Federated Investors
World-Class Investment Manager
August 31, 2001
NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
The fund has received a "volatility rating" of [S1/S2+] from Standard & Poor's Ratings Services (S&P), which is current as of October 2, 2001. The purpose of a volatility rating is to designate the sensitivity of a fund's share price and returns to changes in market conditions. S&P assigns the S1 rating to bond funds that possess "low sensitivity" to changing market conditions. In S&P's system (S1 to S6), this rating indicates lowest relative volatility.
According to S&P, the overall volatility of S1-rated funds should be less than or equal to that of a portfolio comprised of U.S. government securities maturing within one to three years. Within this category, certain funds are designated with a plus sign (+). This indicates the fund's extremely low sensitivity to changing market conditions. These funds possess an aggregate level of volatility that is less than or equal to that of a portfolio comprised of the highest quality fixed-income instruments with an average maturity of one year or less. S&P uses government securities as the basis for comparison because they signify the most liquid, highest quality securities. Volatility ratings can be useful for comparative purposes, to help assess whether one bond fund presents greater overall sensitivity to changing market conditions than another. In addition, because the market generally compensates investors for increased risks, funds with ratings indicating low sensitivity to market changes should be expected to have lower total returns (over extended periods) than funds with ratings indicating greater sensitivity to market changes. Conversely, while returns of funds with ratings indicating higher volatility may tend to be higher over extended periods, they may also be more uncertain.
There is no standard method for determining volatility ratings. S&P's analysis focuses on measuring objective, quantifiable portfolio risk factors. These factors include the credit quality of the bonds held by the fund, the market price volatility of the fund's portfolio, and the historical volatility of the fund's total return performance. In addition, S&P evaluates the fund with regard to specific technical factors, such as interest-rate risk, yield curve risk, credit risk, and liquidity risk. More detailed information about S&P's rating methodology and the factors it considers is posted on S&P's website at www.standardandpoors.com/resourcecenter/ratingscriteria/funds.
The fund's portfolio may have changed since the rating was issued, and there is no guarantee that the fund will continue to have the same rating, or perform in the future as rated. S&P charges fees to issue these ratings, which are paid by the fund, and not all bond funds have volatility ratings. The fact that a fund has a rating is not an indication that it is more or less risky or volatile than a fund that does not.
This material is to be used only when preceded or accompanied by a current fund prospectus. Call your representative.
August 31, 2001 (unaudited)
Principal |
|
|
Value |
|||
|
|
|
LONG-TERM OBLIGATIONS--99.8% |
|
|
|
|
|
|
Federal Home Loan Mortgage Corp.--69.1% |
|
|
|
$ |
32,500,000 |
|
6.625%, 8/15/2002 |
|
$ |
33,470,775 |
|
27,700,000 |
|
6.375%, 11/15/2003 |
|
|
29,015,473 |
|
851,603 |
|
6.500%, 12/1/2015 |
|
|
870,236 |
|
||||||
|
|
|
TOTAL |
|
|
63,356,484 |
|
||||||
|
|
|
Federal Home Loan Mortgage Corp. REMIC--6.6% |
|
|
|
|
5,899,701 |
|
Series 1257-G, 7.000%, 9/15/2006 |
|
|
6,027,489 |
|
||||||
|
|
|
Federal National Mortgage Association--12.9% |
|
|
|
|
1,379,027 |
|
6.000%, 5/1/2016 |
|
|
1,384,198 |
|
10,228,164 |
|
6.500%, 7/1/2016 |
|
|
10,419,942 |
|
||||||
|
|
|
TOTAL |
|
|
11,804,140 |
|
||||||
|
|
|
Federal National Mortgage Association REMIC--11.2% |
|
|
|
|
10,000,000 |
|
Series G93-25-H, 6.670%, 12/15/2019 |
|
|
10,316,800 |
|
||||||
|
|
|
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST $89,435,353) |
|
|
91,504,913 |
|
||||||
|
|
|
MUTUAL FUND--0.0% |
|
|
|
|
40,679 |
|
Government Obligations Fund (at net asset value) |
|
|
40,679 |
|
||||||
|
|
|
TOTAL INVESTMENTS (IDENTIFIED COST $89,476,032)1 |
|
$ |
91,545,592 |
|
1 The cost of investments for federal tax purposes amounts to $89,476,032. The net unrealized appreciation of investments on a federal tax basis amounts to $2,069,560 at August 31, 2001.
