseas appeared to stabi lize.
The Fed remained on hold, but the robust pace of growth from the fourth quarter
of 1998 showed no significant signs of slowing in spite of the recent events
overseas. Lingering concerns over the health of the global economy were replaced
by fears that the Fed might be motivated to tighten rates in the face of a pace
of growth that was clearly above what had been tradition ally considered the
non-inflationary potential of the economy.
WHERE DID YOU POSITION THE FUND'S AVERAGE MATURITY DURING THE REPORTING
PERIOD?
The fund was targeted at a 35-45 day average maturity target range early in the
reporting period, a neutral stance, as expectations were for stable mon etary
policy. The fund remained in that range in spite of the liquidity cri sis and
resulting easing steps by the Fed, because the flight-to-quality influence in
the government markets kept this sector quite expensive. As con ditions were
relieved in the fourth quarter of 1998, however, we extended the range out to
40-50 days as attractive values returned to the government money market sector.
The fund maximized performance through ongoing relative value analysis over the
reporting period, moving within the established target ranges based on relative
value opportunities.
The fund reduced its position in repurchase agreements in favor of short-term
U.S. government agency securities, which offered an attractive yield advan tage.
The fund also added to its position in government agency floating rate
securities. We focused purchases almost exclusively in government agency
securities relative to U.S. Treasuries, because of the greater flight-to-
quality influence in the Treasury market.
WHAT KIND OF SHORT-TERM RATE ENVIRONMENT DO YOU SEE THROUGH 1999?
Although the current pace of economic growth remains robust, Fed officials have
acknowledged that productivity gains may be working to hold inflationary
pressures in check. As a result, we think that the Fed will be reluctant to
tighten monetary policy without concrete signs of rising prices, given the still
uncertain outlook for economies abroad. Treasury securities should continue to
remain well-bid, as forecasts for an over $100 billion surplus should lead to a
continued paydown in Treasury debt. As a result, we would expect to continue our
focus on the government agency market.
Portfolio of Investments
MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM
U.S. GOVERNMENT
OBLIGATIONS-61.6%
$ 3,500,000 Federal Farm Credit Bank
Note-0.6%
5.500%, 4/1/1999 $ 3,500,000
55,000,000 1 Federal Home Loan Bank,
Floating Rate Notes-8.5%
4.770% - 4.997%,
4/1/1999 - 6/1/1999 54,990,178
38,600,000 Federal Home Loan Bank
Notes-5.9%
4.790% - 5.705%,
4/22/1999 - 4/5/2000 38,582,150
6,000,000 2 Federal Home Loan Bank,
Discount Note-0.9%
4.770%, 6/25/1999 5,932,425
36,000,000 1 Federal Home Loan
Mortgage Corp., Floating
Rate Notes-5.5%
4.735% - 4.800%,
4/19/1999 - 5/17/1999 35,991,310
7,000,000 Federal Home Loan
Mortgage Corp. Notes-
1.1%
5.544% - 5.550%,
4/29/1999 - 8/13/1999 6,998,792
72,500,000 2 Federal Home Loan
Mortgage Corp., Discount
Notes-11.0%
4.750% - 4.800%,
5/28/1999 - 8/10/1999 71,745,409
22,200,000 Federal National
Mortgage Association
Notes-3.4%
4.780% - 5.650%,
5/26/1999 - 3/10/2000 22,189,061
104,400,000 2 Federal National
Mortgage Association,
Discount Notes-15.9%
4.400% - 5.160%,
4/7/1999 - 1/24/2000 103,355,979
33,000,000 1 Federal National
Mortgage Association,
Floating Rate Notes-5.1%
4.751% - 5.205%,
4/6/1999 - 6/23/1999 32,988,028
24,000,000 1 Student Loan Marketing
Association, Floating
Rate Notes-3.7%
5.152% - 5.252%,
4/6/1999 23,991,410
TOTAL SHORT-TERM
U.S. GOVERNMENT
OBLIGATIONS 400,264,742
REPURCHASE AGREEMENTS-38.0% 3
17,900,000 Barclays de Zoete Wedd
Securities, Inc.,
4.920%, dated 3/31/1999,
due 4/1/1999 17,900,000
25,000,000 Bear, Stearns and Co.,
5.050%, dated 3/31/1999,
due 4/1/1999 25,000,000
4,300,000 4 Goldman Sachs Group, LP,
4.800%, dated 3/25/1999,
due 5/24/1999 4,300,000
25,000,000 Nationsbanc Montgomery
Securities, Inc.,
5.080%, dated 3/31/1999,
due 4/1/1999 25,000,000
150,000,000 PaineWebber Group, Inc.,
5.050%, dated 3/31/1999,
due 4/1/1999 150,000,000
25,000,000 Paribas Corp., 5.080%,
dated 3/31/1999, due
4/1/1999 25,000,000
TOTAL REPURCHASE
AGREEMENTS 247,200,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 5 $ 647,464,742
