Federated Hermes Short-Term Government Fund SS Class NCSR Certified annual shareholder report (management investment company)





                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form N-CSR
   Certified Shareholder Report of Registered Management Investment Companies




                                    811-3947

                      (Investment Company Act File Number)


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

               (Exact Name of Registrant as Specified in Charter)




                              5800 Corporate Drive
                       Pittsburgh, Pennsylvania 15237-7000


                                 (412) 288-1900
                         (Registrant's Telephone Number)


                           John W. McGonigle, Esquire
                            Federated Investors Tower
                               1001 Liberty Avenue
                       Pittsburgh, Pennsylvania 15222-3779
                     (Name and Address of Agent for Service)
                (Notices should be sent to the Agent for Service)






                        Date of Fiscal Year End: 2/28/05


               Date of Reporting Period: Fiscal year ended 2/28/05
                                         -------------------------


Item 1.     Reports to Stockholders

Federated
World-Class Investment Manager

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

ANNUAL SHAREHOLDER REPORT

February 28, 2005

Institutional Shares
Institutional Service Shares
Class Y Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND FUND OFFICERS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Federated Investors 50 Years of Growth & Innovation

Financial Highlights - Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended February 28 or 29	2005		2004		2003		2002		2001
Net Asset Value, Beginning of Period	$10.77		$10.82		$10.70		$10.53		$10.28
Income From Investment Operations:
Net investment income	0.21		0.20		0.31		0.46		0.60
Net realized and unrealized gain (loss) on investments	(0.23	)	(0.05	)	0.12		0.17		0.25
TOTAL FROM INVESTMENT OPERATIONS	(0.02	)	0.15		0.43		0.63		0.85
Less Distributions:
Distributions from net investment income	(0.21	)	(0.20	)	(0.31	)	(0.46	)	(0.60	)
Net Asset Value, End of Period	$10.54		$10.77		$10.82		$10.70		$10.53
Total Return¹	(0.15	)%	1.40	%	4.10	%	6.07	%	8.51	%

Ratios to Average Net Assets:
Expenses	0.54	%	0.54	%	0.54	%	0.54	%	0.54	%
Net investment income	1.99	%	1.86	%	2.88	%	4.34	%	5.76	%
Expense waiver/reimbursement²	0.29	%	0.26	%	0.27	%	0.27	%	0.25	%
Supplemental Data:
Net assets, end of period (000 omitted)	$260,264		$356,449		$456,096		$365,090		$399,582
Portfolio turnover	36	%	81	%	76	%	99	%	129	%

1 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

2 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)

Year Ended February 28 or 29	2005		2004		2003		2002		2001
Net Asset Value, Beginning of Period	$10.77		$10.82		$10.70		$10.53		$10.28
Income From Investment Operations:
Net investment income	0.19		0.17		0.28		0.43		0.57
Net realized and unrealized gain (loss) on investments	(0.23	)	(0.05	)	0.13		0.17		0.25
TOTAL FROM INVESTMENT OPERATIONS	(0.04	)	0.12		0.41		0.60		0.82
Less Distributions:
Distributions from net investment income	(0.19	)	(0.17	)	(0.29	)	(0.43	)	(0.57	)
Net Asset Value, End of Period	$10.54		$10.77		$10.82		$10.70		$10.53
Total Return¹	(0.40	)%	1.14	%	3.84	%	5.81	%	8.25	%

Ratios to Average Net Assets:
Expenses	0.79	%	0.79	%	0.79	%	0.79	%	0.79	%
Net investment income	1.76	%	1.61	%	2.63	%	4.04	%	5.55	%
Expense waiver/reimbursement²	0.29	%	0.26	%	0.27	%	0.27	%	0.25	%
Supplemental Data:
Net assets, end of period (000 omitted)	$49,780		$53,608		$82,109		$66,642		$55,233
Portfolio turnover	36	%	81	%	76	%	99	%	129	%

2 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)

Year Ended February 28 or 29	2005		2004		2003		2002	¹
Net Asset Value, Beginning of Period	$10.77		$10.82		$10.70		$10.60
Income From Investment Operations:
Net investment income	0.24		0.23		0.34		0.25
Net realized and unrealized gain (loss) on investments	(0.23	)	(0.05	)	0.12		0.10
TOTAL FROM INVESTMENT OPERATIONS	0.01		0.18		0.46		0.35
Less Distributions:
Distributions from net investment income	(0.24	)	(0.23	)	(0.34	)	(0.25	)
Net Asset Value, End of Period	$10.54		$10.77		$10.82		$10.70
Total Return²	0.09	%	1.64	%	4.35	%	3.32	%

Ratios to Average Net Assets:
Expenses	0.30	%	0.30	%	0.30	%	0.30	%³
Net investment income	2.25	%	2.07	%	3.12	%	4.03	%³
Expense waiver/reimbursement⁴	0.28	%	0.25	%	0.26	%	0.26	%³
Supplemental Data:
Net assets, end of period (000 omitted)	$143,676		$130,725		$100,036		$75,240
Portfolio turnover	36	%	81	%	76	%	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, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

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

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees; to the extent applicable, distribution (12b-1) fees and/or shareholder services fees; and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2004 to February 28, 2005.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are provided to enable you to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 9/1/2004	Ending Account Value 2/28/2005	Expenses Paid During Period¹
Actual:
Institutional Shares	$1,000	$ 996.90	$2.67
Institutional Service Shares	$1,000	$ 995.60	$3.91
Y Shares	$1,000	$ 998.00	$1.49
Hypothetical (assuming a 5% return before expenses):
Institutional Shares	$1,000	$1,022.12	$2.71
Institutional Service Shares	$1,000	$1,020.88	$3.96
Y Shares	$1,000	$1,023.31	$1.51