Note: The categories of investments are shown as a percentage of net assets ($91,698,177) at August 31, 2001.
The following acronym is used throughout this portfolio:
REMIC |
--Real Estate Mortgage Investment Conduit |
See Notes which are an integral part of the Financial Statements
August 31, 2001 (unaudited)
Assets: |
|
|
|
|
|
|
|
Total investments in securities, at value (identified cost $89,476,032) |
|
|
|
|
$ |
91,545,592 |
|
Income receivable |
|
|
|
|
|
772,555 |
|
Receivable for shares sold |
|
|
|
|
|
5,000 |
|
|
|||||||
TOTAL ASSETS |
|
|
|
|
|
92,323,147 |
|
|
|||||||
Liabilities: |
|
|
|
|
|
|
|
Payable for shares redeemed |
|
$ |
203,154 |
|
|
|
|
Income distribution payable |
|
|
401,646 |
|
|
|
|
Accrued expenses |
|
|
20,170 |
|
|
|
|
|
|||||||
TOTAL LIABILITIES |
|
|
|
|
|
624,970 |
|
|
|||||||
Net assets for 9,575,544 shares outstanding |
|
|
|
|
$ |
91,698,177 |
|
|
|||||||
Net Assets Consist of: |
|
|
|
|
|
|
|
Paid in capital |
|
|
|
|
$ |
128,246,223 |
|
Net unrealized appreciation of investments |
|
|
|
|
|
2,069,560 |
|
Accumulated net realized loss on investments |
|
|
|
|
|
(38,628,967 |
) |
Undistributed net investment income |
|
|
|
|
|
11,361 |
|
|
|||||||
TOTAL NET ASSETS |
|
|
|
|
$ |
91,698,177 |
|
|
|||||||
Net Asset Value, Offering Price and Redemption Proceeds Per Share |
|
|
|
|
|
|
|
Institutional Shares: |
|
|
|
|
|
|
|
$6,809,211 ÷ 710,982 shares outstanding |
|
|
|
|
|
$9.58 |
|
|
|||||||
Institutional Service Shares: |
|
|
|
|
|
|
|
$84,888,966 ÷ 8,864,562 shares outstanding |
|
|
|
|
|
$9.58 |
|
|
See Notes which are an integral part of the Financial Statements
Six Months Ended August 31, 2001 (unaudited)
Investment Income: |
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
|
|
|
|
$ |
2,677,298 |
|
|||||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Investment adviser fee |
|
|
|
|
|
$ |
177,048 |
|
|
|
|
Administrative personnel and services fee |
|
|
|
|
|
|
78,137 |
|
|
|
|
Custodian fees |
|
|
|
|
|
|
6,448 |
|
|
|
|
Transfer and dividend disbursing agent fees and expenses |
|
|
|
|
|
|
45,736 |
|
|
|
|
Directors'/Trustees' fees |
|
|
|
|
|
|
5,329 |
|
|
|
|
Auditing fees |
|
|
|
|
|
|
5,749 |
|
|
|
|
Legal fees |
|
|
|
|
|
|
2,329 |
|
|
|
|
Portfolio accounting fees |
|
|
|
|
|
|
28,356 |
|
|
|
|
Distribution services fee--Institutional Service Shares |
|
|
|
|
|
|
107,941 |
|
|
|
|
Shareholder services fee--Institutional Shares |
|
|
|
|
|
|
2,714 |
|
|
|
|
Shareholder services fee--Institutional Service Shares |
|
|
|
|
|
|
107,941 |
|
|
|
|
Share registration costs |
|
|
|
|
|
|
20,937 |
|
|
|
|
Printing and postage |
|
|
|
|
|
|
24,987 |
|
|
|
|
Insurance premiums |
|
|
|
|
|
|
576 |
|
|
|
|
Taxes |
|
|
|
|
|
|
4,438 |
|
|
|
|
Miscellaneous |
|
|
|
|
|
|
3,809 |
|
|
|
|
|
|||||||||||
TOTAL EXPENSES |
|
|
|
|
|
|
622,475 |
|
|
|
|
|
|||||||||||
Waivers and Reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
Waiver of investment adviser fee |
|
$ |
(177,048 |
) |
|
|
|
|
|
|
|
Waiver of distribution services fee--Institutional Service Shares |
|
|
(107,941 |
) |
|
|
|
|
|
|
|
Waiver of shareholder services fee--Institutional Shares |
|
|
(2,714 |
) |
|
|
|
|
|
|
|
Reimbursement of investment adviser fee |
|
|
(500 |
) |
|
|
|
|
|
|
|
Reimbursement of other operating expenses |
|
|
(92,084 |
) |
|
|
|
|
|
|
|
|
|||||||||||
TOTAL WAIVERS AND REIMBURSEMENTS |
|
|
|
|
|
|
(380,287 |
) |
|
|
|
|
|||||||||||
