PRESIDENT'S MESSAGE
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
U.S. Government Securities Fund: 1-3 Years. The report covers the six-month
reporting period ended August 31, 1998 and includes an investment review by the
fund's portfolio manager, a complete list of portfolio investments, and the
financial statements.
This mutual fund is designed to pursue current income with limited principal
risk through a portfolio of shorter-maturity government securities. At the end
of the reporting period, the portfolio was invested in U.S. Treasury obligations
and government agency securities.
During the reporting period, the fund's Institutional Shares produced a total
return of 3.38% through paid income totaling $0.27 per share and a net asset
value increase of $0.08 per share. Institutional Service Shares produced a total
return of 3.25% through paid income totaling $0.25 per share and a net asset
value increase of $0.08 per share.* Net assets totaled $655.4 million on August
31, 1998.
Thank you for participating in the income opportunities of short-term
government securities through Federated U.S. Government Securities Fund: 1-3
Years. We welcome your comments and questions.
Sincerely,
[Graphic]
Glen R. Johnson
President
October 15, 1998
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
INVESTMENT REVIEW
Federated U.S. Government Securities Fund: 1-3 Years represents a fully-
invested participation in those obligations of the U.S. Treasury and certain
government agencies which have a maximum maturity of 31/2 years and an
average maturity of 11/2 to 2 years. Since the fund's February 1998 fiscal
year end, the fund has been primarily invested in U.S. Treasury securities.
Standard & Poor's has maintained the fund's "AAAf" credit rating.*
During the fund's semi-annual reporting period, fixed income performance
continued to reflect above-trend economic growth combined with subdued inflation
and a stronger dollar. Consumer prices increased at only a 1.60% annual rate
through August 1998 and the Asian financial crisis eliminated the possibility of
a tightening of Federal Reserve Board (the "Fed") monetary policy. The Fed
maintained its "wait and see" approach due to the counteracting forces of the
underlying strength in the U.S. economy and the potential deflationary impact of
the Asian financial crisis. The federal funds target rate remained at 5.50%,
where it had been since the Fed last tightened near the end of March 1997, and
the 2-year Treasury note yield traded mostly between 5.40% and 5.60%. However,
in August, market expectations of an easing of Fed policy grew as the global
economic and financial crisis worsened and U.S. equity markets declined. The
flight to quality bid which had supported the Treasury market during the fourth
quarter of 1997 intensified and U.S. Treasury securities outperformed the spread
sectors both on a nominal and duration-adjusted basis. U.S. Treasury yields fell
across the curve, ending August well below the federal funds target rate of
5.50%. The 2-year Treasury note yield declined from 5.53% at the end of February
to 4.77% at the end of August 1998.
Although the fund's average maturity has been managed within its neutral range,
its average maturity was extended past its midpoint when yields rose in late
April and ended August slightly shorter at 1.7 years. The fund's net total
return for the six months ended August 31, 1998 was 3.38% and 3.25% for
Institutional Shares and Institutional Service Shares, respectively, compared to
3.18% for the Merrill Lynch 1-Year Treasury Index and 3.71% for the Merrill
Lynch 2-Year Treasury Index.**
* "AAAf" rated fund portfolio holdings and counterparties provide extremely
strong protection against losses from credit defaults. Ratings are subject to
change, and do not remove market risks
** The Merrill Lynch 1-year and 2-year Treasury Indices are unmanaged indices
comprised of the most recently issued 1-year and 2-year Treasury notes,
respectively. Investments cannot be made in an index.
PORTFOLIO OF INVESTMENTS
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
AUGUST 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
U.S. TREASURY NOTES--85.4%
<C> <S> <C>
$ 35,000,000 5.750%, 9/30/1999 $ 35,245,350
15,025,000 7.125%, 9/30/1999 15,341,126
41,500,000 5.625%, 10/31/1999 41,744,850
26,000,000 7.500%, 10/31/1999 26,684,840
38,500,000 5.875%, 11/15/1999 38,855,740
52,000,000 5.625%, 11/30/1999 52,340,600
15,000,000 7.750%, 11/30/1999 15,477,900
43,743,000 5.625%, 12/31/1999 44,055,762
45,000,000 7.750%, 12/31/1999 46,529,100
61,000,000 5.375%, 1/31/2000 61,266,570
5,084,000 5.500%, 3/31/2000 5,121,724
30,000,000 5.750%, 11/15/2000 30,484,500
42,000,000 5.375%, 2/15/2001 42,382,620
35,265,000 6.250%, 4/30/2001 36,376,200
52,000,000 6.500%, 5/31/2001 53,998,880
13,500,000 6.625%, 7/31/2001 14,092,110
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $555,264,046) 559,997,872
U.S. GOVERNMENT AGENCIES--9.9%
FEDERAL HOME LOAN BANKS--6.9%
25,000,000 5.470%, 8/17/2000 25,128,250
20,000,000 5.625%, 3/19/2001 20,174,400
Total 45,302,650
STUDENT LOAN MARKETING ASSOCIATION--3.0%
19,500,000 5.570%, 3/17/2000 19,596,135
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $64,400,987) 64,898,785
(A)REPURCHASE AGREEMENTS--3.7%
24,505,000 BT Securities Corp., 5.800%, dated 8/31/1998, due 9/1/1998
(AT AMORTIZED COST) 24,505,000
TOTAL INVESTMENTS (IDENTIFIED COST $644,170,033)(B) $ 649,401,657
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Government and/ or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(b) The cost of investments for federal tax purposes amounts to $644,170,033.
