FEDERATED SHORT-TERM MUNICIPAL TRUST
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
SUPPLEMENT TO PROSPECTUSES AND STATEMENT OF ADDITIONAL INFORMATION, AS
APPROPRIATE DATED AUGUST 31, 1998
I. At the March 23, 1999 shareholder meeting, shareholders approved the
following:
(1) Elected seven Trustees.
(2) Ratified the selection of the Trust's independent auditors.
(3) Amended the Trust's fundamental investment policy on
diversification of its investments to read as follows:
"With respect to securities comprising 75% of the value of
its total assets, the Trust will not purchase securities
of any one issuer (other than cash, cash items, securities
issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government
securities, and securities of other investment companies)
if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer,
or it would own more than 10% of the outstanding voting
securities of that issuer."
(4) Eliminated the Trust's fundamental investment policy
prohibiting investment in oil, gas, and minerals.
(5) Approved a clarifying amendment to the Trust's Investment Advisory
Agreement to exclude Rule 12b-1 fees and shareholder service fees from
the expense cap.
(6) Approved an amendment and restatement of the Trust's Declaration of
Trust to permit the Board of Trustees to liquidate assets of the
Trust, without seeking shareholder approval.
II. The following actions were taken by the Board of Directors with regard to
non-fundamental investment policies:
(1) Approved the addition of a non-fundamental investment policy as
follows: "The Fund may invest its assets in securities of other
investment companies, including the securities of affiliated money
market funds, as an efficient means of carrying out its investment
policies and managing its uninvested cash."
(2) Approved the deletion of the Trust's non-fundamental investment policy
with regard to the restriction on investment in issuers with operating
histories less than three years.
(3) Approved the deletion of the Trust's non-fundamental investment policy
regarding prohibition against acquiring voting securities, except as a
part of merger, consolidation, reorganization or acquisition of
assets.
March 23, 1999
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Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
www.federatedinvestors.com
Cusip 313907107
Cusip 313907206
G02551-03 (3/99)
