FIRST PRIORITY FUNDS
485BPOS, 1994-06-29
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                                   1933 Act File No. 33-44737
                                   1940 Act File No. 811-6511

              SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549

                           Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933  X

   Pre-Effective Amendment No.

   Post-Effective Amendment No.   6                       X

                            and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940         X

   Amendment No.   7                                      X

                     FIRST PRIORITY FUNDS

      (Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
           (Address of Principal Executive Offices)

                        (412) 288-1900
                (Registrant's Telephone Number)

                  John W. McGonigle, Esquire,
                  Federated Investors Tower,
              Pittsburgh, Pennsylvania 15222-3779
            (Name and Address of Agent for Service)

It is proposed that this filing will become effective:

    immediately upon filing pursuant to paragraph (b)
 x  on June 29, 1994 pursuant to paragraph (b)
    60 days after filing pursuant to paragraph (a)
    on                 pursuant to paragraph (a) of Rule 485.

Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:

 x  filed the Notice required by that Rule on 1/18/94 or
    intends to file the Notice required by that Rule on or
   about ____________; or
    during the most recent fiscal year did not sell any
 securities pursuant to Rule 24f-2 under the Investment
 Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need
 not file the Notice.

                          Copies to:

Thomas J. Donnelly, Esquire        Charles H. Morin, Esquire
Houston, Houston & Donnelly        Dickstein, Shapiro & Morin
2510 Centre City Tower             2101 L Street, N.W.
650 Smithfield Street              Washington, D.C.  20037
Pittsburgh, Pennsylvania 15222



- --------------------------------------------------------------------------------
                                                                  FIRST PRIORITY
- --------------------------------------------------------------------------------
                                                                LIMITED MATURITY
- --------------------------------------------------------------------------------
                                                                      GOVERNMENT
- --------------------------------------------------------------------------------
                                                                            FUND
- --------------------------------------------------------------------------------
                                                    SEMI-ANNUAL REPORT
                                                    DATED MAY 31, 1994
                                                    AND SUPPLEMENT TO PROSPECTUS
                                                    DATED DECEMBER 7, 1994


                                                   A DIVERSIFIED PORTFOLIO
                                                   of the First Priority Funds,
                                                   an Open-End, Management
                                                   Investment Company


                                                            --------------------
     FEDERATED SECURITIES CORP.
     ----------------------------------                     --------------------
(LOGO)
                                                            --------------------

                                                            --------------------

     Distributor

     G00134-01 (6/94)
                                                              ------------------



A. Please delete the "Summary of Fund Expenses" table on page 1 and replace it
   with the following table:

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                                                    <C>
                              SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).........    2.00%
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 Fees (as a percentage of amount redeemed, if applicable).................     None
Exchange Fees.......................................................................     None
                               ANNUAL FUND OPERATING EXPENSES*
                      (As a percentage of projected average net assets)
Management Fee (after waiver)(1)....................................................    0.00%
12b-1 Fees(2).......................................................................    0.00%
Other Expenses......................................................................    0.38%
     Total Operating Expenses.......................................................    0.38%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management fee
is 0.70%.

(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund will not accrue or pay 12b-1 fees until a separate class of
shares has been created for certain institutional investors. The Fund can pay up
to 0.25% as a 12b-1 fee to the distributor.

* Total Operating Expenses are estimated to be 1.08% based on average expenses
  expected to be incurred during the period ending November 30, 1994. During the
  course of this period, expenses may be more or less than the average amount
  shown.

     THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "FIRST PRIORITY FUNDS INFORMATION" AND "INVESTING IN THE FUND."

<TABLE>
<CAPTION>
EXAMPLE                                                                       1 year    3 years
- -------                                                                       ------    -------
<S>                                                                           <C>       <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return; (2) redemption at the end of each time period; and (3)
payment of the maximum sales load of 2%. The Fund charges no redemption
fees.......................................................................    $ 24       $32
</TABLE>

     THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER
30, 1994.


B. Please insert the following "Financial Highlights" table as page 2 following
   the "Summary of Fund Expenses" and before the section entitled "General
   Information." In addition, please add the heading "Financial Highlights" to
   the Table of Contents on page I after the heading "Summary of Fund Expenses."

FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED
                                                                                    NOVEMBER 30,
                                                                                        1994*
                                                                                    ------------
<S>                                                                                 <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                   $10.00
- ---------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------
  Net investment income                                                                  0.19
- ---------------------------------------------------------------------------------
  Net realized and unrealized loss on investments                                       (0.29)
 ---------------------------------------------------------------------------------      -----
    Total from investment operations                                                    (0.10)
- ---------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------
  Dividends to shareholders from net investment income                                  (0.19)
- ---------------------------------------------------------------------------------       -----
NET ASSET VALUE, END OF PERIOD                                                          $9.71
- ---------------------------------------------------------------------------------       =====
TOTAL RETURN**                                                                          (1.01)%
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------
  Expenses                                                                               0.39%(a)
- ---------------------------------------------------------------------------------
  Net investment income                                                                  4.18%(a)
- ---------------------------------------------------------------------------------
  Expenses waiver/reimbursement (b)                                                      0.70%(a)
- ---------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------
  Net assets, end of period (000 omitted)                                             $47,198
- ---------------------------------------------------------------------------------
  Portfolio turnover rate                                                                   6%
- ---------------------------------------------------------------------------------
</TABLE>

 * Reflects operations for the period from December 13, 1993 (date of initial
   public investment) to May 31, 1994 (unaudited).

** Based on net asset value which does not reflect the sales load or contingent
   deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above (Note 4).

(See Notes which are an integral part of the Financial Statements)


C. Under the sub-section entitled "What Shares Cost" on page 11, replace the
   table with the following:

<TABLE>
<CAPTION>
                                             SALES CHARGE AS          SALES CHARGE AS
                                             A PERCENTAGE OF          A PERCENTAGE OF
          AMOUNT OF TRANSACTION           PUBLIC OFFERING PRICE     NET AMOUNT INVESTED
    ----------------------------------   -----------------------   ---------------------
    <S>                                        <C>                       <C>
    Less than $100,000.................            2.00%                    2.04%
    $100,000 but less than $250,000....            1.50%                    1.52%
    $250,000 but less than $500,000....            1.00%                    1.01%
    $500,000 but less than $750,000....            0.50%                    0.50%
    $750,000 but less than $1 million..            0.25%                    0.25%
    $1 million or more.................            0.00%                    0.00%
</TABLE>

D. Please replace the two paragraphs under the sub-section entitled "Dealer
   Concessions" on page 11 with the following:

   "A dealer will normally receive up to 85% of the applicable sales charge. Any
   portion of the sales charge which is not paid to a dealer will be retained by
   the distributor. However, the distributor, at its sole discretion, may
   uniformly offer to pay to a dealer selling shares of the Fund all or a
   portion of the sales charge it normally retains. If accepted by a dealer,
   such additional payments will be predicated upon the amount of Fund shares
   sold. Such payments may take the form of cash or promotional incentives, such
   as payment of certain expenses of qualified employees and their spouses to
   attend the informational meetings about the Fund or other special events at
   recreational facilities, or items of material value. In some instances, these
   incentives will be made available only to dealers whose employees have sold
   or may sell significant amounts of shares."

E. Please insert the following sub-section entitled "Other Payments to Financial
   Institutions" on page 11 under the section entitled "Dealer Concessions." In
   addition, please add the heading "Other Payments to Financial Institutions"
   to the Table of Contents on page I, following the heading "Dealer
   Concessions."

   "Other Payments to Financial Institutions.  The distributor, the adviser, or
   their affiliates may also offer to pay a fee from their own assets to
   financial institutions as financial assistance for providing substantial
   marketing and sales support. The support may include initiating customer
   accounts, providing sales literature, or participating in sales, educational
   and training seminars (including those held at recreational facilities). Such
   assistance will be predicated upon the amount of shares the financial
   institution sells or may sell and/or upon the type and nature of sales or
   marketing support furnished by the financial institution. Any payments made
   by the distributor may be reimbursed by the adviser or its affiliates."


F. Under the sub-section entitled "Reducing the Sales Charge" on page 12, add
   the following as the last bullet point:

  "- purchases with proceeds from redemptions of unaffiliated mutual fund
   shares."

G. Under the sub-section entitled "Quantity Discounts and Accumulated Purchases"
   on page 12, replace the second sentence of the second paragraph with the
   following:

   "For example, if a shareholder already owns shares having a current value at
   the public offering price of $90,000 and purchases $10,000 more at the
   current public offering price, the sales charge on the additional purchase
   according to the schedule now in effect would be 1.50%, not 2.00%."

H. Please insert the following sub-section entitled "Purchases with Proceeds
   from Redemptions of Unaffiliated Mutual Fund Shares" on page 13 immediately
   following the sub-section entitled "Reinvestment Privilege." In addition,
   please add the heading "Purchases with Proceeds from Redemptions of
   Unaffiliated Mutual Fund Shares" to the the Table of Contents on page I,
   following the heading "Reinvestment Privilege."

   "Purchases with Proceeds from Redemptions of Unaffiliated Mutual Fund Shares.
    Investors may purchase shares of the Fund at net asset value, without a
   sales charge, with the proceeds from the redemption of shares of a mutual
   fund which was sold with a sales charge or commission. The purchase must be
   made within 60 days of the redemption, and FAII must be notified by the
   investor in writing or by his financial institution, at the time the purchase
   is made. The adviser will offer to pay broker/dealers an amount equal to .50
   of 1% of the net asset value of Shares purchased by their clients or
   customers in this manner. This offer is not available for the redemption of
   mutual fund shares that were or would be subject to a contingent deferred
   sales charge upon redemption."

I. Under the sub-section entitled "Voting Rights" on page 16, please insert the
   following information as the third paragraph, which will be on page 17:

  "As of May 31, 1994, HUBCO c/o First Alabama Bank, may, for certain purposes,
  be deemed to control the Fund because it is the owner of record of certain
  shares of the Fund."



J. Please insert the following financial statements at the end of the prospectus
   beginning as page 19. In addition, please add the heading "Financial
   Statements" to the Table of Contents on page I, immediately before
   "Addresses."

FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND

PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 PRINCIPAL
  AMOUNT                                                                                  VALUE
- -----------       ------------------------------------------------------------------   -----------
<C>          <C>  <S>                                                                  <C>
CORPORATE BONDS--12.2%
- ------------------------------------------------------------------------------------
                  BASIC INDUSTRY--1.0%
                  ------------------------------------------------------------------
$   500,000       WMX Technologies, 4.875%, 6/15/96                                    $   485,125
                  ------------------------------------------------------------------   -----------
                  BEVERAGES--1.1%
                  ------------------------------------------------------------------
    500,000       Pepsico, Inc., 5.875%, 12/15/94                                          500,045
                  ------------------------------------------------------------------   -----------
                  ELECTRICAL POWER--1.1%
                  ------------------------------------------------------------------
    500,000       Virginia Electric & Power Co., 6.375%, 3/1/95                            502,100
                  ------------------------------------------------------------------   -----------
                  FINANCE-AUTOMOTIVE--2.0%
                  ------------------------------------------------------------------
    500,000       Ford Motor Credit Corporation, 5.15%, 3/15/96                            468,885
                  ------------------------------------------------------------------
    500,000       Ford Motor Credit Corporation, 5.625%, 1/15/99                           487,725
                  ------------------------------------------------------------------   -----------
                  Total                                                                    956,610
                  ------------------------------------------------------------------   -----------
                  FINANCE-COMMERCIAL--1.0%
                  ------------------------------------------------------------------
    500,000       Associates Corp. of North America, 4.50%, 2/15/96                        485,320
                  ------------------------------------------------------------------   -----------
                  PHARMACEUTICAL--1.0%
                  ------------------------------------------------------------------
    500,000       SmithKline Beecham PLC, 5.25%, 1/26/96                                   491,900
                  ------------------------------------------------------------------   -----------
                  RETAIL--1.0%
                  ------------------------------------------------------------------
    500,000       Dayton Hudson Corp., 4.65%, 3/11/96                                      486,565
                  ------------------------------------------------------------------   -----------
                  SECURITIES--1.1%
                  ------------------------------------------------------------------
    500,000       Lehman Brothers Holdings, Inc., 4.94%, 6/23/95                           494,760
                  ------------------------------------------------------------------   -----------
</TABLE>


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 PRINCIPAL
  AMOUNT                                                                                  VALUE
- -----------       ------------------------------------------------------------------   -----------
<C>          <C>  <S>                                                                  <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
                  TELECOMMUNICATIONS--2.9%
                  ------------------------------------------------------------------
$   500,000       AT&T Corp., 4.50%, 2/15/96                                           $   485,035
                  ------------------------------------------------------------------
  1,000,000       Illinois Bell Telephone Co., 5.80%, 1/1/2004                             891,180
                  ------------------------------------------------------------------   -----------
                  Total                                                                  1,376,215
                  ------------------------------------------------------------------   -----------
                  TOTAL CORPORATE BONDS (IDENTIFIED COST $6,028,755)                     5,778,640
                  ------------------------------------------------------------------   -----------
U.S. GOVERNMENT AGENCIES--9.7%
- ------------------------------------------------------------------------------------
  1,000,000       Federal Home Loan Bank, 6.16%, 1/4/2004                                  898,200
                  ------------------------------------------------------------------
    500,000       Federal National Mortgage Association, 6.40%, 1/13/2004                  455,220
                  ------------------------------------------------------------------
    500,000       Federal National Mortgage Association, 5.12%, 1/22/99                    465,350
                  ------------------------------------------------------------------
  1,000,000       Federal National Mortgage Association, 6.28%, 2/3/2004                   916,270
                  ------------------------------------------------------------------
  1,000,000       Federal Home Loan Mortgage Corp., 6.27%, 1/27/2004                       902,190
                  ------------------------------------------------------------------
  1,000,000       Federal Home Loan Mortgage Corp., 4.75%, 2/2/99                          939,370
                  ------------------------------------------------------------------   -----------
                  TOTAL U.S. GOVERNMENT SECURITIES (IDENTIFIED COST $4,983,359)          4,576,600
                  ------------------------------------------------------------------   -----------
U.S. TREASURY OBLIGATIONS--59.0%
- ------------------------------------------------------------------------------------
                  U.S. TREASURY BILLS--2.1%
                  ------------------------------------------------------------------
  1,000,000       6/2/94                                                                   999,380
                  ------------------------------------------------------------------   -----------
                  U.S. TREASURY NOTES--56.9%
                  ------------------------------------------------------------------
  1,000,000       4.25%, 7/31/94                                                         1,000,040
                  ------------------------------------------------------------------
  1,000,000       4.25%, 8/31/94                                                           999,760
                  ------------------------------------------------------------------
  1,000,000       4.25%, 10/31/94                                                          998,170
                  ------------------------------------------------------------------
    500,000       6.00%, 11/15/94                                                          502,435
                  ------------------------------------------------------------------
    500,000       4.625%, 11/30/94                                                         499,240
                  ------------------------------------------------------------------
    500,000       4.625%, 12/31/94                                                         497,440
                  ------------------------------------------------------------------
  1,500,000       4.25%, 1/31/95                                                         1,492,380
                  ------------------------------------------------------------------
  1,000,000       3.875%, 2/28/95                                                          990,500
                  ------------------------------------------------------------------
  1,000,000       3.875%, 3/31/95                                                          988,920
                  ------------------------------------------------------------------
  1,000,000       3.875%, 4/30/95                                                          986,960
                  ------------------------------------------------------------------
    500,000       4.125%, 5/31/95                                                          494,085
                  ------------------------------------------------------------------
</TABLE>


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 PRINCIPAL
  AMOUNT                                                                                  VALUE
- -----------       ------------------------------------------------------------------   -----------
<C>          <C>  <S>                                                                  <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------
                  U.S. TREASURY NOTES--CONTINUED
                  ------------------------------------------------------------------
$ 1,000,000       4.125%, 6/30/95                                                      $   986,850
                  ------------------------------------------------------------------
    500,000       4.25%, 7/31/95                                                           493,075
                  ------------------------------------------------------------------
  1,500,000       4.625%, 8/15/95                                                        1,484,520
                  ------------------------------------------------------------------
    500,000       3.875%, 8/31/95                                                          490,175
                  ------------------------------------------------------------------
    500,000       3.875%, 9/30/95                                                          489,240
                  ------------------------------------------------------------------
  1,000,000       3.875%, 10/31/95                                                         975,980
                  ------------------------------------------------------------------
    500,000       5.125%, 11/15/95                                                         496,265
                  ------------------------------------------------------------------
    500,000       4.625%, 2/15/96                                                          489,950
                  ------------------------------------------------------------------
  1,000,000       5.125%, 3/31/96                                                          986,470
                  ------------------------------------------------------------------
  1,500,000       5.50%, 4/30/96                                                         1,487,205
                  ------------------------------------------------------------------
  1,000,000       4.25%, 5/15/96                                                           968,660
                  ------------------------------------------------------------------
  1,000,000       5.875%, 5/31/96                                                          997,490
                  ------------------------------------------------------------------
  1,000,000       4.375%, 8/15/96                                                          965,320
                  ------------------------------------------------------------------
  1,500,000       4.375%, 11/15/96                                                       1,439,400
                  ------------------------------------------------------------------
  1,000,000       5.125%, 11/30/98                                                         939,530
                  ------------------------------------------------------------------
  1,500,000       5.125%, 12/31/98                                                       1,407,405
                  ------------------------------------------------------------------
  1,000,000       5.00%, 1/31/99                                                           932,310
                  ------------------------------------------------------------------
    500,000       5.50%, 4/15/2000                                                         468,445
                  ------------------------------------------------------------------
  1,000,000       5.75%, 8/15/2003                                                         905,200
                  ------------------------------------------------------------------   -----------
                  Total                                                                 26,853,420
                  ------------------------------------------------------------------   -----------
                  TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $28,539,616)         27,852,800
                  ------------------------------------------------------------------   -----------
</TABLE>


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
  SHARES
    OR
 PRINCIPAL
  AMOUNT                                                                                  VALUE
- -----------       ------------------------------------------------------------------   -----------
<C>          <C>  <S>                                                                  <C>
MUTUAL FUND SHARES--6.6%
- ------------------------------------------------------------------------------------
  2,000,000       Franklin Funds Institutional Money Market Portfolio                   $2,000,000
                  ------------------------------------------------------------------
  1,108,825       Goldman Sachs I.L.A. Treasury Portfolio                                1,108,825
                  ------------------------------------------------------------------   -----------
                  TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE)                          3,108,825
                  ------------------------------------------------------------------   -----------
*REPURCHASE AGREEMENT--12.0%
- ------------------------------------------------------------------------------------
$ 5,640,258       HSBC, 4.25%, dated 5/31/94, due 6/1/94
                  (AT AMORTIZED COST) (NOTE 2B)                                          5,640,258
                  ------------------------------------------------------------------   -----------
                  TOTAL INVESTMENTS (IDENTIFIED COST $48,300,813)                      $46,957,123+
                  ------------------------------------------------------------------   -----------
</TABLE>

* Repurchase agreement is fully collateralized by U.S. government and/or agency
  obligations, based on market prices at May 31, 1994.

+ The cost of investments for federal tax purposes amounts to $48,300,813. The
  net unrealized depreciation of investments on a federal income tax basis
  amounts to $1,343,690 and is comprised of $1,343,690 depreciation at May 31,
  1994.

Note: The categories of investments are shown as a percentage of net assets
      ($47,198,089) at May 31, 1994.

(See Notes which are an integral part of the Financial Statements)


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND

STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                                        <C>            <C>
ASSETS:
- ------------------------------------------------------------------------
Investments in repurchase agreements                                       $ 5,640,258
- ------------------------------------------------------------------------
Investments in other securities                                             41,316,865
- ------------------------------------------------------------------------   -----------
    Total investments, at value (identified and tax cost, $48,300,813)
    (Note 2A and 2B)                                                                      $46,957,123
- --------------------------------------------------------------------------------------
Cash                                                                                           60,313
- --------------------------------------------------------------------------------------
Interest receivable                                                                           468,955
- --------------------------------------------------------------------------------------
Receivable for Fund shares sold                                                                45,466
- --------------------------------------------------------------------------------------
Deferred expenses (Note 2F)                                                                     3,631
- --------------------------------------------------------------------------------------    -----------
    Total assets                                                                           47,535,488
- --------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Dividends payable                                                              171,898
- ------------------------------------------------------------------------
Payable for Fund shares redeemed                                               130,134
- ------------------------------------------------------------------------
Accrued expenses                                                                35,347
- ------------------------------------------------------------------------   -----------
    Total liabilities                                                                         337,379
- --------------------------------------------------------------------------------------    -----------
NET ASSETS for 4,858,677 shares of beneficial interest outstanding                        $47,198,109
- --------------------------------------------------------------------------------------    -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------
Paid-in capital                                                                           $48,567,483
- --------------------------------------------------------------------------------------
Net unrealized depreciation of investments                                                 (1,343,690)
- --------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                  (25,684)
- --------------------------------------------------------------------------------------    -----------
    Total Net Assets                                                                      $47,198,109
- --------------------------------------------------------------------------------------    -----------
NET ASSET VALUE:
- --------------------------------------------------------------------------------------
(Net assets of $47,198,109 / 4,858,677 shares of beneficial interest outstanding)         $      9.71
- --------------------------------------------------------------------------------------    -----------
Computation of Offering Price (100/98 of $9.71)*                                          $      9.91
- --------------------------------------------------------------------------------------    -----------
</TABLE>

* See "What Shares Cost" in the prospectus.