Net expenses |
|
|
|
|
|
|
|
|
|
|
242,188 |
|
|||||||||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
2,435,110 |
|
|||||||||||
Realized and Unrealized Gain on Investments: |
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments |
|
|
|
|
|
|
|
|
|
|
287,361 |
Net change in unrealized appreciation of investments |
|
|
|
|
|
|
|
|
|
|
240,824 |
|
|||||||||||
Net realized and unrealized gain on investments |
|
|
|
|
|
|
|
|
|
|
528,185 |
|
|||||||||||
Change in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
$ |
2,963,295 |
|
See Notes which are an integral part of the Financial Statements
|
Six Months |
|
|
Year Ended |
|
|||
Increase (Decrease) in Net Assets |
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
2,435,110 |
|
|
$ |
5,536,905 |
|
Net realized gain (loss) on investments |
|
|
287,361 |
|
|
|
(570,409 |
) |
Net change in unrealized appreciation/depreciation of investments |
|
|
240,824 |
|
|
|
2,486,497 |
|
|
||||||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS |
|
|
2,963,295 |
|
|
|
7,452,993 |
|
|
||||||||
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
|
|
|
|
|
|
|
Institutional Shares |
|
|
(62,180 |
) |
|
|
(88,012 |
) |
Institutional Service Shares |
|
|
(2,354,623 |
) |
|
|
(5,546,927 |
) |
|
||||||||
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
|
|
(2,416,803 |
) |
|
|
(5,634,939 |
) |
|
||||||||
Share Transactions: |
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
|
7,346,054 |
|
|
|
5,306,758 |
|
Net asset value of shares issued to shareholders in payment of distributions declared |
|
|
978,631 |
|
|
|
3,091,654 |
|
Cost of shares redeemed |
|
|
(6,611,543 |
) |
|
|
(29,696,350 |
) |
|
||||||||
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
|
|
1,713,142 |
|
|
|
(21,297,938 |
) |
|
||||||||
Change in net assets |
|
|
2,259,634 |
|
|
|
(19,479,884 |
) |
|
||||||||
Net Assets: |
|
|
|
|
|
|
|
|
Beginning of period |
|
|
89,438,543 |
|
|
|
108,918,427 |
|
|
||||||||
End of period (including undistributed net investment income of $11,361 and $0, respectively) |
|
$ |
91,698,177 |
|
|
$ |
89,438,543 |
|
|
See Notes which are an integral part of the Financial Statements
(For a Share Outstanding Throughout Each Period)
|
Six Months |
|
|
|
1 |
|
Net Asset Value, Beginning of Period |
|
$9.52 |
|
|
$9.30 |
|
Income From Investment Operations: |
|
|
|
|
|
|
Net investment income |
|
0.28 |
|
|
0.28 |
|
Net realized and unrealized gain on investments |
|
0.05 |
|
|
0.23 |
|
|
||||||
TOTAL FROM INVESTMENT OPERATIONS |
|
0.33 |
|
|
0.51 |
|
|
||||||
Less Distributions: |
|
|
|
|
|
|
Distributions from net investment income |
|
(0.27 |
) |
|
(0.29 |
) |
|
||||||
Net Asset Value, End of Period |
|
$9.58 |
|
|
$9.52 |
|
|
||||||
Total Return2 |
|
3.56 |
% |
|
5.51 |
% |
|
||||||
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
||||||
Expenses |
|
0.30 |
%3 |
|
0.36 |
%3 |
|
||||||
Net investment income |
|
5.77 |
%3 |
|
6.30 |
%3 |
|
||||||
Expense waiver/reimbursement4 |
|
0.86 |
%3 |
|
0.73 |
%3 |
|
||||||
Supplemental Data: |
|
|
|
|
|
|
|
||||||
Net assets, end of period (000 omitted) |
|
$6,809 |
|
|
$2,416 |
|
|
||||||
Portfolio turnover |
|
37 |
% |
|
150 |
% |
|
1 Reflects operations for the period from September 11, 2000 (date of initial public investment) to February 28, 2001.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
(For a Share Outstanding Throughout Each Period)
|
Six Months |
