Federated Investors
World-Class Investment Manager

Federated U.S. Government Securities Fund: 1-3 Years

SEMI-ANNUAL REPORT

August 31, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

Volatility Rating

The fund has received a "volatility rating" of S1 from Standard & Poor's Ratings Services (S&P), which is current as of October 17, 2002. 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.

WHAT THE RATING MEANS

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 U.S. 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.

HOW THE RATING WAS DETERMINED

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.

ADDITIONAL IMPORTANT FACTORS TO CONSIDER

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.

Portfolio of Investments

August 31, 2002 (unaudited)

Principal Amount				Value
			U.S. TREASURY NOTES--68.4%
$	26,000,000	1	4.250%, 5/31/2003	$	26,497,640
	15,000,000	1	3.875%, 6/30/2003		15,273,600
	15,000,000		5.750%, 8/15/2003		15,568,950
	15,000,000		3.625%, 8/31/2003		15,280,650
	10,000,000	1	2.750%, 9/30/2003		10,112,800
	24,000,000	1	2.750%, 10/31/2003		24,282,480
	10,000,000	1	4.250%, 11/15/2003		10,295,600
	15,000,000		3.000%, 11/30/2003		15,229,050
	27,000,000		3.250%, 12/31/2003		27,515,160
	52,000,000		3.000%, 1/31/2004		52,825,240
	15,000,000	1	4.750%, 2/15/2004		15,622,650
	15,000,000		3.625%, 3/31/2004		15,390,600
	26,000,000		3.375%, 4/30/2004		26,596,440
	17,000,000		3.250%, 5/31/2004		17,362,610
	32,000,000		2.875%, 6/30/2004		32,462,080
	45,000,000		2.250%, 7/31/2004		45,125,550
	20,000,000		2.125%, 8/31/2004		19,990,400
			TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $380,357,467)		385,431,500
Principal Amount				Value
			U.S. GOVERNMENT AGENCIES--28.3%
			Federal Home Loan Banks--26.5%
$	14,500,000		5.755%, 6/24/2003	$	14,975,310
	28,500,000		6.875%, 8/15/2003		29,874,270
	19,000,000		6.375%, 11/14/2003		19,996,360
	20,000,000		5.375%, 1/5/2004		20,875,200
	13,000,000		5.250%, 2/13/2004		13,586,170
	26,000,000	1	4.875%, 4/16/2004		27,126,580
	10,000,000	1	4.750%, 6/28/2004		10,446,800
	12,000,000	1	3.875%, 12/15/2004		12,384,720
			TOTAL		149,265,410
			Federal National Mortgage Association--1.8%
	10,000,000		3.000%, 7/29/2004		10,066,800
			TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $153,432,659)		159,332,210
			MUTUAL FUND--6.4%
	36,289,227		Government Obligations Fund (at net asset value)		36,289,227
			TOTAL INVESTMENTS (IDENTIFIED COST $570,079,353)2	$	581,052,937

1 Certain principal amounts are temporarily on loan to unaffiliated broker/dealers.

2 The cost of investments for federal tax purposes amounts to $570,079,353. The net unrealized appreciation of investments on a federal tax basis amounts to $10,973,584 which is comprised of $10,973,584 appreciation and $0 depreciation at August 31, 2002.

Note: The categories of investments are shown as a percentage of net assets ($563,642,397) at August 31, 2002.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

August 31, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $570,079,353)			$	581,052,937
Income receivable				3,984,413
Receivable for shares sold				467,798
Cash held as collateral for securities lending				138,953,654
TOTAL ASSETS				724,458,802
Liabilities:
Payable for investments purchased	$	19,933,722
Payable for shares redeemed		19,306
Payable to bank		386,548
Income distribution payable		1,394,178
Payable on collateral due to brokers		138,953,654
Payable to investment adviser		12,490
Accrued expenses		116,507
TOTAL LIABILITIES				160,816,405
Net assets for 52,267,338 shares outstanding			$	563,642,397
Net Assets Consist of:
Paid in capital			$	560,454,640
Net unrealized appreciation of investments				10,973,584
Accumulated net realized loss on investments				(7,773,649	)
Distributions in excess of net investment income				(12,178	)
TOTAL NET ASSETS			$	563,642,397
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$372,813,633 ÷ 34,571,537 shares outstanding				$10.78
Institutional Service Shares:
$100,616,153 ÷ 9,330,389 shares outstanding				$10.78
Class Y Shares:
$90,212,611 ÷ 8,365,412 shares outstanding				$10.78

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended August 31, 2002 (unaudited)