(See Notes which are an integral part of the Financial Statements)


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND

STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994*
(UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                                     <C>         <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest income (Note 2C)                                                           $   941,492
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee**                                               $144,135
- ---------------------------------------------------------------------
Trustees' fees                                                               223
- ---------------------------------------------------------------------
Administrative personnel and services fees**                              28,093
- ---------------------------------------------------------------------
Custodian fees**                                                           5,154
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses**                 6,411
- ---------------------------------------------------------------------
Legal fees                                                                 2,634
- ---------------------------------------------------------------------
Printing and postage                                                       7,901
- ---------------------------------------------------------------------
Portfolio accounting services**                                           24,569
- ---------------------------------------------------------------------
Insurance premiums                                                         2,545
- ---------------------------------------------------------------------
Miscellaneous                                                              2,393
- ---------------------------------------------------------------------   --------
     Total expenses                                                      224,058
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee**                              144,135
- ---------------------------------------------------------------------   --------
     Net expenses                                                                        79,923
- --------------------------------------------------------------------------------    -----------
          Net investment income                                                         861,569
- --------------------------------------------------------------------------------    -----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized loss on investment transactions (identified cost basis)                    (25,684)
- --------------------------------------------------------------------------------
Net change in unrealized depreciation of investments                                 (1,343,690)
- --------------------------------------------------------------------------------    -----------
     Net realized and unrealized loss on investments                                 (1,369,374)
- --------------------------------------------------------------------------------    -----------
          Change in net assets resulting from operations                            $  (507,805)
- --------------------------------------------------------------------------------    -----------
</TABLE>

 * For the period from December 13, 1993 (date of initial public investment) to
May 31, 1994.

** See Note 4.

(See Notes which are an integral part of the Financial Statements)


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                               PERIOD ENDED
                                                                               NOVEMBER 30,
                                                                                   1994*
                                                                                (UNAUDITED)
                                                                               -------------
<S>                                                                            <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income                                                           $   861,569
- ----------------------------------------------------------------------------
Net realized loss on investment transactions ($25,684 net loss as computed
for federal income tax purposes)                                                    (25,684)
- ----------------------------------------------------------------------------
Net change in unrealized depreciation of investments                             (1,343,690)
- ----------------------------------------------------------------------------   -------------
     Change in net assets resulting from operations                                (507,805)
- ----------------------------------------------------------------------------   -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income                               (861,569)
- ----------------------------------------------------------------------------   -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ----------------------------------------------------------------------------
Net proceeds from sale of shares                                                 52,728,032
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
  declared                                                                            3,898
- ----------------------------------------------------------------------------
Cost of shares redeemed                                                          (4,164,447)
- ----------------------------------------------------------------------------   -------------
     Change in net assets from Fund share transactions                           48,567,483
- ----------------------------------------------------------------------------   -------------
          Change in net assets                                                   47,198,109
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period                                                                 --
- ----------------------------------------------------------------------------   -------------
End of period                                                                   $47,198,109
- ----------------------------------------------------------------------------   -------------
</TABLE>

* For the period from December 13, 1993 (date of initial public investment) to
  May 31, 1994.

(See Notes which are an integral part of the Financial Statements)


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------

(1) ORGANIZATION

First Priority Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company. The
Trust consists of four diversified portfolios. The financial statements included
herein present only those of First Priority Limited Maturity Government Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).

A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
   the mean between the over-the-counter bid and asked prices as furnished by an
   independent pricing service. Corporate bonds and other fixed income
   securities/asset backed securities are valued at the last sale price reported
   on national securities exchanges on that day, if available. Otherwise,
   corporate bonds and other fixed income securities/asset backed securities and
   short-term obligations are valued at the prices provided by an independent
   pricing service. Short-term securities with remaining maturities of sixty
   days, or less may be stated at amortized cost, which approximates value.
   Investments in other regulated investment companies are valued at net asset
   value.

B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
   bank to take possession, to have legally segregated in the Federal Reserve
   Book Entry System or to have segregated within the custodian bank's vault,
   all securities held as collateral in support of repurchase agreement
   investments. Additionally, procedures have been established by the Fund to
   monitor on a daily basis, the market value of each repurchase agreement's
   underlying collateral to ensure the value at least equals the principal
   amount of the repurchase agreement, including accrued interest.

   The Fund will only enter into repurchase agreements with banks and other
   recognized financial institutions such as broker/dealers which are deemed by
   the Fund's adviser to be creditworthy pursuant to guidelines established by
   the Board of Trustees ("Trustees"). Risks may arise from the potential
   inability of counterparties to honor the terms of the repurchase agreement.
   Accordingly, the Fund could receive less than the repurchase price on the
   sale of collateral securities.

C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
   are accrued daily. Bond premium and discount are amortized as required by the
   Internal Revenue Code, as amended ("Code"). Distributions to shareholders are
   recorded on the ex-dividend date.


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------

D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
   Code applicable to regulated investment companies and to distribute to
   shareholders each year substantially all of its taxable income. Accordingly,
   no provisions for federal tax are necessary.

E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
   when-issued or delayed delivery transactions. The Fund records when-issued
   securities on the trade date and maintains security positions such that
   sufficient liquid assets will be available to make payment for the securities
   purchased. Securities purchased on a when-issued or delayed delivery basis
   are marked to market daily and begin earning interest on the settlement date.

F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
   registration of its shares in its first fiscal year, excluding the initial
   expense of registering the shares, have been deferred and are being amortized
   using the straight-line method over a period of five years from the Fund's
   commencement date.

G. OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:

<TABLE>
<CAPTION>
                                                                                PERIOD ENDED
                                                                                NOVEMBER 30,
                                                                                   1994*
- -----------------------------------------------------------------------------   ------------
<S>                                                                             <C>
Shares sold                                                                       5,281,626
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared                          400
- -----------------------------------------------------------------------------
Shares redeemed                                                                    (423,349)
- -----------------------------------------------------------------------------   -----------
     Net change resulting from Fund Share transactions                            4,858,677
- -----------------------------------------------------------------------------   -----------
</TABLE>

* For the period from December 13, 1993 (date of initial public investment) to
May 31, 1994.

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--First Alabama Bank, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to 0.70 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.

ADMINISTRATION FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee is based on the
level of average aggregate net assets of the Trust for the period.


FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------

TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The fee
is based on the size, type and number of accounts and transactions made by
shareholders.

FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period plus out-of-pocket
expenses.

ORGANIZATIONAL EXPENSES--Organizational expenses incurred by the Fund will be
borne initially by FAS and are estimated at $30,000. The Fund has agreed to
reimburse FAS for the organizational expenses during the five year period
following December 7, 1993 (date the Fund's portfolio first became effective).

Certain of the Officers and Trustees of the Fund are Officers and Directors or
Trustees of the above companies.

(5) INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1994 were as follows:

<TABLE>
<S>                                                                               <C>
- -------------------------------------------------------------------------------
PURCHASES                                                                         $46,073,960
- -------------------------------------------------------------------------------   -----------
SALES                                                                             $ 2,005,273
- -------------------------------------------------------------------------------   -----------
</TABLE>


K. Please note that the name of the Fund's legal counsel is now Dickstein,
   Shapiro & Morin, L.L.P. References to "Dickstein, Shapiro & Morin", under
   the sub-section entitled "Legal Counsel" on page 9, and on the inside back
   cover are revised accordingly.

L. Please note that the address of Deloitte & Touche, the Fund's independent
   auditors, is now 2500 One PPG Place, Pittsburgh, Pennsylvania 15222-5401.
   References under the sub-section entitled "Independent Auditors" page 9, and
   on the inside back cover are revised accordingly.

DOCUMENT DESCRIPTION 497C
DOCUMENT TYPE 1
COUNT 39
                                FIRST PRIORITY

                               LIMITED MATURITY

                                  GOVERNMENT

                                     FUND


                                    [LOGO]


                                  PROSPECTUS

                            DATED DECEMBER 7, 1993

             A Diversified Portfolio of the First Priority Funds,
                  an Open-End, Management Investment Company



                                                          [LOGO]

                                                          FIRST
                                                          PRIORITY
                                                          FAMILY OF FUNDS



                                   PROSPECTUS

- --------------------------------------------------------------------------------

                FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
                     (A PORTFOLIO OF FIRST PRIORITY FUNDS)

- --------------------------------------------------------------------------------

The shares of First Priority Limited Maturity Government Fund (the "Fund")
offered by this prospectus represent interests in a diversified portfolio of
First Priority Funds (the "Trust"), an open-end, management investment company
(a mutual fund).

The investment objective of the Fund is to achieve current income.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF FIRST
ALABAMA BANK, ARE NOT ENDORSED OR GUARANTEED BY FIRST ALABAMA BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated December 7,
1993 with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge, obtain other information, or make inquiries about the Fund by
writing or calling toll-free 1-800-433-2829.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated December 7, 1993




TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES                                                       1
- ------------------------------------------------------

GENERAL INFORMATION                                                            2
- ------------------------------------------------------

INVESTMENT INFORMATION                                                         2
- ------------------------------------------------------

  Investment Objective                                                         2
  Investment Policies                                                          2
     Acceptable Investments                                                    3
     U.S. Government Securities                                                3
     Corporate Bonds                                                           3
     Mortgage-Backed Securities                                                3
       Adjustable Rate Mortgage Securities                                     3
       CMOs                                                                    4
       Real Estate Mortgage Investment
          Conduits                                                             4
     Asset-Backed Securities                                                   4
     Considerations for Mortgage-Backed
       and Asset Backed Securities                                             4
     Bank Instruments                                                          5
     Securities Ratings                                                        5
     When-Issued and Delayed Delivery
       Transactions                                                            5
     Repurchase Agreements                                                     5
     Restricted and Illiquid Securities                                        5
     Investing in Securities of Other
       Investment Companies                                                    6
     Lending of Portfolio Securities                                           6
  Investment Limitations                                                       6

FIRST PRIORITY FUNDS INFORMATION                                               7
- ------------------------------------------------------

  Management of the First Priority Funds                                       7
     Board of Trustees                                                         7
     Investment Adviser                                                        7
       Advisory Fees                                                           7
       Adviser's Background                                                    7
  Distribution of the Fund                                                     8
     Distribution Plan                                                         8
     Administrative Arrangements                                               9
  Administration of the Fund                                                   9
     Administrative Services                                                   9
     Transfer Agent, Dividend Disbursing
       Agent and Portfolio Accounting
       Services                                                                9
     Legal Counsel                                                             9
     Independent Auditors                                                      9
  Expenses of the Fund                                                        10

NET ASSET VALUE                                                               10
- ------------------------------------------------------

INVESTING IN THE FUND                                                         10
- ------------------------------------------------------

  Minimum Investment Required                                                 10
  What Shares Cost                                                            11
  Purchases at Net Asset Value                                                11
  Dealer Concessions                                                          11
  Share Purchases                                                             11
  Conversion to Federal Funds                                                 12
  Reducing the Sales Charge                                                   12
     Quantity Discounts and Accumulated
       Purchases                                                              12
     Letter of Intent                                                         12
     Reinvestment Privilege                                                   13
  Systematic Investment Plan                                                  13
  Exchanging Securities for Fund Shares                                       13
  Shareholder Accounts                                                        13
  Dividends and Capital Gains                                                 13

EXCHANGE PRIVILEGE                                                            14
- ------------------------------------------------------

REDEEMING SHARES                                                              15
- ------------------------------------------------------

  By Telephone                                                                15
  By Mail                                                                     15
     Receiving Payment                                                        16
  Redemption Before Purchase
     Instruments Clear                                                        16
  Systematic Withdrawal Plan                                                  16
  Accounts With Low Balances                                                  16

SHAREHOLDER INFORMATION                                                       16
- ------------------------------------------------------

  Voting Rights                                                               16
  Massachusetts Partnership Law                                               17

EFFECT OF BANKING LAWS                                                        17
- ------------------------------------------------------

TAX INFORMATION                                                               18
- ------------------------------------------------------

  Federal Income Tax                                                          18

PERFORMANCE INFORMATION                                                       18
- ------------------------------------------------------

ADDRESSES                                                      Inside Back Cover
- ------------------------------------------------------




SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                                                                     <C>
                                              SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
    (as a percentage of offering price)...............................................................       2.00%
Maximum Sales Load Imposed on Reinvested Dividends
    (as a percentage of offering price)...............................................................       None
Deferred Sales Load (as a percentage of original
    purchase price or redemption proceeds, as applicable).............................................       None
Redemption Fees (as a percentage of amount redeemed, if applicable)...................................       None
Exchange Fees.........................................................................................       None

                                                 ANNUAL OPERATING EXPENSES*
                                     (As a percentage of projected average net assets)
Management Fee........................................................................................       0.70%
12b-1 Fees (1)........................................................................................       0.00%
Other Expenses........................................................................................       0.43%
          Total Operating Expenses....................................................................       1.13%
</TABLE>

(1)  As of the date of this prospectus, the Fund is not paying or accruing 12b-1
     fees. The Fund will not accrue or pay 12b-1 fees until a separate class of
     shares has been created for certain institutional investors. The Fund can
     pay up to 0.25% as a 12b-1 fee to the distributor.