1 Expenses are equal to the Fund's annualized expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized expense ratios are as follows:

Institutional Shares		0.54%
Institutional Service Shares		0.79%
Y Shares		0.30%

Management's Discussion of Fund Performance

Federated U.S. Government Securities Fund: 1-3 Years (the "fund") invests exclusively in short-term U.S. government securities that include U.S. Treasury and government agency obligations. The fund's average duration¹ is managed within 20% of the duration of the Merrill Lynch 1-3 Year Treasury Index (ML1-3T).² Standard & Poor's has maintained the fund's "AAAf" credit rating.³

The fund's total return for the fiscal year ending February 28, 2005 was 0.09% for Class Y Shares, (0.15)% for Institutional Shares, and (0.40)% for Institutional Service Shares. The total return for Class Y Shares consisted of 2.23% of income and 2.14% depreciation in the net asset value of the shares. The total return of the ML1-3T was (0.04)% for the 12-month reporting period and does not reflect transaction costs incurred by a fund. The fund's investment strategy focused on duration management, sector allocation, and yield curve strategy.

Short-term Treasury yields increased and the coupon curve flattened during the reporting period as the Federal Reserve Board (the "Fed") embarked on a tightening cycle for the first time in over four years. The Federal Funds Target Rate was increased six times from the four-decade low of 1.00% to 2.50% and the two-year Treasury note yield increased from 1.64% to 3.60%.

DURATION

The fund's duration was below neutral in expectation of continued economic growth and rising yields, ending the reporting period at 1.4 years. Although short-term yields did rise and the fund's share price declined significantly less than the index price, the fund earned less income, resulting in duration only slightly contributing to fund performance.

1 Duration is the measure of a security's price sensitivity to changes in interest rates. Securities with longer duration are more sensitive to changes in interest rates than securities of shorter durations.

2 The ML1-3T is an unmanaged index tracking short-term U.S. Treasury securities with maturities between 1 and 2.99 years. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Investments cannot be made directly in an index.

3 "AAAf" rating by Standard & Poor's means that the fund's portfolio holdings and counterparties provide extremely strong protection against losses from credit defaults. Ratings do not remove market risks and are subject to change.

SECTOR

Although the majority of the fund remained in Treasury securities, approximately 20% of the fund was invested in government agency securities during the reporting period. Federal National Mortgage Association accounting improprieties were disclosed by the Office of Federal Housing Enterprise Oversight (OFHEO) in late September 2004, but continued strong demand and limited supply resulted in agency securities outperforming Treasury securities.

YIELD CURVE

The fund's portfolio structure was slightly more barbelled than the benchmark which positively contributed to the fund's performance as the one- to three-year Treasury yield spread narrowed.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated U.S. Government Securities Fund: 1-3 Years (Institutional Shares) (the "Fund") from February 28, 1995 to February 28, 2005, compared to the Merrill Lynch 1-3 Year Treasury Index (ML1-3T),² the Merrill Lynch 1-Year Treasury Index (ML1T),²the Merrill Lynch 2-Year Treasury Index (ML2T),²and the Lipper Short U.S. Government Funds Average (LSUSGFA).³

Average Annual Total Return for the Period Ended 2/28/2005
1 Year	(0.15	)%
5 Years	3.94	%
10 Years	4.68	%

Performance data quoted represents past performance which is no guarantee 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. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The Fund's performance assumes the reinvestment of all dividends and distributions. The ML1-3T, ML1T, ML2T, and the LSUSGFA have been adjusted to reflect reinvestment of dividends on securities in the index and average.

2 The ML1-3T, ML1T, and ML2T are not adjusted to reflect taxes, sales charges, expenses, or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The ML1T and ML2T are unmanaged indexes tracking U.S. treasury securities. The ML1-3T is an unmanaged index tracking short-term U.S. treasury securities with maturities between 1 and 2.99 years. These indexes are produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Investments cannot be made directly in an index.

3 The LSUSGFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling in the respective categories indicated. These figures do not reflect any sales charges.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SERVICE SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated U.S. Government Securities Fund: 1-3 Years (Institutional Service Shares) (the "Fund") from February 28, 1995 to February 28, 2005, compared to the Merrill Lynch 1-3 Year Treasury Index (ML1-3T),² Merrill Lynch 1-Year Treasury Index (ML1T),² the Merrill Lynch 2-Year Treasury Index (ML2T)² and the Lipper Short U.S. Government Funds Average (LSUSGFA).³

Average Annual Total Return for the Period Ended 2/28/2005
1 Year	(0.40	)%
5 Years	3.68	%
10 Years	4.41	%

2 The ML1-3T, ML1T, and ML2T are not adjusted to reflect taxes, sales charges, expenses, or other fees that the SEC requires to be reflected in the Fund's performance. The ML1T and ML2T are unmanaged indexes tracking U.S. Treasury securities. The ML1-3T is an unmanaged index tracking short-term U.S. treasury securities with maturities between 1 and 2.99 years. These indexes are produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Investments cannot be made directly in an index.

