U.S. TREASURY CASH RESERVES
(A PORTFOLIO OF FEDERATED GOVERNMENT TRUST)
Supplement to Prospectus dated June 30, 1994
Effective October 30, 1994, U.S. Treasury Cash Reserves, a
portfolio of Federated Government Trust, added a new class of
shares called "Institutional Service Shares." Accordingly, the
existing shares of U.S. Treasury Cash Reserves are designated as
"Institutional Shares." All references in this prospectus to
U.S. Treasury Cash Reserves are to the Institutional Shares
class of the portfolio. In this regard, please make the
following changes to the prospectus:
1.On page 1, please delete the section entitled "Summary of Fund Expenses"
and replace with the following:
"Summary of Fund Expenses
Institutional Shares
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price) None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original
purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if
applicable) None
Exchange Fee None
Annual Institutional Shares Operating Expenses
(As a percentage of average net assets)
Management Fee (after waiver) (1) 0.00%
12b-1 Fee None
Total Other Expenses (after expense reimbursement) 0.20%
Shareholder Services Fee(2) 0.05%
Total Institutional Shares Operating Expenses (3)
0.20%
(1)The management fee has been reduced to reflect the voluntary waiver of a
portion of
the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum manageme
nt fee is 0.40%.
(2) The maximum Shareholder Services Fee is 0.25%
(3)The Total Institutional Shares Operating Expenses in the table above are
based on expenses expected during the fiscal year ending April 30, 1995.
The Total Institutional Shares Operating Expenses were 0.20% for
the fiscal year ended April 30, 1994, and were 0.63% absent
the anticipated voluntary waiver of the management fee and the
voluntary reimbursement of certain other operating expenses.
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a shareholder
of Institutional Shares of the Fund will bear, either directly
or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in the Fund" and "Trust
Information." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.
EXAMPLE 1 year3 years5 years10 years
You would pay the following expenses on
a $1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each
time period. .................................. $2 $6
$11 $26
The above example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less
than those shown.
The information set forth in the foregoing table and example
relates only to Institutional Shares of the Fund. The Fund also
offers another class of shares called Institutional Service
Shares. Institutional Shares and Institutional Service Shares
are subject to certain of the same expenses; however,
Institutional Service Shares are subject to a 12b-1 fee of up to
0.25%. "
2. On page 3, please delete the first paragraph under the section entitled
"General Information" and replace with the following:
"The Trust was established as a Massachusetts
business trust under a Declaration of Trust dated
December 7, 1989. The Declaration of Trust permits
the Trust to offer separate series of shares of
beneficial interest representing interests in separate
portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With
respect to this Fund, as of the date of this
prospectus, the Trustees have established two classes
of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to
Institutional Shares ( the "Shares") of the Fund,
which are designed primarily for institutional
investors such as banks, fiduciaries, custodians of
public funds, and similar institutional investors,
such as corporations, unions, hospitals, insurance
companies, and municipalities as a convenient means of
participating in a professionally managed, diversified
portfolio limited to short-term U.S. Treasury
obligations. A minimum initial investment of $25,000
over a 90-day period is required."
3.On page 6, following the section entitled "Independent Auditors", please
add the following:
"Expenses of the Fund and Institutional Shares
Holders of Shares pay their allocable portion of Fund
and Trust expenses.
The Trust expenses for which holders of Shares pay
their allocable portion include, but are not limited
to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and
state securities authorities; Trustees' fees;
auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues;
and such non-recurring and extraordinary items as may
arise.
The Fund expenses for which holders of Shares pay
their allocable portion include, but are not limited
to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions;
custodian fees; insurance premiums; auditors' fees;
and such non-recurring and extraordinary items as may
arise.
At present, no expenses are allocated to Institutional
Shares as a class. However, the Board of Trustees reserves
the right to allocate certain other expenses to holders of
Shares as it deems appropriate ("Class Expenses"). In any
case, Class Expenses would be limited to: transfer agent
fees as identified by the transfer agent as attributable to
holders of Shares; printing and postage expenses related to
preparing and distributing materials such as shareholder
reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange
Commission and registration fees paid to state securities
commissions; expenses related to administrative personnel
and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees
incurred as a result of issues relating solely to Shares."
4.On page 7, please delete the fourth sentence of the section entitled
"By Wire" which begins on page 6 and replace with the following:
"Federal funds should be wired as follows: State Street
Bank and Trust Company, Boston, Massachusetts; Attention:
EDGEWIRE; For Credit to: U.S. Treasury Cash Reserves - Inst
itutional Shares: Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Orde
r Number; Nominee or Institution Name; and ABA Number
011000028."
5.On page 7, please delete the first sentence of the section entitled "By Mail"
and replace with the following:
"To purchase Shares by mail, send a check made payable
to U.S. Treasury Cash Reserves - Institutional Shares
to the Fund's transfer agent, Federated Services
Company c/o State Street Bank and Trust Company, P.O.
Box 8602, Boston, Massachusetts 02266-8602."
6.On page 12, please add the following as the fourth paragraph of the
section entitled "Performance Information":
"Performance figures will be calculated separately for
each class of shares. Because each class of shares is
subject to different expenses, the performance of
Institutional Shares will exceed the yield and
effective yield of Institutional Service Shares for
the same period."
7.On page 12, following the section entitled "Performance Information",
please add the following:
"Other Classes of Shares
Institutional Service Shares are sold at net asset
value to accounts for which financial institutions act
in an agency or fiduciary capacity. Investments in
Institutional Service Shares are subject to a minimum
initial investment of $25,000. Institutional Service
Shares are sold pursuant to a 12b-1 Plan whereby the
distributor is paid a fee of up to 0.25 of 1% of the
Institutional Service Shares' average daily net
assets.
Financial institutions providing distribution or
administrative services may receive different
compensation depending upon which class of shares of
the Fund is sold.
The amount of dividends payable to shareholders of
Institutional Shares will exceed that payable to the
shareholders of Institutional Service Shares by the
difference between Class Expenses and any 12b-1 Plan
expenses borne by Institutional Service Shares.
The stated advisory fee is the same for both classes
of shares."
October 30 , 1994
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated
Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
314186305
G00712-01 (10/94)