* Annual Fund Operating Expenses in this table are estimated based on average
  expenses expected to be incurred during the fiscal year ending November 30,
  1994. During the course of this period, expenses may be more or less than the
  average amount shown.

     THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "FIRST PRIORITY FUNDS INFORMATION" AND "INVESTING IN THE FUND."

<TABLE>
<CAPTION>
EXAMPLE                                                                                         1 year     3 years
<S>                                                                                            <C>        <C>

You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return;
(2) redemption at the end of each time period; and (3) payment of the maximum sales load of
2%. The Fund charges no redemption fees......................................................     $31        $55

</TABLE>

     THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER
30, 1994.


GENERAL INFORMATION
- --------------------------------------------------------------------------------

First Priority Funds was established as a Massachusetts business trust under a
Declaration of Trust dated October 15, 1991.

The Declaration of Trust permits First Priority Funds to offer separate series
of shares of beneficial interest representing interests in separate portfolios
of securities. The shares of beneficial interest in any one portfolio may be
offered in separate classes. This prospectus relates only to First Priority
Limited Maturity Government Fund.

The Fund is designed for investors seeking current income through a
professionally managed, diversified portfolio investing primarily in government
securities. A minimum initial investment of $1,000 is required.

Except as otherwise noted in this prospectus, shares are sold at net asset value
plus an applicable sales charge and redeemed at net asset value.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to achieve current income. The
investment objective cannot be changed without approval of shareholders. While
there is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in securities
which are guaranteed as to payment of principal and interest by the U.S.
government or U.S. government agencies or instrumentalities. Under normal
circumstances, the Fund will invest at least 65% of the value of its total
assets in U.S. government securities. The Fund may also invest in corporate
bonds, mortgage-backed securities, asset-backed securities and bank instruments.
As stated in the Fund's name, the Fund has a policy of limiting its dollar
weighted average portfolio maturity. Specifically, the Fund intends to maintain
a dollar-weighted average portfolio maturity between two and five years,
although the Fund may purchase individual securities with longer maturities.

The net asset value of the Fund is expected to fluctuate with changes in
interest rates and bond market conditions. However, due to the limitation on the
Fund's average maturity, this fluctuation should be more moderate than that of a
fund with a longer average portfolio maturity. The adviser will attempt to
minimize principal fluctuation through, among other things, diversification,
careful credit analysis and security selection, and adjustments of the Fund's
average portfolio maturity.

Unless indicated otherwise, the investment policies may be changed by the Board
of Trustees ("Trustees") without the approval of shareholders. Shareholders will
be notified before any material change in these investment policies becomes
effective.


ACCEPTABLE INVESTMENTS.  The permitted investments include but are not limited
to the following:

U.S. GOVERNMENT SECURITIES.  The U.S. government securities in which the Fund
invests are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:

    . direct obligations of the U.S. Treasury such as U.S. Treasury bills, notes
      and bonds; and

    . notes, bonds, and discount notes of U.S. government agencies or
      instrumentalities such as Federal Home Loan Banks, Federal National
      Mortgage Association, Government National Mortgage Association, Banks for
      Cooperatives, Federal Farm Credit Banks, Tennessee Valley Authority,
      Export-Import Bank of the United States, Commodity Credit Corporation,
      Federal Financing Bank, Student Loan Marketing Association, Federal Home
      Loan Mortgage Corporation or National Credit Union Administration.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury.
Others for which no assurances can be given that the U.S. government will
provide financial support to the agencies or instrumentalities, since it is not
obligated to do so, are supported by:

    . issuer's right to borrow an amount limited to a specific line of credit
      from the U.S. Treasury;

    . discretionary authority of the U.S. government to purchase certain
      obligations of an agency or instrumentality; or

    . the credit of the agency or instrumentality.

CORPORATE BONDS.  The Fund may invest in issues of corporate debt obligations
which are rated in one of the three highest categories by a nationally
recognized statistical rating organization (a "NRSRO") (rated Aaa, Aa, or A by
Moody's Investors Service, Inc. ("Moody's"); AAA, AA or A by Standard & Poor's
Corporation ("Standard & Poor's") or by Fitch Investors Service, Inc. ("Fitch")
at the time of purchase, or which are of comparable quality in the judgment of
the adviser).

MORTGAGE-BACKED SECURITIES.  Mortgage-backed securities are securities that
directly or indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property. There are currently three basic
types of mortgage-backed securities: (i) those issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities, such as the Government
National Mortgage Association ("Ginnie Mae"), the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"); (ii) those issued by private issuers that represent an interest
in or are collateralized by mortgage-backed securities issued or guaranteed by
the U.S. government or one of its agencies or instrumentalities; and (iii) those
issued by private issuers that represent an interest in or are collateralized by
whole loans or mortgage-backed securities without a government guarantee but
usually having some form of private credit enhancement.

     ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS").  ARMS are pass-through
     mortgage securities representing interests in adjustable rather than fixed
     interest rate mortgages. The ARMS in which the Fund invests are underlying
     mortgages which collateralize ARMS issued by Ginnie Mae Veterans
     Administration ("VA"), while those collateralizing ARMS issued by Fannie
     Mae or Freddie Mac are typically conventional residential mortgages
     conforming to strict underwriting size and maturity constraints.

     CMOS.  Collateralized Mortgage Obligations ("CMOs") are a form of
     mortgage-backed security issued by single-purpose stand-alone finance
     subsidiaries or trusts of financial institutions, government agencies,
     investment bankers or companies related to the construction industry.

     The Fund will invest only in CMOs which are rated AAA by a NRSRO, and which
     may be: a) collateralized by pools of mortgages in which each mortgage is
     guaranteed as to payment of principal and interest by an agency or
     instrumentality of the U.S. government; (b) collateralized by pools of
     mortgages in which payment of principal and interest is guaranteed by the
     issuer and such guarantee is collateralized by U.S. government securities;
     or (c) securities in which the proceeds of the issuance are invested in
     mortgage securities and payment of the principal and interest are supported
     by the credit of any agency or instrumentality of the U.S. government.

     REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS").  REMICs are offerings
     of multiple class real estate mortgage-backed securities which qualify and
     elect treatment as such under provisions of the Internal Revenue Code.
     Issuers of REMICs may take several forms, such as trusts, partnerships,
     corporations, associations, or segregated pools of mortgages. Once REMIC
     status is elected and obtained, the entity is not subject to federal income
     taxation. Instead, income is passed through the entity and is taxed to the
     person or persons who hold interests in the REMIC. A REMIC interest must
     consist of one or more classes of "regular interests." To qualify as a
     REMIC, substantially all the assets of the entity must be in assets
     directly or indirectly secured principally by real property.

ASSET-BACKED SECURITIES.  Asset-backed securities have structural
characteristics similar to mortgage-backed securities but have underlying assets
that are not mortgage loans or interests in mortgage loans. The Fund may invest
in asset-backed securities rated A or higher by a NRSRO. The collateral for such
securities will consist of motor vehicle installment purchase obligations and
credit card receivables. These securities may be in the form of pass-through
instruments or asset-backed bonds. The securities are issued by non-governmental
entities and carry no direct or indirect government guarantee.

CONSIDERATIONS FOR MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.  Mortgage-backed
and asset-backed securities generally pay back principal and interest over the
life of the security. At the time the Fund reinvests the payments and any
unscheduled prepayments of principal received, the Fund may receive a rate of
interest which is actually lower than the rate of interest paid on these
securities ("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt instruments
with prepayment risks because the underlying mortgage loans or the collateral
supporting asset-backed securities may be prepaid without penalty or premium.
Prepayment risks on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or elect to
make unscheduled payments on their mortgages. Although asset-backed securities
generally are less likely to experience substantial prepayments than are
mortgage-backed securities, certain of the factors that affect the rate of
prepayments on mortgage-backed securities also affect the rate of prepayments on
asset-backed securities.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities do not have the benefit
of the same security interest in the related collateral. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of asset-backed
securities backed by motor vehicle installment purchase obligations permit the
servicer of such receivables to retain possession of the underlying
obligations. If the servicer sells these obligations to another party, there is
a risk that the purchaser would acquire an interest superior to that of the
holders of the related asset-backed securities. Further, if a vehicle is
registered in one state, and is then reregistered because the owner and obligor
moves to another state, such could defeat the original security interest in the
vehicle in certain cases. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws, the
trustee for the holders of asset-backed securities backed by automobile
receivables may not have a proper security interest in all of the obligations
backing such receivables. Therefore, there is the possibility that recoveries
on repossessed collateral may not, in some cases, be available to support
payments on these securities.

BANK INSTRUMENTS.  The Fund may purchase time and savings deposits (including
certificates of deposit) in commercial or savings banks (other than First
Alabama Bank or its affiliates) whose accounts are insured by the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund, both of which are
administered by the Federal Deposit Insurance Corporation ("FDIC"), including
certificates of deposit and other time deposits issued by foreign branches of
FDIC insured banks, and banker's acceptances.

SECURITIES RATINGS.  If a security's rating is reduced below the required
minimum after the Fund has purchased it, the Fund is not required to sell the
security, but may consider doing so.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.  The Fund may purchase securities
on a when-issued or delayed delivery basis. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.

REPURCHASE AGREEMENTS.  Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.

RESTRICTED AND ILLIQUID SECURITIES.  The Fund may invest in restricted
securities. This restriction is not applicable to commercial paper issued under
Section 4(2) of the Securities Act of 1933. Restricted securities are any
securities in which the Fund may otherwise invest pursuant to its investment
objective and policies, but which are subject to restriction on resale under
federal securities law. However, the Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the
Trustees to be liquid, non-negotiable time deposits, and repurchase agreements
providing for settlement in more than seven days after notice, to 15% of its net
assets.