The net unrealized appreciation of investments on a federal tax basis amounts to
$5,231,624 which is comprised of $5,231,624 appreciation at August 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($655,469,246) at August 31, 1998.
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
AUGUST 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $644,170,033) $649,401,657
Income receivable 9,225,850
Receivable for shares sold 2,052,858
Total assets 660,680,365
LIABILITIES:
Payable for investments purchased $ 412,664
Payable for shares redeemed 41,696
Income distribution payable 2,671,562
Payable to Bank 2,031,797
Accrued expenses 53,400
Total liabilities 5,211,119
NET ASSETS for 62,509,335 shares outstanding $655,469,246
NET ASSETS CONSIST OF:
Paid in capital $664,427,045
Net unrealized appreciation of investments 5,231,624
Accumulated net realized loss on investments (14,184,676)
Distributions in excess of net investment income (4,747)
Total Net Assets $655,469,246
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$607,205,035 / 57,906,522 shares outstanding $10.49
INSTITUTIONAL SERVICE SHARES:
$48,264,211 / 4,602,813 shares outstanding $10.49
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $17,777,236
EXPENSES:
Investment advisory fee $1,262,145 Administrative personnel and services fee
237,914 Custodian fees 16,432 Transfer and dividend disbursing agent fees and
expenses 113,413 Directors'/Trustees' fees 5,995 Auditing fees 9,054 Legal fees
2,524 Portfolio accounting fees 63,152 Distribution services fee--Institutional
Service Shares 49,416 Shareholder services fee--Institutional Shares 739,424
Shareholder services fee--Institutional Service Shares 49,416 Share registration
costs 19,435 Printing and postage 20,091 Insurance premiums 3,471 Taxes 3
Miscellaneous 8,371 Total expenses 2,600,256 Waivers-- Waiver of investment
advisory fee $ (44,220) Waiver of distribution services fee--Institutional
Service Shares (47,440) Waiver of shareholder services fee--Institutional Shares
(739,424) Waiver of shareholder services fee--Institutional Service Shares
(1,977) Total waivers (833,061) Net expenses 1,767,195 Net investment income
16,010,041 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain
on investments 2,496,398 Net change in unrealized appreciation of investments
2,448,112 Net realized and unrealized gain on investments 4,944,510 Change in
net assets resulting from operations $20,954,551 </TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
AUGUST 31, 1998 FEBRUARY 28, 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 16,010,041 $ 36,690,854
Net realized gain on investments ($2,496,398 and
$2,033,001 net gain, respectively, as
computed for federal tax purposes) 2,496,398 2,018,431
Net change in unrealized appreciation 2,448,112 3,542,439
Change in net assets resulting from operations 20,954,551 42,251,724
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (15,071,065) (35,155,560)
Institutional Service Shares (943,723) (1,535,294)
Change in net assets resulting from distributions to shareholders (16,014,788) (36,690,854)
SHARE TRANSACTIONS--
Proceeds from sale of shares 169,531,052 302,726,969
Net asset value of shares issued to shareholders in payment of distributions declared 7,444,273 18,874,038
Cost of shares redeemed (157,625,657) (426,661,455)
Change in net assets resulting from share transactions 19,349,668 (105,060,448)
Change in net assets 24,289,431 (99,499,578)
NET ASSETS:
Beginning of period 631,179,815 730,679,393
End of period $ 655,469,246 $ 631,179,815
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
AUGUST 31, YEAR ENDED FEBRUARY 28 OR 29,
1998 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.41 $10.32 $10.38 $10.25 $10.46 $10.53
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.27 0.56 0.54 0.61 0.52 0.37
Net realized and unrealized gain (loss) on investments 0.08 0.09 (0.06) 0.13 (0.21) (0.07)
Total from investment operations 0.35 0.65 0.48 0.74 0.31 0.30
LESS DISTRIBUTIONS
Distributions from net investment income (0.27 ) (0.56) (0.54) (0.61) (0.52) (0.37)
NET ASSET VALUE, END OF PERIOD $10.49 $10.41 $10.32 $10.38 $10.25 $10.46
TOTAL RETURN(A) 3.38 % 6.41% 4.78% 7.41% 3.14% 2.93%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.54%* 0.54% 0.54% 0.54% 0.54% 0.51%
Net investment income 5.09%* 5.36% 5.26% 5.91% 5.06% 3.56%
Expense waiver/reimbursement(b) 0.26%* 0.26% 0.27% 0.26% 0.02% --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $607,205 $597,549 $701,498 $697,692 $687,037 $858,556
Portfolio turnover 96 % 118% 145% 142% 265% 150%
</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)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
AUGUST 31, YEAR ENDED FEBRUARY 28 OR 29,