</TABLE>
1 Floating rate note with current rate and next reset date shown.
2 Discount rate at time of purchase.
3 The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfo lio. The
investments in the repurchase agreements are through participa tion in joint
accounts with other Federated funds.
4 Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase agree ment
within seven days if credit worthiness of the issuer is downgraded.
5 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($650,126,487) as of March 31, 1999.
The following acronym is used throughout this portfolio:
LP -Limited Partnership
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 647,464,742
Cash 20,342
Income receivable 1,637,528
Receivable for shares
sold 9,358,548
TOTAL ASSETS 658,481,160
LIABILITIES:
Payable for investments
purchased $ 4,296,066
Payable for shares
redeemed 3,437,365
Income distribution
payable 217,520
Accrued expenses 403,722
TOTAL LIABILITIES 8,354,673
Net assets for
650,126,487 shares
outstanding $ 650,126,487
NET ASSET VALUE,
OFFERING PRICE PER
SHARE:
CLASS A SHARES:
$598,859,079 / 598,859,079
shares outstanding $1.00
CLASS B SHARES:
$51,267,408 / 51,267,408
shares outstanding $1.00
Redemption Proceeds Per
Share:
CLASS A SHARES $1.00
CLASS B SHARES: (94.50/100 of $1.00) 1 $0.95
</TABLE>
1 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
Statement of Operations
YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 34,503,017
EXPENSES:
Investment advisory fee $ 3,195,464
Administrative personnel
and services fee 487,396
Custodian fees 52,770
Transfer and dividend
disbursing agent fees
and expenses 1,952,857
Directors'/Trustees'
fees 12,705
Auditing fees 15,062
Legal fees 8,304
Portfolio accounting
fees 112,476
Distribution services
fee-Class B Shares 310,593
Shareholder services
fee-Class A Shares 1,512,503
Shareholder services
fee-Class B Shares 103,530
Share registration costs 88,489
Printing and postage 109,073
Insurance premiums 3,005
Miscellaneous 63,796
TOTAL EXPENSES 8,028,023
WAIVER:
Waiver of shareholder
services fee-Class A
Shares $ (1,008,977)
Net expenses 7,019,046
Net investment income $ 27,483,971
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $ 27,483,971 $ 29,156,157
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (26,094,085) (28,452,044)
Class B Shares (1,389,886) (704,113)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (27,483,971) (29,156,157)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,604,775,656 790,819,804
Net asset value of shares
issued to shareholders
in payment of
distributions declared 24,223,986 26,222,787
Cost of shares redeemed (1,609,649,454) (873,334,408)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 19,350,188 (56,291,817)
Change in net assets 19,350,188 (56,291,817)
NET ASSETS:
Beginning of period 630,776,299 687,068,116
End of period $ 650,126,487 $ 630,776,299
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.04 0.05 0.04 0.05 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.04) (0.05) (0.04) (0.05) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 4.40% 4.67% 4.43% 4.89% 3.93%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.02% 1.06% 1.06% 1.10% 1.12%
Net investment income 4.31% 4.57% 4.33% 4.78% 3.83%
Expense waiver/reimbursement 2 0.16% 0.22% 0.29% 0.20% -
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $598,859 $611,630 $658,731 $697,472 $715,257
</TABLE>
1 Based on net asset value, which does not reflect the contingent deferred sales
charge, if applicable.