GROWTH OF A $5,000,000 INVESTMENT - CLASS Y SHARES

The graph below illustrates the hypothetical investment of $5,000,000¹ in the Federated U.S. Government Securities Fund: 1-3 Years (Class Y Shares) (the "Fund") from August 1, 2001 (start of performance) to February 28, 2005, compared to the Merrill Lynch 1-3 Year Treasury Index (ML1-3T),² the Merrill Lynch 1-Year Treasury Index (ML1T),²the Merrill Lynch 2-Year Treasury Index (ML2T),² and the Lipper Short U.S Government Funds Average (LSUSGFA).³

Average Annual Total Return for the Period Ended 2/28/2005
1 Year		0.09%
Start of Performance (8/1/2001)		2.61%

2 The ML1-3T, ML1T, and ML2T are not adjusted to reflect taxes, sales charges, expenses, or other fees that the SEC requires to be reflected in the Fund's performance. The ML1T and ML2T are unmanaged indexes tracking U.S. treasury securities. The ML1-3T is an unmanaged index tracking short-term U.S. treasury securities with maturities between 1 and 2.99 years. These indexes are produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Investments cannot be made directly in an index.

Portfolio of Investments Summary Table

At February 28, 2005, the Fund's portfolio composition¹ was as follows:

Sector	Percentage of Total Net Assets
U.S. Treasury Securities	73.8	%
U.S. Government Agency Securities	22.5	%
Cash Equivalents²	53.1	%
Other Assets and Liabilities--Net³	(49.4	)%
TOTAL	100.0	%

1 See the Fund's Prospectus for a description of the principal types of securities in which the Fund invests.

2 Cash Equivalents include repurchase agreements, as more fully described in the Fund's prospectus, which are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed-upon time and price. Includes repurchase agreements purchased with cash collateral received in securities lending transactions (48.7%).

3 See Statement of Assets and Liabilities.

Portfolio of Investments

February 28, 2005

Principal Amount				Value
			U.S. TREASURY NOTES--73.8%
$	40,000,000	¹	1.875%, 12/31/2005	$	39,578,000
	19,000,000	¹	5.625%, 2/15/2006		19,434,910
	22,000,000	¹	1.500%, 3/31/2006		21,591,020
	28,000,000		2.000%, 5/15/2006		27,571,320
	38,000,000		7.000%, 7/15/2006		39,828,560
	17,000,000	¹	2.375%, 8/15/2006		16,747,720
	27,900,000		2.375%, 8/31/2006		27,472,851
	23,000,000	¹	3.500%, 11/15/2006		23,010,810
	27,900,000	¹	2.875%, 11/30/2006		27,603,702
	15,000,000	¹	3.000%, 12/31/2006		14,854,650
	24,000,000	¹	3.125%, 5/15/2007		23,748,720
	19,000,000	¹	3.250%, 8/15/2007		18,815,890
	30,000,000	¹	3.000%, 11/15/2007		29,460,900
	5,000,000		3.375%, 2/15/2008		4,948,450
			TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $336,479,536)		334,667,503
			GOVERNMENT AGENCIES--22.5%
			Federal Home Loan Bank System--22.5%
	12,000,000		3.625%, 11/15/2005		12,029,280
	26,000,000		2.500%, 4/11/2006		25,727,000
	15,000,000		2.875%, 5/22/2006		14,885,550
	19,800,000		3.500%, 8/15/2006		19,774,656
	20,000,000		3.125%, 11/15/2006		19,815,800
	10,000,000		3.500%, 5/15/2007		9,937,300
			TOTAL		102,169,586
			Federal Home Loan Mortgage Corporation--0.0%
	180,000		3.500%, 9/15/2007		178,427
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $102,727,050)		102,348,013
Principal Amount				Value
			REPURCHASE AGREEMENTS--53.1%
$	19,876,000		Interest in $2,000,000,000 joint repurchase agreement with Barclays Capital, Inc., 2.640%, dated 2/28/2005 to be repurchased at $19,877,458 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 11/15/2030, collateral market value $2,040,000,470	$	19,876,000
	75,000,000		Interest in $1,000,000,000 joint repurchase agreement with Banc of America Securities LLC, 2.640%, dated 2/28/2005 to be repurchased at $75,005,500 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2035, collateral market value $1,022,355,288 (held as collateral for securities lending)		75,000,000
	75,000,000		Interest in $2,000,000,000 joint repurchase agreement with Barclays Capital, Inc., 2.640%, dated 2/28/2005 to be repurchased at $75,005,500 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 11/15/2030, collateral market value $2,040,000,470 (held as collateral for securities lending)		75,000,000
	71,243,000		Interest in $1,000,000,000 joint repurchase agreement with Westdeutsche Landesbank Girozentrale, New York, 2.640%, dated 2/28/2005 to be repurchased at $71,248,224 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 11/1/2043, collateral market value $1,030,000,000 (held as collateral for securities lending)		71,243,000
			TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST)		241,119,000
			TOTAL INVESTMENTS--149.4% (IDENTIFIED COST $680,325,586)²		678,134,516
			OTHER ASSETS AND LIABILITIES - NET--(49.4%)		(224,415,175	)
			TOTAL NET ASSETS--100%	$	453,719,341

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

2 The cost of investments for federal tax purposes amounts to $680,325,586.

Note: The categories of investments are shown as a percentage of total net assets at February 28, 2005.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