|
|
Year Ended February 28 or 29, |
||||||||||||||
|
8/31/2001 |
|
|
2001 |
|
|
2000 |
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
Net Asset Value, Beginning of Period |
|
$9.52 |
|
|
$9.33 |
|
|
$9.43 |
|
|
$9.52 |
|
|
$9.56 |
|
|
$9.55 |
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.26 |
|
|
0.54 |
|
|
0.46 |
|
|
0.48 |
|
|
0.53 |
|
|
0.52 |
|
Net realized and unrealized gain (loss) on investments |
|
0.06 |
|
|
0.20 |
|
|
(0.10 |
) |
|
(0.09 |
) |
|
(0.04 |
) |
|
0.03 |
|
|
||||||||||||||||||
TOTAL FROM INVESTMENT OPERATIONS |
|
0.32 |
|
|
0.74 |
|
|
0.36 |
|
|
0.39 |
|
|
0.49 |
|
|
0.55 |
|
|
||||||||||||||||||
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
(0.26 |
) |
|
(0.55 |
) |
|
(0.46 |
) |
|
(0.48 |
) |
|
(0.53 |
) |
|
(0.52 |
) |
Distributions in excess of net investment income1 |
|
-- |
|
|
-- |
|
|
-- |
|
|
-- |
|
|
-- |
|
|
(0.02 |
) |
|
||||||||||||||||||
TOTAL DISTRIBUTIONS |
|
(0.26 |
) |
|
(0.55 |
) |
|
(0.46 |
) |
|
(0.48 |
) |
|
(0.53 |
) |
|
(0.54 |
) |
|
||||||||||||||||||
Net Asset Value, End of Period |
|
$9.58 |
|
|
$9.52 |
|
|
$9.33 |
|
|
$9.43 |
|
|
$9.52 |
|
|
$9.56 |
|
|
||||||||||||||||||
Total Return2 |
|
3.43 |
% |
|
8.22 |
% |
|
3.89 |
% |
|
4.20 |
% |
|
5.25 |
% |
|
5.90 |
% |
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.55 |
%3 |
|
0.86 |
% |
|
1.02 |
% |
|
1.02 |
% |
|
1.10 |
% |
|
1.02 |
% |
|
||||||||||||||||||
Net investment income |
|
5.49 |
%3 |
|
5.74 |
% |
|
4.76 |
% |
|
5.03 |
% |
|
5.53 |
% |
|
5.42 |
% |
|
||||||||||||||||||
Expense waiver/reimbursement4 |
|
0.86 |
%3 |
|
0.59 |
% |
|
0.45 |
% |
|
0.33 |
% |
|
0.28 |
% |
|
0.42 |
% |
|
||||||||||||||||||
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$84,889 |
|
|
$87,023 |
|
|
$108,918 |
|
|
$139,968 |
|
|
$183,604 |
|
|
$224,447 |
|
|
||||||||||||||||||
Portfolio turnover |
|
37 |
% |
|
150 |
% |
|
65 |
% |
|
55 |
% |
|
67 |
% |
|
108 |
% |
|
1 Distributions in excess of net investment income were the result of certain book and tax timing differences. These distributions do not represent a return of capital for federal income tax purposes.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
August 31, 2001 (unaudited)
Federated Limited Duration Government Fund, Inc., (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as diversified, open-end management investment company. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is to provide total return.
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.
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 securites are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Directors (the "Directors").
It is the policy of the Fund 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 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 repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Directors. 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. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.
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"). Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value. The Fund offers multiple classes of shares which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, with out distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). The Guide is effective for annual financial statements issued for fiscal years beginning after December 15, 2000. The adoption of the Guide did not have any effect on the financial statements.