The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES.  The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10% of its total assets in investment companies in general. The Fund will invest
in other investment companies primarily for the purpose of investing short-term
cash which has not yet been invested in other portfolio instruments. The adviser
will waive its investment advisory fee on assets invested in securities of
open-end investment companies. While it is the Fund's policy to waive management
fees on Fund assets invested in securities of other open-end investment
companies, it should be noted that investment companies incur certain expenses
such as custodian and transfer agent fees and, therefore, any investment by the
Fund in shares of another investment company would be subject to such expenses.

LENDING OF PORTFOLIO SECURITIES.  In order to generate additional income, the
Fund may lend portfolio securities on a short-term or a long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Board of Trustees and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned.

INVESTMENT LIMITATIONS

The Fund will not:

    . borrow money directly or through reverse repurchase agreements
      (arrangements in which the Fund sells a portfolio instrument for a
      percentage of its cash value with an arrangement to buy it back on a set
      date) or pledge securities except, under certain circumstances, the Fund
      may borrow up to one-third of the value of its total assets and pledge up
      to 10% of the value of those assets to secure such borrowings; or

    . with respect to 75% of the value of its total assets, invest more than 5%
      in securities of any one issuer other than cash, cash items or securities
      issued or guaranteed by the government of the United States, its agencies,
      or instrumentalities and repurchase agreements collateralized by such
      securities or acquire more than 10% of the outstanding voting securities
      of any one issuer.

The above investment limitations cannot be changed without shareholder approval.
The following investment limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this investment limitation becomes effective.

The Fund will not:

    . invest more than 5% of the value of its total assets in securities of
      issuers that have records of less than three years of continuous
      operations including the operation of any predecessor.



FIRST PRIORITY FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE FIRST PRIORITY FUNDS

BOARD OF TRUSTEES.  The Board of Trustees is responsible for managing business
affairs of the Trust and for exercising all of the powers of the Trust except
those reserved for the shareholders. The Executive Committee of the Board of
Trustees handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER.  Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by First Alabama Bank ("First
Alabama" or "adviser"), as the Fund's investment adviser, subject to direction
by the Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the assets of
the Fund.

     ADVISORY FEES.  The Fund's adviser receives an annual investment advisory
     fee equal to 0.70% of the Fund's average daily net assets. The adviser has
     undertaken to reimburse the Fund up to the amount of the advisory fee, for
     operating expenses in excess of limitations established by certain states.
     The adviser may voluntarily choose to waive a portion of its fee or
     reimburse other expenses of the Fund. The adviser can terminate such waiver
     or reimbursement policy at any time at its sole discretion.

     ADVISER'S BACKGROUND.  The adviser is a wholly-owned subsidiary of First
     Alabama Bancshares, Inc., a bank holding company organized during 1971
     under the laws of the State of Delaware. Operating out of more than 200
     offices, it provides a wide range of banking and fiduciary services to its
     customers. As of June 30, 1993, First Alabama Bancshares was one of the 100
     largest bank holding companies in the United States with total assets in
     excess of $8 billion. First Alabama Bank is recognized as one of the
     strongest banks in America by U.S. Banker magazine, Keefe, Bruyette &
     Woods, and Thomson Bankwatch. During 1992, these organizations rated First
     Alabama as one of the top quality banks in the United States. First
     Alabama's common stock is currently included among those in the Dow Jones
     Equity Market Index as well as Standard & Poor's Midcap Index.

     As fiduciary, First Alabama managed over $2.3 billion in discretionary
     assets as of December 31, 1992. It manages eight common trust funds and
     collective investment funds having a
     market value in excess of $200 million as of September 30, 1993. First
     Alabama has been adviser
     to the First Priority Funds since inception with a market value in excess
     of $400 million as of
     September 30, 1993.

     As part of their regular banking operations, First Alabama and its
     affiliates may grant loans to public companies. Thus, it may be possible,
     from time to time, for the Fund to hold or acquire the securities of
     issuers which are also lending clients of First Alabama or its affiliates.
     The lending relationship will not be a factor in the selection of
     securities. Because of the internal controls maintained by the companies to
     restrict the flow of information, Fund investments are typically made
     without any knowledge of First Alabama or its affiliates' lending
     relationships with an issuer.

     John M. Haigler has been the Fund's portfolio manager since its inception.
     Mr. Haigler is Vice President and Trust Investment Officer of First Alabama
     Bank, where he has 16 years of investment experience within the Trust
     Department. Mr. Haigler is enrolled in the Chartered Financial Analyst
     Program (level II) and received his B.A. from Huntingdon College.

DISTRIBUTION OF THE FUND

Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

DISTRIBUTION PLAN.  Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to Federated Securities Corp. an amount computed at an annual rate of
up to .25 of 1% of the average daily net asset value of the Shares to finance
any activity which is principally intended to result in the sale of shares
subject to the Plan.

The Fund will not accrue or pay any distribution expenses pursuant to the Plan
until a separate class of shares has been created for certain institutional
investors.

Federated Securities Corp. may from time to time and for such periods as it
deems appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the Shares exceed such lower expense
limitation as the distributor may, by notice to the Trust, voluntarily declare
to be effective.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers to provide
sales and/or administrative services as agents for their clients or customers
who beneficially own shares of the Fund. Administrative services may include,
but are not limited to, the following functions: providing office space,
equipment, telephone facilities, and various personnel including clerical,
supervisory, and computer as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the Fund; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as the Fund reasonably requests.

Financial institutions will receive fees from the distributor based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
distributor.

The Fund's Plan is a compensation type plan. As such, the Fund makes no payments
to the distributor except as described above. Therefore, the Fund does not pay
for unreimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Plan.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of Trustees will consider appropriate changes in the
services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

ADMINISTRATIVE ARRANGEMENTS.  The distributor may select brokers and dealers to
provide distribution and administrative services. The distributor may also
select administrators (including depository institutions such as commercial
banks and savings and loan associations) to provide administrative services.
These administrative services include distributing prospectuses and other
information, providing accounting assistance, and communicating or facilitating
purchases and redemptions of the Fund's shares.

Brokers, dealers, and administrators will receive fees from the distributor
based upon shares of the Fund owned by their clients or customers. The fees are
calculated as a percentage of the average aggregate net asset value of
shareholder accounts during the period for which the brokers, dealers, and
administrators provide services. Any fees paid for these services by the
distributor will be reimbursed by the adviser. Payments made here are in
addition to any payments made under the Fund's Rule 12b-1 Distribution Plan.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES.  Federated Administrative Services, a subsidiary of
Federated Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund. Such services include shareholder
servicing and certain legal and accounting services. Federated Administrative
Services provides these at an annual rate as follows:

<TABLE>
<CAPTION>
        MAXIMUM                  AVERAGE AGGREGATE DAILY
  ADMINISTRATIVE FEE             NET ASSETS OF THE TRUST
<C>                      <S>
      .150 of 1%               on the first $250 million
      .125 of 1%               on the next $250 million
      .100 of 1%               on the next $250 million
      .075 of 1%               on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may voluntarily waive a portion of
its fee.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the Shares of the Fund, and dividend disbursing
agent for the Fund. It also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments.

LEGAL COUNSEL.  Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro and Morin, Washington, D.C.

INDEPENDENT AUDITORS.  The independent auditors for the Fund are Deloitte &
Touche, Boston, Massachusetts.


EXPENSES OF THE FUND

The Fund pays all of its own expenses and its allocable shares of Trust
expenses. These expenses include, but are not limited to, the cost of: Trustees'
fees; investment advisory and administrative services; printing prospectuses and
other Fund documents for shareholders; registering the Trust, the Fund, and
shares of the Fund with federal and state securities commissions; taxes and
commissions; issuing, purchasing, repurchasing, and redeeming shares; fees for
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing, mailing, auditing, accounting, and legal
expenses; reports to shareholders and governmental agencies; meetings of
Trustees and shareholders and proxy solicitations therefor; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items as
may arise. However, the adviser may voluntarily reimburse some expenses and has,
in addition, undertaken to reimburse the Fund, up to the amount of the advisory
fee, the amount by which operating expenses exceed limitations imposed by cetain
states.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.


INVESTING IN THE FUND
- --------------------------------------------------------------------------------

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in shares of the Fund by an investor is $1,000.
Subsequent investments may be made in any amounts. The Fund may waive the
initial minimum investment from time to time. For further information, please
call First Priority Mutual Funds at 1-800-433-2829.

Officers, directors, employees, and retired employees of First Alabama or its
subsidiaries and their spouses and their dependent children may purchase shares
of the Fund with a minimum initial investment of $500, unless they choose to
participate in the systematic investment plan, in which case the minimum initial
investment is $100.



WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received, plus a sales charge as follows:

<TABLE>
<CAPTION>
                                                                        SALES CHARGE AS        SALES CHARGE AS
                                                                         A PERCENTAGE           A PERCENTAGE
                                                                           OF PUBLIC               OF NET
AMOUNT OF TRANSACTION                                                   OFFERING PRICE         AMOUNT INVESTED
<S>                                                                  <C>                    <C>
Less than $100,000                                                           2.00%                  2.04%
$100,000 but less than $250,000                                              1.75%                  1.78%
$250,000 but less than $500,000                                              1.25%                  1.27%
$500,000 but less than $750,000                                              1.00%                  1.01%
$750,000 but less than $1 million                                            0.50%                  0.50%
$1 million or more                                                           0.25%                  0.25%
</TABLE>

The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

PURCHASES AT NET ASSET VALUE.  Fund shares may be purchased at net asset value,
without a sales charge, by officers, directors, employees and retired employees
of First Alabama or its subsidiaries, and their spouses and dependent children.
Additionally, shares are available at net asset value without a sales charge to
trust customers purchasing through the Trust Departments of First Alabama Bank
and its affiliates. The Trust Departments, however, may charge fees for services
provided, which may be related to the ownership of Fund shares. This prospectus
should therefore be read together with any agreement between the Trust customer
and the Trust Department with regard to services provided and the fees charged
for these services.

DEALER CONCESSIONS.  For sales of shares of the Fund, a dealer will normally
receive up to 85% of the applicable sales charge. Any portion of the sales
charge which is not paid to a dealer will be retained by the distributor.
However, from time to time, and at the sole discretion of the distributor, all
or part of that portion may be paid to a dealer. If accepted by the dealer, such
additional payments will be predicated upon the amount of Fund shares sold.

The sales charge for shares sold other than through registered broker/dealers
will be retained by the distributor. The distributor may pay fees to banks out
of the sales charge in exchange for sales and/or administrative services
performed on behalf of the bank's customers in connection with the initiation of
customer accounts and purchases of shares.

SHARE PURCHASES.  Fund shares are sold on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Trust
customers may purchase shares through the Trust Departments of First Alabama
Bank or its affiliates. Other customers may purchase shares through First
Alabama Investments, Inc. ("FAII"). Texas residents must purchase shares through
Federated Securities Corp. at 1-800-356-2805. In connection with the sale of
Fund shares, the distributor may from time to time offer certain items of
nominal value to any shareholder or investor. The Fund reserves the right to
reject any purchase request.