Investment Income:
Interest (including interest on securities loaned of $37, 528)							$	9,746,712
Expenses:
Investment adviser fee				$	1,043,727
Administrative personnel and services fee					196,221
Custodian fees					12,813
Transfer and dividend disbursing agent fees and expenses					88,450
Directors'/Trustees' fees					7,031
Auditing fees					6,784
Legal fees					2,088
Portfolio accounting fees					65,095
Distribution services fee--Institutional Service Shares					100,980
Shareholder services fee--Institutional Shares					451,461
Shareholder services fee--Institutional Service Shares					100,980
Share registration costs					29,156
Printing and postage					16,315
Insurance premiums					522
Miscellaneous					8,322
TOTAL EXPENSES					2,129,945
Waivers and Reimbursement:
Waiver of investment adviser fee	$	(629,378	)
Waiver of transfer and dividend disbursing agent fees and expenses		(8,921	)
Waiver of shareholder services fee--Institutional Shares		(18,059	)
Waiver of shareholder services fee--Institutional Service Shares		(4,039	)
Reimbursement of investment adviser fee		(42,644	)
TOTAL WAIVERS					(703,041	)
Net expenses								1,426,904
Net investment income								8,319,808
Realized and Unrealized Gain on Investments:
Net realized gain on investments								2,412,286
Net change in unrealized appreciation of investments								1,921,995
Net realized and unrealized gain on investments								4,334,281
Change in net assets resulting from operations							$	12,654,089

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 8/31/2002			Year Ended 2/28/2002
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	8,319,808		$	20,552,636
Net realized gain on investments		2,412,286			5,956,821
Net change in unrealized appreciation of investments		1,921,995			1,726,061
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		12,654,089			28,235,518
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(5,780,912	)		(16,533,876	)
Institutional Service Shares		(1,179,615	)		(2,378,917	)
Class Y Shares		(1,374,893	)		(1,641,755	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(8,335,420	)		(20,554,548	)
Share Transactions:
Proceeds from sale of shares		201,509,314			293,240,869
Net asset value of shares issued to shareholders in payment of distributions declared		4,821,809			13,883,830
Cost of shares redeemed		(153,979,379	)		(262,649,021	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		52,351,744			44,475,678
Change in net assets		56,670,413			52,156,648
Net Assets:
Beginning of period		506,971,984			454,815,336
End of period (including undistributed net investment income of $3,434 at the year ended February 28, 2002)	$	563,642,397		$	506,971,984

See Notes which are an integral part of the Financial Statements

Financial Highlights--Institutional Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)			Year Ended February 28 or 29,
	8/31/2002			2002			2001			2000			1999			1998
Net Asset Value, Beginning of Period	$10.70			$10.53			$10.28			$10.44			$10.41			$10.32
Income From Investment Operations:
Net investment income	0.17			0.46			0.60			0.50			0.50			0.56
Net realized and unrealized gain (loss) on investments	0.08			0.17			0.25			(0.16	)		0.03			0.09
TOTAL FROM INVESTMENT OPERATIONS	0.25			0.63			0.85			0.34			0.53			0.65
Less Distributions:
Distributions from net investment income	(0.17	)		(0.46	)		(0.60	)		(0.50	)		(0.50	)		(0.56	)
Net Asset Value, End of Period	$10.78			$10.70			$10.53			$10.28			$10.44			$10.41
Total Return1	2.39	%		6.07	%		8.51	%		3.29	%		5.19	%		6.41	%
Ratios to Average Net Assets:
Expenses	0.54	%2		0.54	%		0.54	%		0.54	%		0.54	%		0.54	%
Net investment income	3.19	%2		4.34	%		5.76	%		4.81	%		4.78	%		5.36	%
Expense waiver/reimbursement3	0.27	%2		0.27	%		0.25	%		0.28	%		0.27	%		0.26	%
Supplemental Data:
Net assets, end of period (000 omitted)	$372,823		$365,090			$399,582			$461,506			$591,317			$597,549
Portfolio turnover	40	%		99	%		129	%		171	%		207	%		118	%

1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

2 Computed on an annualized basis.

3 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

Financial Highlights--Institutional Service Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)			Year Ended February 28 or 29,
	8/31/2002			2002			2001			2000			1999			1998
Net Asset Value, Beginning of Period	$10.70			$10.53			$10.28			$10.44			$10.41			$10.32
Income From Investment Operations:
Net investment income	0.16			0.43			0.57			0.48			0.47			0.53
Net realized and unrealized gain (loss) on investments	0.08			0.17			0.25			(0.17	)		0.03			0.09
TOTAL FROM INVESTMENT OPERATIONS	0.24			0.60			0.82			0.31			0.50			0.62
Less Distributions:
Distributions from net investment income	(0.16	)		(0.43	)		(0.57	)		(0.47	)		(0.47	)		(0.53	)
Net Asset Value, End of Period	$10.78			$10.70			$10.53			$10.28			$10.44			$10.41
Total Return1	2.26	%		5.81	%		8.25	%		3.03	%		4.93	%		6.15	%
Ratios to Average Net Assets:
Expenses	0.79	%2		0.79	%		0.79	%		0.79	%		0.79	%		0.79	%
Net investment income	2.92	%2		4.04	%		5.55	%		4.48	%		4.50	%		5.11	%
Expense waiver/reimbursement3	0.27	%2		0.27	%		0.25	%		0.28	%		0.27	%		0.26	%
Supplemental Data:
Net assets, end of period (000 omitted)	$100,618		$66,642			$55,233			$29,255			$50,527			$33,631
Portfolio turnover	40	%		99	%		129	%		171	%		207	%		118	%