2 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
Financial Highlights - Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.04 0.04 0.04 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.04) (0.04) (0.04) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 3.45% 3.71% 3.59% 4.04% 1.14%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.93% 1.98% 1.87% 1.91% 1.95% 3
Net investment income 3.36% 3.65% 3.58% 3.91% 4.15% 3
Expense waiver/reimbursement 4 - 0.05% 0.23% 0.14% -
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $51,267 $19,146 $28,337 $9,459 $186
</TABLE>
1 Reflects operations for the period from December 17, 1994 (date of initial
public offering) to March 31, 1995.
2 Based on net asset value, which does not reflect the contingent deferred sales
charge, if applicable.
3 Computed on an annualized basis.
4 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
Notes to Financial Statements
MARCH 31, 1999
ORGANIZATION
Liberty U.S. Government Money Market Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Fund offers two classes of shares: Class A
Shares and Class B Shares. The investment objective of the Fund is stability of
principal and current income consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund 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 Fund to require the custodian bank to take posses sion,
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 Fund 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 repur chase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other rec
ognized financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to the guidelines and/or stan dards
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 Fund 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 Fund'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 Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security posi
tions 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 rev enues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
CLASS A SHARES:
Shares sold 1,432,718,249 730,207,814
Shares issued to
shareholders in payment
of distributions
declared 23,198,290 25,602,143
Shares redeemed (1,468,687,538) (802,910,654)
NET CHANGE RESULTING
FROM CLASS A SHARE
TRANSACTIONS (12,770,999) (47,100,697)
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
CLASS B SHARES:
Shares sold 172,057,407 60,611,990
Shares issued to
shareholders in payment
of distributions
declared 1,025,696 620,644
Shares redeemed (140,961,916) (70,423,754)
NET CHANGE RESULTING
FROM CLASS B SHARE
TRANSACTIONS 32,121,187 (9,191,120)
NET CHANGE RESULTING
FROM SHARE TRANSACTIONS 19,350,188 (56,291,817)
</TABLE>
At March 31, 1999, capital paid-in aggregated $650,126,487.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee based on the average daily net
assets of the Fund as follows: 0.50% on the first $500 million, 0.475% on the
second $500 million, 0.45% on the third $500 million, 0.425% on the fourth $500
million, and 0.40% over $2 billion. On March 31, 1999, the adviser changed its
name to Federated Investment Management Company.
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 Fund 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, Inc. for the period. The
administrative fee received during the period of the Administra tive Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Feder ated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class B
Shares. The Plan provides that the Fund may incur distribution expenses up to
0.75% of the 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 Share holder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of aver age daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discre tion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disburs ing
agent for the Fund. 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 Fund'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 Fund are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking mea sures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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 Lib erty
U.S. Government Money Market Trust (a Massachusetts business trust), including
the portfolio of investments, as of March 31, 1999, 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 finan cial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Fund'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 stan
dards. 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 finan cial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities purchased but
not received, we requested confirmation from brokers and, when replies were not
received, we carried out alternative auditing procedures. 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, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
May 18, 1999
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
WILLIAM J. COPELAND
JOHN F. CUNNINGHAM
JAMES E. DOWD, ESQ.
LAWRENCE D. ELLIS, M.D.
EDWARD L. FLAHERTY, JR., ESQ.
EDWARD C. GONZALES
PETER E. MADDEN
JOHN E. MURRAY, JR., J.D., S.J.D.
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 and Secretary
RICHARD J. THOMAS
Treasurer
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 gov
ernment agency. Investment in mutual funds involves investment risk, includ ing
the 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 con
cerning its objective and policies, management fees, expenses, and other
information.
ANNUAL REPORT AS OF MARCH 31, 1999
[Graphic]
Federated
World-Class Investment Manager
Liberty U.S. Government Money Market Trust
Established 1980
19TH ANNUAL REPORT
[Graphic]
Federated
Liberty U.S. Government Money Market Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 531485100
Cusip 531485209
8042603 (5/99)
[Graphic]