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 provision for federal tax is necessary.
At February 28, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $38,918,805 which will reduce the Fund'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 Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:
Expiration Year |
|
Expiration Amount |
2002 |
|
$12,916,149 |
|
||
2003 |
|
$ 21,867,393 |
|
||
2004 |
|
$ 2,738,947 |
|
||
2008 |
|
$ 533,376 |
|
||
2009 |
|
$ 862,940 |
|
The Fund may engage in when-issued or delayed delivery transactions. The Fund 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. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
The Fund may enter into dollar roll transactions, with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage securities to financial institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. Dollar roll transactions involve "to be announced" securities and are treated as short-term financing arrangements which will not exceed 12 months. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund's current yield and total return.
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.
Investment transactions are accounted for on a trade date basis.
At August 31, 2001, par value shares ($0.001 per share) authorized were as follows:
Share Class Name |
|
Number of Par Value |
Institutional Shares |
|
2,500,000,000 |
Institutional Service Shares |
|
2,500,000,000 |
TOTAL |
|
5,000,000,000 |
Transactions in capital stock were as follows:
|
Six Months Ended |
|
Year Ended |
|||||||||||
Institutional Shares: |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
||||||
Shares sold |
|
575,384 |
|
|
$ |
5,499,776 |
|
|
352,692 |
|
|
$ |
3,280,625 |
|
Shares issued to shareholders in payment of distributions declared |
|
528 |
|
|
|
5,024 |
|
|
895 |
|
|
|
8,412 |
|
Shares redeemed |
|
(118,778 |
) |
|
|
(1,131,690 |
) |
|
(99,739 |
) |
|
|
(939,007 |
) |
|
||||||||||||||
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
|
457,134 |
|
|
$ |
4,373,110 |
|
|
253,848 |
|
|
$ |
2,350,030 |
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Year Ended |
|||||||||||
Institutional Service Shares: |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
||||||
Shares sold |
|
193,582 |
|
|
$ |
1,846,278 |
|
|
216,375 |
|
|
$ |
2,026,133 |
|
Shares issued to shareholders in payment of distributions declared |
|
102,248 |
|
|
|
973,607 |
|
|
329,780 |
|
|
|
3,083,242 |
|
Shares redeemed |
|
(575,130 |
) |
|
|
(5,479,853 |
) |
|
(3,081,767 |
) |
|
|
(28,757,343 |
) |
|
||||||||||||||
NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS |
|
(279,300 |
) |
|
|
$(2,659,968 |
) |
|
(2,535,612 |
) |
|
$ |
(23,647,968 |
) |
|
||||||||||||||
NET CHANGE RESULTING FROM SHARE TRANSACTIONS |
|
177,834 |
|
|
$ |
1,713,142 |
|
|
(2,281,764 |
) |
|
$ |
(21,297,938 |
) |
|
1 Reflects operations for the period from September 11, 2000 (date of initial public investment) to February 28, 2001.
Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment Adviser fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion.
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Trust may invest in Government Obligations Fund which is managed by the Adviser. The Adviser has agreed to reimburse certain investment adviser fees as a result of these transactions.
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 a scale that ranges from 0.150% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.
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 Federated 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 Institutional Service Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund's 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.
Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average 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 discretion.
FServ, through its subsidiary FSSC, serves as a transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type and number of accounts and transactions made by shareholders.
FServ Company 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.
Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees of the above companies.
Purchases and sales of long-term U.S. government securities for the six months ended August 31, 2001, were as follows:
Purchases |
|
$ |
34,574,590 |
|
|||
Sales |
|
$ |
32,218,132 |
|
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD J. THOMAS
Treasurer
C. GRANT ANDERSON
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 the possible loss of principal
This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the householding program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of householding. Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of householding at any time by calling 1-800-341-7400.
Federated
World-Class Investment Manager
Federated Limited Duration
Government Fund, Inc.
Federated Investors Funds
5800 Corporate
Drive
Pittsburgh, PA
15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated
Securities Corp., Distributor
Cusip 314213109
Cusip 314213208
Federated is a registered mark of Federated Investors, Inc. 2001 ©Federated Investors, Inc.
25891 (10/01)