FEDERATED GNMA TRUST
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
SUPPLEMENT TO PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, AS
APPROPRIATE, DATED MAY 31, 1999
I. At the June 21, 1999 shareholder meeting, shareholders approved the
following changes to become effective July 1, 1999:
(1) Elected Seven Trustees.
(2) Ratified the selection of the Trust's Independent Auditors
(3) Made changes to the Trust's fundamental investment limitations:
(a) Amended the Trust's fundamental investment limitation regarding
diversification of its investments to read as follows:
"With respect to securities comprising 75% of the value of its total
asset, 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 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 the Trust would own more
than 10% of the outstanding voting securities of that issuer."
(b) Amended the Trust's fundamental investment limitation regarding
borrowing money and issuing senior securities to read as follows:
"The Trust may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act."
(c) Amended the Trust's fundamental investment limitation regarding
investments in real estate to read as follows:
"The Trust may not purchase or sell real estate, provided that this
restriction does not prevent the Trust from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or
interests therein, or investing in securities that are secured by real
estate or interests therein. The Trust may exercise its rights under
agreements relating to such securities, including the right to enforce
security interests and to hold real estate acquired by reason of such
enforcement until that real estate can by liquidated in an orderly
manner."
(d) Amended the Trust's fundamental investment limitation regarding
investments in commodities to read as follows:
"The Trust may not purchase or sell physical commodities, provided
that the Trust may purchase securities of companies that deal in
commodities."
(e) Amended the Trust's fundamental investment limitation regarding
underwriting securities to read as follows:
"The Trust may not underwrite the securities of other issuers, except
that the Trust may engage in transactions involving the acquisition,
disposition or resale of its portfolio securities, under circumstances
where it may be considered to be an underwriter under the Securities
Act of 1933."
(f) Amended the Trust's fundamental investment limitation regarding
lending to read as follows:
" The Trust may not make loans, provided that this restriction does
not prevent the Trust from purchasing debt obligations, entering into
repurchase agreements, lending its assets to broker/dealers or
institutional investors and investing in loans, including assignments
and participation interests."
(g) Amended, and made non-fundamental, the Trust's fundamental
investment limitation regarding buying securities on margin to
read as follows:
"The Trust will not purchase securities on margin, provided that the
Trust may obtain short-term credits necessary for the clearance of
purchases and sales of securities."
(h) Amended, and made non-fundamental, the Trust's fundamental
investment limitation regarding pledging assets to read as
follows:
"The Trust will not mortgage, pledge, or hypothecate any of its
assets, provided that this shall not apply to the transfer of
securities in connection with any permissible borrowing or to
collateral arrangements in connection with permissible activities."
(i) Eliminated the Trust's fundamental investment policy regarding
selling securities short.
II. Approved the following changes to the Trust's Declaration of Trust.
(1) Amended and restated the Trust's Declaration of Trust to require the
approval of a majority of the outstanding voting shares in the event
of the sale and conveyance of the assets of the Trust to another Trust
or Corporation.
(2) Amended and restated the Trust's Declaration of Trust to permit the
Board of Trustees to liquidate assets of the Trust without shareholder
approval.
(3) Amended and restated the Trust's Declaration of Trust to permit the
Board of Trustees to change the name of the Trust without seeking
shareholder approval.
III. The following actions were taken by the Board of Directors with regard to
non- fundamental investment limitations and policies:
(1) Amended the Trust's non-fundamental investment limitation regarding
illiquid securities to read as follows:
" The Trust will not purchase securities for which there is no readily
available market, or enter into repurchase agreements or purchase time
deposits maturing in more than seven days, if immediately after and as
a result, the value of such securities would exceed, in the aggregate,
15% of the Trust's net assets."
(2) Approved the elimination of the Trust's non-fundamental investment
policy pertaining to when-issued and delayed delivery transactions
that provides that the Trust will not engage in such transactions to
an extent that would cause the segregation of more than 20% of value
of its total assets.
(3) Removed the Trust's non-fundamental investment policy regarding
temporary investments.
June 21, 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 314184102
Cusip 314184201
G02645-04(6/99)