February 28, 2005

Assets:
Investments in securities	$	437,015,516
Investments in repurchase agreements		241,119,000
Total investments in securities, at value including $214,978,462 of securities loaned (identified cost $680,325,586)			$	678,134,516
Income receivable				2,662,435
Receivable for shares sold				102,618
TOTAL ASSETS				680,899,569
Liabilities:
Payable for investments purchased		4,952,229
Payable for shares redeemed		608,591
Income distribution payable		229,560
Payable to bank		923
Payable for Directors'/Trustees' fees		2,560
Payable for distribution services fee (Note 5)		9,727
Payable for shareholder services fee (Note 5)		47,378
Payable for collateral due to broker		221,243,000
Accrued expenses		86,260
TOTAL LIABILITIES				227,180,228
Net assets for 43,036,853 shares outstanding			$	453,719,341
Net Assets Consist of:
Paid-in capital			$	462,656,947
Net unrealized depreciation of investments				(2,191,070	)
Accumulated net realized loss on investments				(6,748,053	)
Undistributed net investment income				1,517
TOTAL NET ASSETS			$	453,719,341
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$260,263,714 ÷ 24,686,792 shares outstanding, no par value, unlimited shares authorized				$10.54
Institutional Service Shares:
$49,779,885 ÷ 4,721,781 shares outstanding, no par value, unlimited shares authorized				$10.54
Class Y Shares:
$143,675,742 ÷ 13,628,280 shares outstanding, no par value, unlimited shares authorized				$10.54

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended February 28, 2005

Investment Income:
Interest (including income on securities loaned of $210,393)							$	12,829,653
TOTAL INCOME								12,829,653
Expenses:
Investment adviser fee (Note 5)				$	2,020,739
Administrative personnel and services fee (Note 5)					405,072
Custodian fees					21,065
Transfer and dividend disbursing agent fees and expenses (Note 5)					200,650
Directors'/Trustees' fees					14,507
Auditing fees					17,948
Legal fees					6,856
Portfolio accounting fees					116,995
Distribution services fee--Institutional Service Shares (Note 5)					124,994
Shareholder services fee--Institutional Shares (Note 5)					800,436
Shareholder services fee--Institutional Service Shares (Note 5)					124,994
Share registration costs					60,334
Printing and postage					41,051
Insurance premiums					19,835
Miscellaneous					18,592
TOTAL EXPENSES					3,994,068
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(1,375,116	)
Waiver of administrative personnel and services fee		(20,121	)
Waiver of transfer and dividend disbursing agent fees and expenses		(8,097)
Waiver of shareholder services fee--Institutional Shares		(42,539	)
Waiver of shareholder services fee--Institutional Service Shares		(5,000	)
TOTAL WAIVERS AND REIMBURSEMENT					(1,450,873	)
Net expenses								2,543,195
Net investment income								10,286,458
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(4,957,434	)
Net change in unrealized appreciation of investments								(6,158,792	)
Net realized and unrealized loss on investments								(11,116,226	)
Change in net assets resulting from operations							$	(829,768	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended February 28 or 29		2005			2004
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	10,286,458		$	11,513,762
Net realized gain (loss) on investments		(4,957,434	)		3,147,251
Net change in unrealized appreciation/depreciation of investments		(6,158,792	)		(5,941,291	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(829,768	)		8,719,722
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(6,362,869	)		(7,823,775	)
Institutional Service Shares		(878,725	)		(1,113,019	)
Class Y Shares		(3,043,010	)		(2,575,416	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(10,284,604	)		(11,512,210	)
Share Transactions:
Proceeds from sale of shares		330,146,765			364,164,267
Net asset value of shares issued to shareholders in payment of distributions declared		7,444,069			7,989,422
Cost of shares redeemed		(413,540,028	)		(466,819,321	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(75,949,194	)		(94,665,632	)
Change in net assets		(87,063,566	)		(97,458,120	)
Net Assets:
Beginning of period		540,782,907			638,241,027
End of period (including undistributed (distributions in excess of) net investment income of $1,517 and $(337), respectively)	$	453,719,341		$	540,782,907

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

February 28, 2005

1. 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.

2. 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) in the United States of America.

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 accordance with procedures established by and under general supervision of 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 the 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, Gains and Losses, Expenses, and Distributions

Interest income and expenses are accrued daily. 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. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class bears certain expenses unique to that class such as distribution and shareholder services fees. 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.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is 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 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 is invested in cash or invested in short-term securities, including repurchase agreements. Collateral is maintained at a minimum level of 102% of the market value of investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the securities lending agent, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of February 28, 2005, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$214,978,462		$221,243,000

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. Realized gains and losses from investment transactions are recorded on an identified cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended February 28 or 29	2005					2004
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	25,565,827		$	272,998,495		14,359,133		$	154,941,511
Shares issued to shareholders in payment of distributions declared	345,490			3,677,231		411,363			4,434,700
Shares redeemed	(34,306,513	)		(365,837,725	)	(23,846,624	)		(257,233,960	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(8,395,196	)	$	(89,161,999	)	(9,076,128	)	$	(97,857,749	)

Year Ended February 28 or 29	2005					2004
Institutional Service Shares:	Shares			Amount		Shares			Amount
Shares sold	1,832,783		$	19,508,845		6,718,584		$	72,407,255
Shares issued to shareholders in payment of distributions declared	70,678			752,024		91,036			981,585
Shares redeemed	(2,157,034	)		(22,974,440	)	(9,424,140	)		(101,587,043	)
NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS	(253,573	)	$	(2,713,571	)	(2,614,520	)	$	(28,198,203	)