1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

2 Computed on an annualized basis.

3 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

Financial Highlights--Class Y Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 8/31/2002		Period Ended 2/28/2002	1
Net Asset Value, Beginning of Period	$10.70		$10.60
Income From Investment Operations:
Net investment income	0.19		0.25
Net realized and unrealized gain on investments	0.08		0.10
TOTAL FROM INVESTMENT OPERATIONS	0.27		0.35
Less Distributions:
Distributions from net investment income	(0.19	)	(0.25	)
Net Asset Value, End of Period	$10.78		$10.70
Total Return2	2.51	%	3.32	%
Ratios to Average Net Assets:
Expenses	0.30	%3	0.30	%3
Net investment income	3.43	%3	4.03	%3
Expense waiver/reimbursement4	0.26	%3	0.26	%3
Supplemental Data:
Net assets, end of period (000 omitted)	$90,215		$75,240
Portfolio turnover	40	%	99	%

1 Reflects operations for the period from August 1, 2001 (date of initial public investment) to February 28, 2002.

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

Notes to Financial Statements

August 31, 2002 (unaudited)

ORGANIZATION

Federated U.S. Government Securities Fund: 1-3 Years (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund offers three classes of shares: Institutional Shares, Institutional Service Shares and Class Y Shares. The investment objective of the Fund is to provide current income.

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 ("GAAP").

Investment Valuation

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 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 Trustees (the "Trustees").

Repurchase Agreements

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 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. 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.

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. All discounts/premiums are accreted/amortized for financial reporting purposes as required. 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, without 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.

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended (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, 2002, the Fund, for federal tax purposes, had a capital loss carryforward of $10,185,935, 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
2003	$  775,050
2008	$  6,837,276
2009	$2,573,609

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 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.

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. Collateral for securities loaned must be in cash or government securities. Collateral is maintained at a minimum level of 100% of the market value on investments loaned, plus interest, if applicable. In accordance with the Fund's securities lending agreement, the market value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the custodian, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of August 31, 2002, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned	Market Value of Collateral
$136,349,888	$138,953,654

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 a trade date basis.

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 capital stock were as follows:

	Six Months Ended 8/31/2002					Year Ended 2/28/2002
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	7,598,611		$	81,493,095		13,028,745		$	138,446,518
Shares issued to shareholders in payment of distributions declared	272,362			2,913,442		962,189			10,221,970
Shares redeemed	(7,431,399	)		(79,566,091	)	(17,823,738	)		(189,282,465	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	439,574		$	4,840,446		(3,832,804	)	$	(40,613,977	)
	Six Months Ended 8/31/2002					Year Ended 2/28/2002
Institutional Service Shares:	Shares			Amount		Shares			Amount
Shares sold	6,952,884		$	74,546,442		4,940,228		$	52,638,339
Shares issued to shareholders in payment of distributions declared	72,325			774,482		190,011			2,020,095
Shares redeemed	(3,925,111	)		(42,124,594	)	(4,147,773	)		(44,226,955	)
NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS	3,100,098		$	33,196,330		982,466		$	10,431,479
	Six Months Ended 8/31/2002					Period Ended 2/28/20021
Class Y Shares:	Shares			Amount		Shares			Amount
Shares sold	4,240,119		$	45,469,777		9,604,097		$	102,156,012
Shares issued to shareholders in payment of distributions declared	105,983			1,133,885		153,377			1,641,765
Shares redeemed	(3,014,792	)		(32,288,694	)	(2,723,372	)		(29,139,601	)
NET CHANGE RESULTING FROM CLASS Y SHARE TRANSACTIONS	1,331,310		$	14,314,968		7,034,102		$	74,658,176
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	4,870,982		$	52,351,744		4,183,764		$	44,475,678

1 For the period from August 1, 2001 (date of initial public investment) to February 28, 2002.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

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. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Pursuant to an Exemptive Order issued by the SEC, the Fund 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.

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 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.

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 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 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 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.

Transfer and Dividend Disbursing Agent Fees and Expenses

FServ, through its subsidiary FSSC, serves as 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. 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.

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 Trust are Officers and Directors or Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of long-term U.S. government securities for the six months ended August 31, 2002, were as follows:

Purchases	$	247,413,371
Sales	$	199,700,378

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.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

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 U.S. Government Securities Fund: 1-3 Years
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 31428M100
Cusip 31428M209
Cusip 31425M308

G01436-01 (10/02)