Trust customers may place an order to purchase shares by contacting their local
Trust Administrator or by calling First Alabama. Other customers may purchase
shares by contacting their local FAII office or telephone FAII at
1-800-456-3244.

Payment may be made by either check or federal funds or by debiting a customer's
account at First Alabama. Purchase orders must be received by 3:00 p.m. (Central
time) in order to be credited on the same day. For settlement of an order,
payment must be received within five business days of receipt of the order.

CONVERSION TO FEDERAL FUNDS

It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds before shareholders begin to
earn dividends. Federated Services Company acts as the shareholder's agent in
depositing checks and converting them to federal funds.

REDUCING THE SALES CHARGE

The sales charge can be reduced on the purchase of Fund shares through:

    . quantity discounts and accumulated purchases;

    . signing a 13-month letter of intent; or

    . using the reinvestment privilege.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES.  As shown in the table above,
larger purchases reduce the sales charge paid. The Fund will combine purchases
of shares made on the same day by the investor, his spouse, and his children
under age 21 when it calculates the sales charge.

If an additional purchase of shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
shares having a current value at the public offering price of $90,000 and
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 1.75%,
not 2.00%.

To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing at the time the purchase is made that
shares are already owned or that purchases are being combined. The Fund will
reduce the sales charge after it confirms the purchases.

LETTER OF INTENT.  If a shareholder intends to purchase at least $100,000 of
shares in First Priority Funds over the next 13 months, the sales charge may be
reduced by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge adjustment depending on the amount
actually purchased within the 13-month period and a provision for the custodian
to hold up to 2.00% of the total amount intended to be purchased in escrow until
such purchase is completed.

The amount held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of intent
is not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.

This letter of intent will not obligate the shareholder to purchase shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days
toward the dollar fulfillment of the letter of intent. Prior trade prices will
not be adjusted.

REINVESTMENT PRIVILEGE.  If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 30 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to eliminate a sales
charge. If the shareholder redeems shares in the Fund, there may be tax
consequences, and exercise of the reinvestment privilege may result in
additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.

SYSTEMATIC INVESTMENT PLAN

Holders of shares may arrange for systematic monthly investments in their
accounts in amounts of $100 or more. Officers, directors, employees, and retired
employees of First Alabama or its subsidiaries, and their spouses and their
dependent children, may arrange for systematic monthly investments in their
accounts in amounts of $25 or more. Once proper authorization is given, a
shareholder's bank account will be debited to purchase shares in the Fund.

EXCHANGING SECURITIES FOR FUND SHARES

Investors may exchange certain securities or a combination of certain securities
and cash for Fund shares. A Fund reserves the right to determine the
acceptability of securities to be exchanged. On the day securities are accepted
by a Fund, they are valued in the same manner as the Fund values its assets.
Investors wishing to exchange securities should first contact First Alabama
Bank.The market value of any securities exchanged in an initial investment, plus
any cash, must be at least $1,000,000.

SHAREHOLDER ACCOUNTS

As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not usually
issued.

DIVIDENDS AND CAPITAL GAINS

Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. Capital gains realized by the Fund, if any, will
be distributed at least once every 12 months. Dividends and capital gains will
be reinvested in additional shares of the Fund on payment dates at the
ex-dividend date net asset value unless cash payments are requested by
shareholders by writing to the Fund or First Alabama as appropriate.



EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

A shareholder may exchange shares of one fund for the appropriate class of
shares of any other fund in the Trust by calling or by writing to First Alabama
or FAII, as appropriate. Texas residents must telephone Federated Securities
Corp. at 1-800-356-2805 to exchange shares. In addition, shareholders of the
Trust may have the ability to exchange shares of certain Funds distributed by
Federated Securities Corp. For further information, contact First Alabama Bank.
Shares purchased by check are not eligible for exchange until the purchase check
has cleared, which could take up to ten calendar days. The exchange feature
applies to shares of each fund as of the effective offering date of each fund's
shares. Telephone exchange instructions may be recorded.

Orders to exchange shares of one fund for shares of any of the other First
Priority Funds will be executed by redeeming the shares owned at net asset value
and purchasing shares of any of the other First Priority Funds at the offering
price determined after the proceeds from such redemption become available.
Orders for exchanges received by the Fund prior to 3:00 p.m. (Central time) on
any day the funds are open for business will be executed as of the close of
business that day. Orders for exchanges received after 3:00 p.m. (Central time)
on any business day will be executed at the close of the next business day.

Shares of funds with a sales charge may be exchanged at net asset value for
shares of other funds with an equal sales charge or no sales charge. Shares of
funds with a sales charge may be exchanged for shares of funds with a higher
sales charge at net asset value, plus the additional sales charge. Shares of
funds with no sales charge, whether acquired by direct purchase, reinvestment of
dividends on such shares, or otherwise, may be exchanged for shares of funds
with a sales charge at net asset value, plus the applicable sales charge.

When an exchange is made from a fund with a sales charge to a fund with no sales
charge, the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to terminate the exchange privilege of any shareholder who makes more than five
exchanges of shares of the funds in a year or three in a calendar quarter.

An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial purchase requirements of
each fund being acquired. An exchange constitutes a sale for federal income tax
purposes.

The exchange privilege is only available in states where shares of the fund
being acquired may legally be sold. Before the exchange, a shareholder must
receive a prospectus of the fund for which the exchange is being made.


REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at its net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes the net asset value of shares. Redemption requests cannot be
executed on days on which the New York Stock Exchange is closed or on Federal
holidays when wire transfers are restricted. Requests for redemption can be made
in person, by telephone, or by mail.

BY TELEPHONE

Trust customers may redeem shares of the Fund by contacting their Trust
Administrator. Other shareholders may redeem shares by telephoning their local
FAII office. For calls received by First Alabama before 3:00 p.m. (Central
time), proceeds will normally be wired within five business days to the
shareholder's account at First Alabama or a check will be sent to the address of
record. Those shares will be entitled to the dividend declared on the day the
redemption request was received. In no event will proceeds be wired more than
seven days after a proper request for redemption has been received.

An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from First Alabama. Telephone redemption instructions may be recorded.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as a written request to Federated Services Company or
First Alabama should be considered.

If at any time, the Fund shall determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL

A shareholder may redeem shares by sending a written request to FAII. The
written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested. Shareholders should
call FAII for assistance in redeeming by mail.

Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have signatures
on written redemption requests guaranteed by:

    . a trust company or commercial bank whose deposits are insured by BIF;

    . a member of the New York, American, Boston, Midwest, or Pacific Stock
      Exchanges;

    . a savings and loan association or a savings bank whose deposits are
      insured by the Savings Association Insurance Fund; or

    . any other "eligible guarantor institution," as defined in the Securities
      Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

RECEIVING PAYMENT.  Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven days, after
receipt of a proper written redemption request, provided that the transfer agent
has received payment for shares from the shareholder.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

When shares are purchased by check, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until First
Alabama is reasonably certain that the purchase check has cleared, which could
take up to ten calendar days.

SYSTEMATIC WITHDRAWAL PLAN

Under a Systematic Withdrawal Plan, accounts having a value of at least $10,000
may arrange for regular monthly or quarterly fixed withdrawal payments. Each
payment must be at least $100 and may be as much as 1.5% per month or 4.5% per
quarter of the total net asset value of the shares in the account when the
Systematic Withdrawal Plan is opened. Excessive withdrawals may deplete or
decrease the value of an account.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in the Fund's net asset value. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional shares to meet the minimum requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular Fund or class, only shareholders of that Fund or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.


MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument the Trust or its Trustees
enter into or sign.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities. However, such
banking laws and regulations do not prohibit such a holding company affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company or from purchasing shares of such a company as
agent for and upon the order of their customer. First Alabama Bank is subject to
such banking laws and regulations.

First Alabama believes, based on the advice of its counsel, that First Alabama
may perform the services for the Fund contemplated by its advisory agreement
with the Trust without violation of the Glass-Steagall Act or other applicable
banking laws or regulations. Changes in either federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent the adviser from continuing to perform all or a part of the above
services for its customers and/or the Fund. If it were prohibited from engaging
in these customer-related activities, the Trustees would consider alternative
advisers and means of continuing available investment services. In such event,
changes in the operation of the Fund may occur, including possible termination
of any automatic or other Fund share investment and redemption services that are
being provided by First Alabama. It is not expected that existing shareholders
would suffer any adverse financial consequences (if another adviser with
equivalent abilities to First Alabama is found) as a result of any of these
occurrences.



TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.


PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its total return and yield.

Total return represents the change, over a specified period of time, in the
value of an investment in shares of the Fund after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by shares
over a thirty-day period by the maximum offering price per share of shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.

The performance information described above reflects the effect of the maximum
sales load which, if excluded, would increase the total return and yield.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.



ADDRESSES
- -------------------------------------------------------------------------
<TABLE>
<S>             <C>                                                    <C>

                    First Priority Limited Maturity
                    Government Fund                                        Federated Investors Tower
                                                                           Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Distributor
                    Federated Securities Corp.                             Federated Investors Tower
                                                                           Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
                    First Alabama Bank                                     P.O. Box 10247
                    Mutual Funds Group                                     Birmingham, Alabama 35202
- ---------------------------------------------------------------------------------------------------------------------

Transfer Agent, Dividend Disbursing Agent
and Portfolio Accounting Services
                    Federated Services Company                             Federated Investors Tower
                                                                           Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Legal Counsel
                    Houston, Houston & Donnelly                            2510 Centre City Tower
                                                                           Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------

Legal Counsel
                    Dickstein, Shapiro & Morin                             2101 L Street, N.W.
                                                                           Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------

Independent Auditors
                    Deloitte & Touche                                      125 Summer Street
                                                                           Boston, Massachusetts 02110-1617
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>



FIRST PRIORITY LIMITED
MATURITY GOVERNMENT
FUND
PROSPECTUS

A Diversified Portfolio of the
First Priority Funds, an Open-End,
Management Investment Company

Prospectus dated December 7, 1993

3092905A (12/93)





FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND ( the "FUND")
(A PORTFOLIO OF FIRST PRIORITY FUNDS)
- --------------------------------------------------------------------------------

     SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 7, 1993

     A. Please insert the following as a second paragraph under the sub-section
        entitled "Fund Ownership" on page 7:

        "As of May 31, 1994, HUBCO, c/o First Alabama Bank, Birmingham, Alabama,
        acting in various capacities for numerous accounts, was the owner of
        record of approximately 4,809,951 shares (99.01%) of the Fund and
        therefore, may, for certain purposes, be deemed to control the Fund and
        be able to effect the outcome of certain matters presented for a vote of
        shareholders."

     B. Under the section entitled "Investment Advisory Services" which begins
        on page 7, please insert the following as the second sentence in the
        sub-section entitled "Advisory Fees" on page 8:

        "During the period from December 13, 1993, (date of initial public
        investment) through May 31, 1994, the Adviser earned $144,135, all of
        which was voluntarily waived."

     C. Please insert the following information as the second sentence of the
        first paragraph under the section entitled "Administrative Services" on
        page 8:

        "During the period from December 13, 1993, (date of initial public
        investment) to May 31, 1994, the Fund incurred administrative service
        costs of $28,093."