Year Ended February 28 or 29	2005					2004
Class Y Shares:	Shares			Amount		Shares			Amount
Shares sold	3,534,815		$	37,639,425		12,663,559		$	136,815,501
Shares issued to shareholders in payment of distributions declared	283,304			3,014,814		238,825			2,573,137
Shares redeemed	(2,322,736	)		(24,727,863	)	(10,016,274	)		(107,998,318	)
NET CHANGE RESULTING FROM CLASS Y SHARE TRANSACTIONS	1,495,383		$	15,926,376		2,886,110		$	31,390,320
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(7,153,386	)	$	(75,949,194	)	(8,804,538	)	$	(94,665,632	)

4. FEDERAL TAX INFORMATION

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended February 28 or 29, 2005 and 2004 was as follows:

		2005		2004
Ordinary income		$10,284,604		$11,512,210

As of February 28, 2005, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	231,077
Net unrealized depreciation	$	2,191,070
Capital loss carryforward	$	4,169,892

At February 28, 2005, the cost of investments for federal tax purposes was $680,325,586. The net unrealized depreciation of investments for federal tax purposes was $2,191,070. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $2,747 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,193,817.

At February 28, 2005, the Fund had a capital loss carryforward of $4,169,892 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of 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
2009		$1,790,620
2013		$2,379,272

Under current tax regulations, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of February 28, 2005, for federal income tax purposes, post-October losses of $2,578,162 were deferred to March 1, 2005.

5. 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.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of all Federated funds as specified below:

Maximum Administrative Fee		Average Aggregate Daily Net Assets of the Federated Funds
0.150%		on the first $5 billion
0.125%		on the next $5 billion
0.100%		on the next $10 billion
0.075%		on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion.

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 daily net assets of the Fund's Institutional Service Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses of up to 0.25% of average daily net assets, 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. Rather than paying investment professionals directly, the Fund may pay fees to FSC and FSC will use the fees to compensate investment professionals. For the year ended February 28, 2005, FSC retained $124,994 of fees paid by the Fund.

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 the average daily net assets of the Fund's Institutional Shares and Institutional Service Shares 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. Rather than paying investment professionals directly, the Fund may pay fees to FSSC and FSSC will use the fees to compensate investment professionals. For the year ended February 28, 2005, FSSC retained $318,414 of fees paid by the Fund.

Transfer and Dividend Disbursing Agent Fees and Expenses

Prior to July 1, 2004, Federated Services Company (FServ), through its subsidiary FSSC, served as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC was based on the size, type, and number of accounts and transactions made by shareholders. The fee paid to FSSC during the reporting period was $57,527, after voluntary waiver, if applicable.

General

Certain of the Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies.

6. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, "Federated"), along with various investment companies sponsored by Federated (Funds) were named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland seeking damages of unspecified amounts. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. Federated and various Funds have also been named as defendants in several additional lawsuits, the majority of which are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees, and seeking damages of unspecified amounts. The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and will respond appropriately. Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these recent lawsuits and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

7. SUBSEQUENT EVENT

On March 31, 2005, FServ made a contribution to the Fund of $527,968 resulting from an administrative delay in the implementation of contractual terms of shareholder service fee agreements. This contribution will be presented as a reimbursement of shareholder service fees in the fiscal year ending February 28, 2006.

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS:

We have audited the accompanying statement of assets and liabilities of Federated U.S. Government Securities Fund: 1-3 Years (the "Fund"), including the portfolio of investments, as of February 28, 2005 and 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 financial highlights for each of the periods indicated therein. 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 standards of the Public Company Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2005, by correspondence with the custodian and brokers or by appropriate auditing procedures where replies from brokers were not received. 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 Federated U.S. Government Securities Fund: 1-3 Years at February 28, 2005, 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 indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
April 8, 2005

Board of Trustees and Fund Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA. As of December 31, 2004, the Fund comprised one portfolio, and the Federated Fund Complex consisted of 44 investment companies (comprising 133 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND


Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 CHAIRMAN AND TRUSTEE Began serving: January 1984		Principal Occupations : Chairman and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc. Previous Positions : Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.

J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: July 1999		Principal Occupations : Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions : President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp., and Passport Research, Ltd.


Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 1987		Principal Occupations : Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held : Member, National Board of Trustees, Leukemia Society of America. Previous Positions : Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is "interested" because his son-in-law is employed by the Fund's principal underwriter, Federated Securities Corp.

INDEPENDENT TRUSTEES BACKGROUND


Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: October 1995		Principal Occupation : Director or Trustee of the Federated Fund Complex. Other Directorships Held : Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position : Senior Partner, Ernst & Young LLP.

John T. Conroy, Jr. Birth Date: June 23, 1937 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL TRUSTEE Began serving: August 1991		Principal Occupations : Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida. Previous Positions : President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.


Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Nicholas P. Constantakis Birth Date: September 3, 1939 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: February 1998		Principal Occupations : Director or Trustee of the Federated Fund Complex. Other Directorships Held : Director and Member of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position : Partner, Andersen Worldwide SC.

John F. Cunningham Birth Date: March 5, 1943 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: January 1999		Principal Occupation : Director or Trustee of the Federated Fund Complex. Other Directorships Held : Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions : Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.

