FEDERATED U.S. GOVERNMENT SECURITIES FUND: 1-3 YEARS
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
SUPPLEMENT TO PROSPECTUSES AND STATEMENT OF ADDITIONAL INFORMATION, AS
APPROPRIATE, DATED APRIL 30, 1999
I. At the June 21, 1999 shareholder meeting, shareholders approved the
following:
(1) Elected seven Trustees.
(2) Ratified the selection of the Trust's independent auditors.
II. The June 21, 1999 meeting was adjourned to August 5, 1999, 2:00 p.m.,
(Eastern Time), at 2800 Corporate Drive, Pittsburgh, PA 15237-7000, at which
time shareholders approved the following:
(3) Made changes to the Trust's fundamental investment policies and
limitations:
(a) 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."
(b) Amended the Trust's fundamental investment limitation regarding lending
by the Trust 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."
(c) 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."
(d) 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."
(e) Amended, and made non-fundamental, the Trust's fundamental investment
policy regarding investing in U.S. government securities to read as follows:
The Trust will invest primarily in U.S. government securities.
"U.S. government securities include: (1) U.S. Treasury obligations, which
differ only in their interest rates, maturities and times of issuance: (a) U.S.
Treasury bills and (b) U.S. Treasury notes; (2) obligations issued or guaranteed
by U.S. government agencies and instrumentalities which are supported by any of
the following: (a) the full faith and credit of the U.S. Treasury (such as
Government National Mortgage Association pass through and modified participation
certificates), (b) the right of the issuer to borrow an amount limited to a
specific line of credit from the U.S. Treasury, (c) discretionary authority of
the U.S. government to purchase obligations of the U.S. government agency or
instrumentality or (d) the credit of the instrumentality."
(f) Amended, and made non-fundamental, the Trust's fundamental investment
policy regarding investing in repurchase agreements to read as follows:
"The Trust may enter into repurchase agreements."
4. Eliminated certain of the Trust's fundamental investment limitations:
(a) Removed the Trust's fundamental investment policy regarding selling
securities short; and
(b) Removed the Trust's fundamental investment policy regarding portfolio
trading.
5. Approved an amendment and restatement to the Trust's Declaration of
Trust to permit the Board of Trustees to liquidate assets of the Trust without
seeking shareholder approval.
III The following actions were taken by the Board of Trustees with regard to
non- fundamental investment policies:
1. Amended the Trust's non-fundamental policy concerning investing in
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 aggregate, 15% of the Trust's net
assets."
2. Amended the Trust's non-fundamental policy concerning the Trust's
average dollar-weighted portfolio maturity to read as follows:
"As a matter of investment practice that can be changed without shareholder
approval, the Trust will maintain an average dollar- weighted duration of 1 to 3
years."
3. Eliminated the following Trust's undertaking concerning borrowing:
"The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of its total assets or in an amount up to one-third of the value of
its total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling portfolio securities. This borrowing
provision is not for investment leverage but solely to facilitate management of
the portfolio by enabling the Trust to meet redemption requests when the
liquidation of portfolio securities would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment. The Trust
will liquidate any such borrowings as soon as possible and may not purchase any
portfolio securities while the borrowings are outstanding."
4. Eliminated the Trust's non-fundamental investment policy
providing that the Trust will not engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the value of its total assets.
August 5, 1999
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Federated Investors
Federated Securities, Distributors
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
www.federatedinvstors.com
Cusip 31428M100
Cusip 31428M209
G02641-04 (8/99)
