FEDERATED GNMA TRUST
497, 1999-05-27
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FEDERATED GNMA TRUST

INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES

SUPPLEMENT TO PROSPECTUSES DATED MAY 31, 1999

At a Special Meeting of Shareholders to be held on June 21, 1999, shareholders
will be asked to vote on the changes described below. If approved by
shareholders, these changes will take effect as of July 1, 1999. Shareholders
will be notified if any of these changes are not approved. Please keep this
supplement for your records.

Shareholders will be asked to consider the following proposals:

(1)  To elect seven Trustees.

(2)  To ratify the selection of the Trust's independent auditors.

(3)  To make changes to the Trust's fundamental investment policies:

     (a)  To  amend  the  Trust's   fundamental   investment   policy  regarding
          diversification;

     (b)  To amend the Trust's fundamental investment policy regarding borrowing
          money and issuing senior securities;

     (c)  To  amend  the  Trust's   fundamental   investment   policy  regarding
          investments in real estate;

     (d)  To  amend  the  Trust's   fundamental   investment  policy  concerning
          investments in commodities;

     (e)  To  amend  the  Trust's   fundamental   investment   policy  regarding
          underwriting securities;

     (f)  To amend the Trust's  fundamental  investment policy regarding lending
          by the Trust;

     (g)  To  amend,  and  to  make  non-fundamental,  the  Trust's  fundamental
          investment policy on buying securities on margin; and

     (h)  To  amend,  and  to  make  non-fundamental,  the  Trust's  fundamental
          investment policy on pledging assets.

(4)  To eliminate the Trust's  fundamental  investment  policy regarding selling
     securities short.

(5)  To approve an  amendment  and  restatement  to the Trust's  Declaration  of
     Trust:

     (a)  To require  the  approval  of a  majority  of the  outstanding  voting
          securities  in the event of the sale and  conveyance  of the assets of
          the Trust to another trust or corporation;

     (b)  To  permit  the Board of  Trustees  to  liquidate  assets of the Trust
          without seeking shareholder approval; and

     (c)  To  permit  the  Board of  Trustees  to  change  the name of the Trust
          without seeking shareholder approval.

(6)  To transact such other  business as may properly come before the meeting or
     any adjournment thereof.

                                                                    May 31, 1999

[Graphic]
Federated Investors

Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA 15222-3779
Cusip   314184102

Cusip   314184201
G02645-03 (5/99)



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