1998 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.41 $10.32 $10.38 $10.25 $10.46 $10.53
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.25 0.53 0.52 0.59 0.50 0.35
Net realized and unrealized gain (loss) on investments 0.08 0.09 (0.06 ) 0.13 (0.21) (0.07)
Total from investment operations 0.33 0.62 0.46 0.72 0.29 0.28
LESS DISTRIBUTIONS
Distributions from net investment income (0.25 ) (0.53 ) (0.52 ) (0.59) (0.50) (0.35)
NET ASSET VALUE, END OF PERIOD $10.49 $10.41 $10.32 $10.38 $10.25 $10.46
TOTAL RETURN(A) 3.25 % 6.15 % 4.52 % 7.14% 2.88% 2.68%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.79%* 0.79 % 0.79% 0.79% 0.79% 0.76%
Net investment income 4.85%* 5.11 % 5.01 % 5.68% 4.76% 3.33%
Expense waiver/reimbursement(b) 0.26%* 0.26 % 0.27 % 0.26% 0.25% --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $48,264 $33,631 $29,181 $26,432 $29,208 $39,905
Portfolio turnover 96 % 118% 145 % 142% 265% 150%
</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)
NOTES TO FINANCIAL STATEMENTS
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
AUGUST 31, 1998 (UNAUDITED)
ORGANIZATION
Federated U.S. Government Securities Fund: 1-3 Years (the "Trust") is
registered under the Investment Company Act of 1940, as amended (the "Act"),
as a diversified, open-end management investment company. The Trust offers
two classes of shares: Institutional Shares and Institutional Service
Shares. The investment objective of the Trust is to provide current income.
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
U.S. government securities are generally valued at the mean of the latest bid
and asked price as furnished by an independent pricing service. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value.
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.
At February 28, 1998, the Trust, for federal tax purposes, had a capital loss
carryforward of $16,666,504, which will reduce the Trust's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Trust of any
liability for federal tax. Pursuant to the Code, such capital loss carryforward
will expire in 2003.
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.
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
AUGUST 31, 1988 FEBRUARY 28, 1998
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 14,288,321 $ 148,823,018 27,005,133 $ 279,621,175
Shares issued to shareholders in payment of distributions declared 653,041 6,795,584 1,693,644 17,556,139
Shares redeemed (14,461,283) (150,550,097) (39,219,746) (406,462,678)
Net change resulting from Institutional Share transactions 480,079 $ 5,068,505 (10,520,969) $(109,285,364)
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1988 FEBRUARY 28, 1998
<S> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 1,987,905 $ 20,708,034 2,230,331 $ 23,105,794
Shares issued to shareholders in payment of distributions declared 62,335 648,689 127,126 1,317,899
Shares redeemed (679,492) (7,075,560) (1,951,903) (20,198,777)
Net change resulting from Institutional Service Share transactions 1,370,748 $ 14,281,163 405,554 $ 4,224,916
Net change resulting from share transactions 1,850,827 $ 19,349,668 (10,115,415) $(105,060,448)
</TABLE>
At August 31, 1998, capital paid-in aggregated $664,427,045.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Trust's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to 0.40% of the Trust's
average daily net assets. 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, Inc. 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
Institutional Service Shares. The Plan provides that the Trust may incur
distribution expenses up to 0.25% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. FSC may voluntarily
choose to waive any portion of its fee. FSC can modify or terminate this
voluntary waiver at any time at its sole discretion.
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
Federated Services Company ("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.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended August 31, 1998, were as follows:
PURCHASES $596,591,955
SALES $594,361,378
YEAR 2000
Similar to other financial organizations, the Trust could be adversely affected
if the computer systems used by the Trust's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Trust's Adviser and administrator are taking measures 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 Trust'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 Trust.
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
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.
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.
Federated U.S. Government Securities Fund:
1-3 Years
SEMI-ANNUAL REPORT TO SHAREHOLDERS
AUGUST 31, 1998
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 31428M100
Cusip 31428M209
G01436-01 (10/98)