Peter E. Madden Birth Date: March 16, 1942 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL TRUSTEE Began serving: August 1991		Principal Occupation : Director or Trustee of the Federated Fund Complex. Other Directorships Held : Board of Overseers, Babson College. Previous Positions : Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.

Charles F. Mansfield, Jr. Birth Date: April 10, 1945 80 South Road Westhampton Beach, NY TRUSTEE Began serving: January 1999		Principal Occupations : Director or Trustee of the Federated Fund Complex; Management Consultant; Executive Vice President, DVC Group, Inc. (marketing communications and technology) (prior to 9/1/00). Previous Positions : Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University.


Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 Chancellor, Duquesne University Pittsburgh, PA TRUSTEE Began serving: February 1995		Principal Occupations : Director or Trustee of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue and Lannis. Other Directorships Held : Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions : President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.

Marjorie P. Smuts Birth Date: June 21, 1935 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: February 1984		Principal Occupations : Director or Trustee of the Federated Fund Complex; Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions : National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.

John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN TRUSTEE Began serving: January 1999		Principal Occupations : Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position : Vice President, Walsh & Kelly, Inc.

OFFICERS


Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Began serving: February 1984		Principal Occupations : Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc.

Richard J. Thomas Birth Date: June 17, 1954 TREASURER Began serving: November 1998		Principal Occupations : Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services.


Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) for Past Five Years and Previous Position(s)
Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Began serving: February 1984		Principal Occupations : Vice Chairman or President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions : President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; and Director and Chief Executive Officer, Federated Securities Corp.

Robert J. Ostrowski Birth Date: April 26, 1963 CHIEF INVESTMENT OFFICER Began serving: May 2004		Principal Occupations: Robert J. Ostrowski joined Federated in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of taxable, fixed-income products in 2004 and also serves as a Senior Portfolio Manager. He has been a Senior Vice President of the Fund's Adviser since 1997. Mr. Ostrowski is a Chartered Financial Analyst. He received his M.S. in Industrial Administration from Carnegie Mellon University.

Susan M. Nason Birth Date: August 29, 1961 VICE PRESIDENT Began serving: November 1998		Susan M. Nason has been the Fund's Portfolio Manager since September 1991. She is Vice President of the Fund. Ms. Nason joined Federated in 1987 and has been a Senior Portfolio Manager and Senior Vice President of the Fund's Adviser since 1997. Ms. Nason served as a Portfolio Manager and Vice President of the Adviser from 1993 to 1997. Ms. Nason is a Chartered Financial Analyst and received her M.S.I.A. concentrating in Finance from Carnegie Mellon University.

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Federated's Internet site. Go to FederatedInvestors.com, select "Products," select the "Prospectuses and Regulatory Reports" link, then select the Fund to access the link to Form N-PX. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.

QUARTERLY PORTFOLIO SCHEDULE

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of the Federated Investors website at FederatedInvestors.com by clicking on "Portfolio Holdings" and selecting the name of the Fund, or by selecting the name of the Fund and clicking on "Portfolio Holdings." You must register on the website the first time you wish to access this information.

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. 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 Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses, and other information.

Federated
World-Class Investment Manager

Federated U.S. Government Securities Fund: 1-3 Years
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31428M100
Cusip 31428M209
Cusip 31428M308

30215 (4/05)

Federated is a registered mark of Federated Investors, Inc. 2005 (c)Federated Investors, Inc.


Item 2.     Code of Ethics

(a) As of the end of the  period  covered by this  report,  the  registrant  has
adopted a code of ethics (the "Section 406 Standards for Investment  Companies -
Ethical Standards for Principal Executive and Financial  Officers") that applies
to the registrant's Principal Executive Officer and Principal Financial Officer;
the  registrant's  Principal  Financial  Officer  also  serves as the  Principal
Accounting Officer.

(c) Not Applicable

(d) Not Applicable

(e) Not Applicable

(f)(3) The registrant hereby  undertakes to provide any person,  without charge,
upon  request,  a copy of the code of  ethics.  To request a copy of the code of
ethics,  contact the  registrant  at  1-800-341-7400,  and ask for a copy of the
Section 406 Standards for Investment Companies - Ethical Standards for Principal
Executive and Financial Officers.


Item 3.     Audit Committee Financial Expert

The  registrant's  Board has  determined  that each member of the Board's  Audit
Committee is an "audit committee financial expert," and that each such member is
"independent,"  for purposes of this Item. The Audit  Committee  consists of the
following  Board members:  Thomas G. Bigley,  John T. Conroy,  Jr.,  Nicholas P.
Constantakis and Charles F. Mansfield, Jr.


Item 4.     Principal Accountant Fees and Services

            (a)   Audit Fees billed to the registrant for the two most recent fiscal
years:

                  Fiscal year ended 2005 - $16,484

                  Fiscal year ended 2004 - $16,000



(b)   Audit-Related Fees billed to the registrant for the two most recent fiscal years:

                  Fiscal year ended 2005 - $0

                  Fiscal year ended 2004 - $0



      Amount requiring approval of the registrant's audit committee pursuant to paragraph
      (c)(7)(ii) of Rule 2-01 of Regulation S-X, $16,500 and $0 respectively.  Fiscal
      year ended 2005 - Sarbanes Oxley sec. 302 procedures.



(c)          Tax Fees billed to the registrant for the two most recent fiscal years:

                  Fiscal year ended 2005 - $0

                  Fiscal year ended 2004 - $0

      Amount requiring approval of the registrant's audit committee pursuant to paragraph
      (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.