     D. Please insert the following information as the third paragraph under the
        section entitled "Administrative Services" on page 8:

        "Federated Services Company ("FServ") is the Fund portfolio accounting
        agent, transfer agent and dividend delivering agent. For the period from
        December 13, 1993, (date of initial public investment) to May 31, 1994,
        FServ received from the Fund fees equal to $24,569 for the portfolio
        accounting services."

     E. Please insert the following as the third paragraph under the sub-section
        entitled "Distribution Plan" under the section entitled "Purchasing
        Shares" on page 9:

        "During the period from December 13, 1993, (date of initial public
        investment) to May 31, 1994, there were no distribution fees."

     F. Please insert the following information as the first paragraph under the
        section "Total Return" on page 11:

        "The Fund's cumulative total return from December 13, 1993, (date of
        initial public investment) to May 31, 1994, was -2.95%. Cumulative total
        return reflects the Fund's total performance over a specific period of
        time. This total return assumes and is reduced by the payment of the
        maximum sales load. The Fund's total return is representative of
        approximately 5 months of activity since the Fund's start of
        performance."

     G. Please insert the following information as the first paragraph under the
        section "Yield" on page 11:

        "The Fund's yield for the thirty-day period, ended May 31, 1994, was
        4.96%."

                                                                   June 30, 1994

     FEDERATED SECURITIES CORP.
(LOGO)
- --------------------------------------------------------------------------------

     Distributor

     G00134-01 (6/94)


                FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
                     (A PORTFOLIO OF FIRST PRIORITY FUNDS)
                      STATEMENT OF ADDITIONAL INFORMATION

     This Statement of Additional Information should be read with the
     prospectus for First Priority Limited Maturity Government Fund (the
     "Fund") dated December 7, 1993. This Statement is not a prospectus
     itself. To receive a copy of the prospectus, write the Fund or call
     1-800-433-2829.

     FEDERATED INVESTORS TOWER
     PITTSBURGH, PENNSYLVANIA 15222-3779

                        Statement dated December 7, 1993

     [LOGO]  FEDERATED SECURITIES CORP.
             ---------------------------------------------------------
             Distributor
             A subsidiary of FEDERATED INVESTORS




TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND                                             1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE                                                           1
- ---------------------------------------------------------------

  Types of Investments                                                         1
  Investment Considerations                                                    2
  When-Issued and Delayed
     Delivery Transactions                                                     2
  Restricted and Illiquid Securities                                           2
  Repurchase Agreements                                                        3
  Lending of Portfolio Securities                                              3
  Investment Limitations                                                       3

FIRST PRIORITY FUNDS MANAGEMENT                                                5
- ---------------------------------------------------------------

  Officers and Trustees                                                        5
  The Funds                                                                    7
  Fund Ownership                                                               7
  Trustee Liability                                                            7

INVESTMENT ADVISORY SERVICES                                                   7
- ---------------------------------------------------------------

  Adviser to the Fund                                                          7
  Advisory Fees                                                                8

ADMINISTRATIVE SERVICES                                                        8
- ---------------------------------------------------------------

CUSTODIAN                                                                      8
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS                                                         8
- ---------------------------------------------------------------

PURCHASING SHARES                                                              9
- ---------------------------------------------------------------

  Distribution Plan                                                            9

EXCHANGING SECURITIES FOR FUND SHARES                                          9
- ---------------------------------------------------------------

DETERMINING NET ASSET VALUE                                                    9
- ---------------------------------------------------------------

  Determining Market Value of Securities                                       9

REDEEMING SHARES                                                              10
- ---------------------------------------------------------------

  Redemption in Kind                                                          10

EXCHANGE PRIVILEGE                                                            10
- ---------------------------------------------------------------

  Requirements for Exchanging Shares                                          10

TAX STATUS                                                                    10
- ---------------------------------------------------------------

  The Fund's Tax Status                                                       10
  Shareholders' Tax Status                                                    10

TOTAL RETURN                                                                  11
- ---------------------------------------------------------------

YIELD                                                                         11
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS                                                       11
- ---------------------------------------------------------------

APPENDIX                                                                      13
- ---------------------------------------------------------------



GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

First Priority Limited Maturity Government Fund (the "Fund") is a portfolio in
First Priority Funds (the "Trust"), which was established as a Massachusetts
business trust under a Declaration of Trust dated October 15, 1991.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------

The Fund's investment objective is to achieve current income. The investment
objective cannot be changed without approval of shareholders.

TYPES OF INVESTMENTS

The Fund invests primarily in a portfolio of government securities. The
investment portfolio may include the following securities:

. U.S. government securities, including Treasury bills, notes, bonds, and
  securities issued by agencies and instrumentalities of the U.S. government;

. mortgage-backed securities;

. corporate debt securities rated within the three highest categories by a
  nationally recognized statistical rating organization, including bonds, notes,
  and debentures;

. asset-backed securities; and

. bank instruments.

     U.S. GOVERNMENT OBLIGATIONS

       The types of U.S. government obligations in which the Fund may invest
       generally include obligations issued or guaranteed by U.S. government
       agencies or instrumentalities. These securities are backed by:

       . issuer's right to borrow an amount limited to a specific line of credit
         from the U.S. Treasury;

       . the discretionary authority of the U.S. government to purchase certain
         obligations of agencies or instrumentalities; or

       . the credit of the agency or instrumentality issuing the obligations.

       Examples of agencies and instrumentalities which are permissible
       investments which may not always receive financial support from the U.S.
       government are:

       . Federal Farm Credit Banks;

       . Federal Home Loan Banks;

       . Federal National Mortgage Association;

       . Student Loan Marketing Association; and

       . Federal Home Loan Mortgage Corporation.

     ASSET-BACKED SECURITIES

       Asset-backed securities are created by the grouping of certain
       governmental, government related and private loans, receivables and other
       lender assets into pools. Interests in these pools are sold as individual
       securities. These securities differ from other forms of debt securities,
       which normally provide for periodic payment of interest in fixed amounts
       with principal paid at maturity or specified call dates. Asset-backed
       securities, however, provide periodic payments which generally consist of
       both interest and principal payments. The estimated life of an
       asset-backed security and the average maturity of a portfolio including
       such assets vary with the prepayment experience with respect to the
       underlying debt instruments. The credit characteristics of asset-backed
       securities also differ in a number of respects from those of traditional
       debt securities.

       The credit quality of most asset-backed securities depends primarily upon
       the credit quality of the assets underlying such securities, how well the
       entity issuing the securities is insulated from the credit risk of the
       originator or any other affiliated entities, and the amount and quality
       of any credit support provided to such securities.

     NON-MORTGAGE RELATED ASSET-BACKED SECURITIES

       The Fund may invest in non-mortgage related asset-backed securities
       including, but not limited to, interests in pools of receivables, such as
       motor vehicle installment purchase obligations and credit card
       receivables. These securities may be in the form of pass-through
       instruments or asset-backed bonds. The securities, all of which are
       issued by non-governmental entities and carry no direct or indirect
       government guarantee, are structurally similar to collateralized mortgage
       obligations and mortgage pass-through securities, which are described
       below.


     MORTGAGE-RELATED ASSET-BACKED SECURITIES

       The Fund may also invest in various mortgage-related asset-backed
       securities. These types of investments may include adjustable rate
       mortgage securities, collateralized mortgage obligations ("CMOs"), real
       estate mortgage investment conduits, or other securities collateralized
       by or representing an interest in real estate mortgages (collectively,
       "mortgage securities"). The mortgage securities primarily will have
       interest rates which reset at least annually and generally will be issued
       or guaranteed by government agencies.

     ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

       ARMS are pass-through mortgage securities with adjustable rather than
       fixed interest rates. The ARMS in which the Fund invests are issued by
       the Government National Mortgage Association ("GNMA"), the Federal
       National Mortgage Association ("FNMA"), and the Federal Home Loan
       Mortgage Corporation ("FHLMC") and are actively traded. The underlying
       mortgages which collateralize ARMS issued by GNMA are fully guaranteed by
       the Federal Housing Administration ("FHA") or Veterans Administration
       ("VA"), while those collateralizing ARMS issued by FHLMC or FNMA are
       typically conventional residential mortgages conforming to strict
       underwriting size and maturity constraints. Like other U.S. government
       securities, the market value of ARMS will generally vary inversely with
       changes in market interest rates. Thus, the market value of ARMS
       generally declines when interest rates rise and generally rises when
       interest rates decline.

INVESTMENT CONSIDERATIONS

Unlike conventional bonds, mortgage-backed and other asset-backed securities may
pay back principal over the life of the security rather than at maturity. Thus,
a holder of these securities, such as the Fund, would receive monthly scheduled
payments of principal and interest, and may receive unscheduled principal
payments representing prepayments on the underlying mortgages. At the time that
a holder of the security reinvests the payments and any unscheduled prepayments
of principal that it receives, the holder may receive a rate of interest which
is actually lower than the rate of interest paid on the existing security. As a
consequence, these securities may be a less effective means of "locking in"
long-term interest rates than other types of U.S. government securities.

While these securities generally entail less risk of a decline during periods of
rapidly rising rates, they may also have less potential for capital appreciation
than other similar investments (e.g. investments with comparable maturities)
because as interest rates decline, the likelihood increases that the underlying
obligations will be prepaid. Furthermore, if these securities are purchased at a
premium, mortgage foreclosures and unscheduled principal payments may result in
some loss of a holder's principal investment to the extent of the premium paid.
Conversely, if these securities are purchased at a discount, both a scheduled
payment of principal and an unscheduled prepayment of principal would increase
current and total returns and would accelerate the recognition of income, which
would be taxed as ordinary income when distributed to shareholders.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.

No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated on the Fund's records at the trade date. These
securities are marked to market daily and maintained until the transaction is
settled. The Fund may engage in these transactions to an extent that would cause
the segregation of an amount up to 20% of the total value of its assets.

RESTRICTED AND ILLIQUID SECURITIES

The ability of the Board of Trustees ("Trustees") to determine the liquidity of
certain restricted securities is permitted under a Securities and Exchange
Commission ("SEC") Staff position set forth in the adopting release for Rule
144A under the Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive
safe-harbor for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities laws. The Rule
provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Fund believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:

. the frequency of trades and quotes for the security;

. the number of dealers willing to purchase or sell the security and the number
  of other potential buyers;

. dealer undertakings to make a market in the security; and

. the nature of the security and the nature of the marketplace trades.


REPURCHASE AGREEMENTS

The Fund requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are marked to market daily. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that a defaulting seller files for bankruptcy or
becomes insolvent, disposition of securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.

LENDING OF PORTFOLIO SECURITIES

The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.

The Fund would not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.

INVESTMENT LIMITATIONS

     BUYING ON MARGIN

       The Fund will not purchase any securities on margin, but may obtain such
       short-term credits as are necessary for clearance of transactions.

     ISSUING SENIOR SECURITIES AND BORROWING MONEY

       The Fund will not issue senior securities except that the Fund may borrow
       money in amounts up to one-third of the value of its total assets,
       including the amounts borrowed. The Fund will not borrow money except as
       a temporary, extraordinary, or emergency measure or to facilitate
       management of the portfolio by enabling the Fund to meet redemption
       requests when the liquidation of portfolio securities is deemed to be
       inconvenient or disadvantageous. The Fund will not purchase any
       securities while borrowings in excess of 5% of its total assets are
       outstanding.