(d)   All Other Fees billed to the registrant for the two most recent fiscal years:

                  Fiscal year ended 2005 - $0

                  Fiscal year ended 2004 - $0

      Amount requiring approval of the registrant's audit committee pursuant to paragraph
      (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.



(e)(1)      Audit Committee Policies regarding Pre-approval of Services.

     The Audit Committee is required to pre-approve audit and non-audit services
performed by the  independent  auditor in order to assure that the  provision of
such services do not impair the auditor's independence. Unless a type of service
to be provided by the independent auditor has received general pre-approval,  it
will require specific pre-approval by the Audit Committee. Any proposed services
exceeding  pre-approved  cost levels will require  specific  pre-approval by the
Audit Committee.

     Certain services have the general pre-approval of the Audit Committee.  The
term of the general  pre-approval  is 12 months  from the date of  pre-approval,
unless the Audit Committee  specifically  provides for a different  period.  The
Audit  Committee  will annually  review the services that may be provided by the
independent  auditor  without  obtaining  specific  pre-approval  from the Audit
Committee  and may  grant  general  pre-approval  for such  services.  The Audit
Committee  will revise the list of general  pre-approved  services  from time to
time, based on subsequent determinations.  The Audit Committee will not delegate
its  responsibilities  to  pre-approve  services  performed  by the  independent
auditor to management.

     The Audit Committee has delegated  pre-approval  authority to its Chairman.
The Chairman will report any  pre-approval  decisions to the Audit  Committee at
its next scheduled  meeting.  The Committee  will designate  another member with
such pre-approval authority when the Chairman is unavailable.

AUDIT SERVICES

     The annual Audit services  engagement terms and fees will be subject to the
specific  pre-approval of the Audit Committee.  The Audit Committee must approve
any changes in terms, conditions and fees resulting from changes in audit scope,
registered investment company (RIC) structure or other matters.

     In addition to the annual Audit services engagement  specifically  approved
by the Audit Committee,  the Audit Committee may grant general  pre-approval for
other Audit Services, which are those services that only the independent auditor
reasonably  can provide.  The Audit  Committee  has  pre-approved  certain Audit
services,  all other Audit  services must be  specifically  pre-approved  by the
Audit Committee.

AUDIT-RELATED SERVICES

     Audit-related   services  are  assurance  and  related  services  that  are
reasonably  related to the  performance  of the audit or review of the Company's
financial  statements  or that are  traditionally  performed by the  independent
auditor.  The Audit  Committee  believes  that the  provision  of  Audit-related
services does not impair the  independence of the auditor,  and has pre-approved
certain  Audit-related  services,  all  other  Audit-related  services  must  be
specifically pre-approved by the Audit Committee.

TAX SERVICES

     The Audit Committee  believes that the independent  auditor can provide Tax
services to the Company  such as tax  compliance,  tax  planning  and tax advice
without impairing the auditor's independence.  However, the Audit Committee will
not  permit the  retention  of the  independent  auditor  in  connection  with a
transaction  initially  recommended by the independent  auditor,  the purpose of
which may be tax  avoidance  and the tax treatment of which may not be supported
in the Internal  Revenue Code and related  regulations.  The Audit Committee has
pre-approved certain Tax services,  all Tax services involving large and complex
transactions must be specifically pre-approved by the Audit Committee.

ALL OTHER SERVICES

     With  respect to the  provision  of services  other than  audit,  review or
attest services the pre-approval requirement is waived if:



(1)  The aggregate amount of all such services provided constitutes no more than
     five percent of the total amount of revenues  paid by the  registrant,  the
     registrant's adviser (not including any sub-adviser whose role is primarily
     portfolio  management  and is  subcontracted  with or  overseen  by another
     investment  adviser),  and any entity controlling,  controlled by, or under
     common control with the investment  adviser that provides  ongoing services
     to the  registrant  to its  accountant  during the fiscal year in which the
     services are provided;

(2)  Such  services  were not  recognized by the  registrant,  the  registrant's
     adviser (not including any  sub-adviser  whose role is primarily  portfolio
     management  and is  subcontracted  with or overseen  by another  investment
     adviser),  and any  entity  controlling,  controlled  by,  or under  common
     control with the investment  adviser that provides  ongoing services to the
     registrant at the time of the engagement to be non-audit services; and

(3)  Such services are promptly  brought to the attention of the Audit Committee
     of the  issuer and  approved  prior to the  completion  of the audit by the
     Audit  Committee or by one or more members of the Audit  Committee  who are
     members of the board of directors to whom authority to grant such approvals
     has been delegated by the Audit Committee.


     The Audit  Committee may grant general  pre-approval  to those  permissible
non-audit services classified as All Other services that it believes are routine
and recurring services, and would not impair the independence of the auditor.

     The SEC's rules and relevant  guidance should be consulted to determine the
precise  definitions of prohibited  non-audit  services and the applicability of
exceptions to certain of the prohibitions.



PRE-APPROVAL FEE LEVELS

     Pre-approval  fee levels for all services to be provided by the independent
auditor  will be  established  annually  by the Audit  Committee.  Any  proposed
services exceeding these levels will require specific  pre-approval by the Audit
Committee.



PROCEDURES

     Requests or applications to provide services that require specific approval
by the Audit  Committee  will be  submitted  to the Audit  Committee by both the
independent  auditor  and  the  Principal  Accounting  Officer  and/or  Internal
Auditor,  and must include a joint  statement as to whether,  in their view, the
request  or  application   is  consistent   with  the  SEC's  rules  on  auditor
independence.



(e)(2)      Percentage of services identified in items 4(b) through 4(d) that were
approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X:

            4(b)

            Fiscal year ended 2005 - 0%

            Fiscal year ended 2004 - 0%

            Percentage of services provided to the registrants investment adviser and any
            entity controlling, controlled by, or under common control with the
            investment adviser that provides ongoing services to the registrant that were
            approved by the registrants audit committee pursuant to paragraph
            (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.

            4(c)

            Fiscal year ended 2005 - 0%

            Fiscal year ended 2004 - 0%

            Percentage of services provided to the registrants investment adviser and any
            entity controlling, controlled by, or under common control with the
            investment adviser that provides ongoing services to the registrant that were
            approved by the registrants audit committee pursuant to paragraph
            (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.

            4(d)

            Fiscal year ended 2005 - 0%

            Fiscal year ended 2004 - 0%

            Percentage of services provided to the registrants investment adviser and any
            entity controlling, controlled by, or under common control with the
            investment adviser that provides ongoing services to the registrant that were
            approved by the registrants audit committee pursuant to paragraph
            (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.



(f)  NA


(g)  Non-Audit  Fees  billed  to the  registrant,  the  registrant's  investment
     adviser,  and certain entities  controlling,  controlled by or under common
     control with the investment adviser:

            Fiscal year ended 2005 - $244,338

            Fiscal year ended 2004 - $109,542

(h)  The  registrant's  Audit  Committee  has  considered  that the provision of
     non-audit  services  that were  rendered to the  registrant's  adviser (not
     including any sub-adviser whose role is primarily portfolio  management and
     is subcontracted with or overseen by another investment  adviser),  and any
     entity  controlling,  controlled  by,  or  under  common  control  with the
     investment  adviser that provides  ongoing  services to the registrant that
     were not  pre-approved  pursuant to  paragraph  (c)(7)(ii)  of Rule 2-01 of
     Regulation S-X is compatible with  maintaining  the principal  accountant's
     independence.


Item 5.     Audit Committee of Listed Registrants

            Not Applicable

Item 6.     Schedule of Investments

            Not Applicable

Item 7.     Disclosure of Proxy Voting Policies and Procedures for Closed-End
            Management Investment Companies

            Not Applicable

Item 8.     Portfolio Managers of Closed-End Management Investment Companies

            Not Applicable

Item 9.     Purchases of Equity Securities by Closed-End Management
            Investment Company and Affiliated Purchasers

            Not Applicable

Item 10.    Submission of Matters to a Vote of Security Holders

            Not Applicable

Item 11.    Controls and Procedures

(a)  The   registrant's   President  and  Treasurer   have  concluded  that  the
     registrant's  disclosure  controls  and  procedures  (as  defined  in  rule
     30a-3(c)  under the Act) are  effective  in design  and  operation  and are
     sufficient to form the basis of the certifications required by Rule 30a-(2)
     under the Act, based on their evaluation of these  disclosure  controls and
     procedures within 90 days of the filing date of this report on Form N-CSR.

(b)  There were no changes in the  registrant's  internal control over financial
     reporting  (as  defined  in rule  30a-3(d)  under the Act)  during the last
     fiscal quarter that have materially  affected,  or are reasonably likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting.

Item 12.    Exhibits


SIGNATURES

Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

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

By          /S/ Richard J. Thomas, Principal Financial Officer
                            (insert name and title)

Date        April 19, 2005


Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934 and the
Investment  Company  Act of  1940,  this  report  has been  signed  below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.


By          /S/ J. Christopher Donahue, Principal Executive Officer
Date        April 19, 2005


By          /S/ Richard J. Thomas, Principal Financial Officer
Date        April 19, 2005

Federated Hermes Short-Term Government Fund SS Class (FSGIX) N-CSRCertified annual shareholder report (management investment company)

FederatedWorld-Class Investment Manager

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

ANNUAL SHAREHOLDER REPORT

Institutional SharesInstitutional Service SharesClass Y Shares

Financial Highlights - Institutional Shares

Financial Highlights - Institutional Service Shares

Financial Highlights - Class Y Shares

Shareholder Expense Example

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

Management's Discussion of Fund Performance

DURATION

SECTOR

YIELD CURVE

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SERVICE SHARES

GROWTH OF A $5,000,000 INVESTMENT - CLASS Y SHARES

Portfolio of Investments Summary Table

Portfolio of Investments

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Notes to Financial Statements

1. ORGANIZATION

2. SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Repurchase Agreements

Investment Income, Gains and Losses, Expenses, and Distributions

Premium and Discount Amortization

Federal Taxes

When-Issued and Delayed Delivery Transactions

Securities Lending

Use of Estimates

Other

3. SHARES OF BENEFICIAL INTEREST

4. FEDERAL TAX INFORMATION

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

General

6. LEGAL PROCEEDINGS

7. SUBSEQUENT EVENT

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS:

Board of Trustees and Fund Officers

INTERESTED TRUSTEES BACKGROUND

INDEPENDENT TRUSTEES BACKGROUND

OFFICERS

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

QUARTERLY PORTFOLIO SCHEDULE

FederatedWorld-Class Investment Manager

Federated
World-Class Investment Manager

Institutional Shares
Institutional Service Shares
Class Y Shares

Federated
World-Class Investment Manager