     PLEDGING ASSETS

       The Fund will not mortgage, pledge, or hypothecate any assets except to
       secure permitted borrowings. In those cases, it may pledge assets having
       a market value not exceeding the lesser of the dollar amounts borrowed or
       15% of the value of total assets at the time of the pledge. For purposes
       of this limitation, the segregation or collateral arrangements made in
       connection with the purchase of securities on a when-issued basis are not
       deemed to be a pledge.

     DIVERSIFICATION OF INVESTMENTS

       With respect to securities comprising 75% of the value of its total
       assets, the Fund will not purchase securities issued by any one issuer
       (other than cash, cash items or securities issued or guaranteed by the
       government of the United States or its agencies or instrumentalities and
       repurchase agreements collateralized by such securities) if as a result
       more than 5% of the value of its total assets would be invested in the
       securities of that issuer or if it would own more than 10% of the
       outstanding voting securities of that issuer. (For purposes of this
       limitation, the Fund considers instruments issued by a U.S. branch of a
       domestic bank having capital, surplus, and undivided profits in excess of
       $100,000,000 at the time of investment to be "cash items.")

     INVESTING IN REAL ESTATE

       The Fund will not purchase or sell real estate, including limited
       partnership interests, although it may invest in the securities of
       companies whose business involves the purchase or sale of real estate or
       in securities which are secured by real estate or interests in real
       estate.


     INVESTING IN COMMODITIES

       The Fund will not purchase or sell commodities, commodity contracts or
       commodity futures contracts.

     UNDERWRITING

       The Fund will not underwrite any issue of securities, except as it may be
       deemed to be an underwriter under the Securities Act of 1933 in
       connection with the sale of securities which the Fund may purchase
       pursuant to its investment objective, policies, and limitations.

     LENDING CASH OR SECURITIES

       The Fund will not lend any of its assets, except portfolio securities up
       to one-third of the value of its total assets. This shall not prevent the
       Fund from purchasing or holding U.S. government obligations, money market
       instruments, variable rate demand notes, bonds, debentures, notes,
       certificates of indebtedness, or other debt securities, entering into
       repurchase agreements, or engaging in other transactions where permitted
       by the Fund's investment objective, policies and limitations.

     SELLING SHORT

       The Fund will not sell any securities short.

     CONCENTRATION OF INVESTMENTS

       The Fund will not invest 25% or more of its total assets in securities of
       issuers having their principal business activities in the same industry.

The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

     INVESTING IN RESTRICTED SECURITIES

       The Fund will not invest more than 10% of the value of its total assets
       in securities subject to restrictions on resale under the Securities Act
       of 1933, except for commercial paper issued under Section 4(2) of the
       Securities Act of 1933 and certain other restricted securities which meet
       the criteria for liquidity as established by the Board of Trustees.

     INVESTING IN ILLIQUID SECURITIES

       The Fund will not invest more than 15% of its net assets in illiquid
       securities, including repurchase agreements providing for settlement in
       more than seven days after notice, certain securities not determined
       under quidelines established by the Trustees to be liquid, and
       non-negotiable fixed income time deposits with maturities over seven
       days.

     INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

       The Fund will limit its investment in other investment companies to no
       more than 3% of the total outstanding voting stock of any investment
       company, invest no more than 5% of its total assets in any one investment
       company, or invest more than 10% of its total assets in investment
       companies in general. The Fund will purchase securities of closed-end
       investment companies only in open market transactions involving only
       customary broker's commissions. However, these limitations are not
       applicable if the securities are acquired in a merger, consolidation,
       reorganization or acquisition of assets; nor are they applicable with
       respect to securities of investment companies that have been exempted
       from registration under the Investment Company Act of 1940.

     INVESTING IN NEW ISSUERS

       The Fund will not invest more than 5% of the value of its total assets in
       securities of issuers which have records of less than three years of
       continuous operations, including the operation of any predecessor. The
       Fund will apply this limitation by reference to the issuer of a CMO (or
       other asset-backed security) rather than requiring that the CMO (or other
       asset-backed security) itself have at least three years of continuous
       operations.

     INVESTING IN MINERALS

       The Fund will not purchase interests in oil, gas, or other mineral
       exploration or development programs or leases, except it may purchase the
       securities of issuers which invest or sponsor such programs.


Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of the investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a violation
of such restriction.

The Fund has no present intent to borrow money, pledge securities or invest in
credit card receivables in excess of 5% of the value of its net assets in the
coming fiscal year.


FIRST PRIORITY FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with First Alabama Bank,
Federated Investors, Federated Securities Corp., Federated Services Company,
Federated Administrative Services and the Funds (as defined below).

<TABLE>
<CAPTION>
                                   POSITIONS WITH        PRINCIPAL OCCUPATIONS
NAME AND ADDRESS                   THE TRUST             DURING PAST FIVE YEARS
<S>                                <C>                   <C>
John F. Donahue*\                  Chairman and          Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower          Trustee               Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA                                           Director, AEtna Life and Casualty Company; Chief Executive Officer and
                                                         Director, Trustee, or Managing General Partner of the Funds; formerly,
                                                         Director, The Standard Fire Insurance Company. Mr. Donahue is the father
                                                         of J. Christopher Donahue, Vice President of the Trust.

John T. Conroy, Jr.                Trustee               President, Investment Properties Corporation; Senior Vice President,
Wood/IPC Commercial                                      John R. Wood and Associates, Inc., Realtors, President, Northgate
Department                                               Village Development Corporation; General Partner or Trustee in private
John R. Wood and                                         real estate ventures in Southwest Florida; Director, Trustee or Managing
Associates, Inc. Realtors                                General Partner of the Funds; formerly, President, Naples Property
3255 Tamiami Trail North                                 Management, Inc.
Naples, FL

William J. Copeland                Trustee               Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza                                            Director, Trustee, or Managing General Partner of the Funds; formerly,
23rd Floor                                               Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Pittsburgh, PA                                           Director, Ryan Homes, Inc.

James E. Dowd                      Trustee               Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road                                    Trustee, or Managing General Partner of the Funds; formerly, Director,
Concord, MA                                              Blue Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D. 3471       Trustee               Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Fifth Avenue                                             Hospitals; Clinical Professor of Medicine and Trustee, University of
Suite 1111                                               Pittsburgh; Director, Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA
Edward L. Flaherty, Jr.\           Trustee               Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat 'N Park
5916 Penn Mall                                           Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Pittsburgh, PA                                           Trustee, or Managing General Partner of the Funds; formerly, Counsel,
                                                         Horizon Financial, F.A., Western Region.

Edward C. Gonzales*                President,            Vice President, Treasurer, and Trustee, Federated Investors; Vice
Federated Investors Tower          Treasurer             President and Treasurer, Federated Advisers, Federated Management and
Pittsburgh, PA                     and Trustee           Federated Research; Executive Vice President, Treasurer, and Director,
                                                         Federated Securities Corp.; Trustee, Federated Services Company;
                                                         Chairman, Treasurer, and Trustee, Federated Administrative Services;
                                                         Trustee of some of the Funds; Vice President and Treasurer of the Funds.

Peter E. Madden                    Trustee               Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street                                      Director, Trustee, or Managing General Partner of the Funds; formerly,
Boston, MA                                               President, State Street Bank & Trust Company and State Street Boston
                                                         Corporation and Trustee, Lahey Clinic Foundation, Inc.

Gregor F. Meyer                    Trustee               Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
5916 Penn Mall                                           Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
Pittsburgh, PA                                           General Partner of the Funds; formerly, Vice Chairman, Horizon
                                                         Financial, F.A.

Wesley W. Posvar                   Trustee               Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of                                        Endowment for International Peace and RAND Corporation, Online Computer
Learning                                                 Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
University of Pittsburgh                                 Management Center; Director, Trustee, or Managing General Partner of the
Pittsburgh, PA                                           Funds; formerly, President, Emeritus, University of Pittsburgh;
                                                         formerly, Chairman, National Advisory Council for Environmental Policy
                                                         and Technology.

Marjorie P. Smuts                  Trustee               Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street                                       General Partner of the Funds.
Pittsburgh, PA

J. Christopher Donahue             Vice President        President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Tower                                Federated Management, and Federated Research; President and Director,
Pittsburgh, PA                                           Federated Administrative Services; Trustee, Federated Services Company;
                                                         President or Vice President of the Funds; Director, Trustee or Managing
                                                         General Partner of some of the Funds. Mr. Donahue is the son of John F.
                                                         Donahue, Chairman and Trustee of the Trust.

Richard B. Fisher                  Vice President        Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Tower                                Director, Federated Securities Corp.; President or Vice President of the
Pittsburgh, PA                                           Funds; Director or Trustee of some of the Funds.

John W. McGonigle                  Vice President and    Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower          Secretary             Investors; Vice President, Secretary and Trustee, Federated Advisers,
Pittsburgh, PA                                           Federated Management, and Federated Research; Trustee, Federated
                                                         Services Company; Executive Vice President, Secretary, and Trustee,
                                                         Federated Administrative Services; Executive Vice President and
                                                         Director, Federated Securities Corp.; Vice President and Secretary of
                                                         the Funds.

John A. Staley, IV                 Vice President        Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower                                President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA                                           Advisers, Federated Management, and Federated Research; Vice President
                                                         of the Funds; Director, Trustee, or Managing General Partner of some of
                                                         the Funds; formerly, Vice President, The Standard Fire Insurance Com-
                                                         pany and President of its Federated Research Division.

Ronald M. Petnuch                  Vice President        Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower          and Assistant         Assistant Treasurer of some of the Funds; formerly, Associate Corporate
Pittsburgh, PA                     Treasurer             Counsel, Federated Investors.
</TABLE>

*This Trustee is deemed to be an "interested person" of the Trust as defined in
 the Investment Company Act of 1940.

\Members of the Trust's Executive Committee. The Executive Committee of the
 Board of Trustees handles the responsibilities of the Board of Trustees between
 meetings of the Board.

THE FUNDS

"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; California
Municipal Cash Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust; FT Series, Inc.;
Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA Trust;
Federated Government Trust; Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Intermediate Government Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock Trust; Federated
Tax-Free Trust; First Priority Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash Trust; Intermediate
Municipal Trust; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty Term Trust, Inc.-1999; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; The Boulevard Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; Signet Select Funds; The Shawmut Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The Starburst Funds II; Stock
and Bond Fund, Inc.; Targeted Duration Trust; Tax-Free Instruments Trust; Trust
for Government Cash Reserves; Trust for Short-Term U.S. Government Securities;
and Trust for U.S. Treasury Obligations.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding Shares.

TRUSTEE LIABILITY

The First Priority Funds' Declaration of Trust provides that the Trustees are
not liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.


INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is First Alabama Bank ("First Alabama" or
"adviser"), which is a wholly-owned subsidiary of First Alabama Bancshares, Inc.

The adviser shall not be liable to the Trust, the Fund or any shareholder of the
Fund for any losses that may be sustained in the purchase, holding, or sale of
any security, or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the Trust.

ADVISORY FEES

For its advisory services, First Alabama receives an annual investment advisory
fee as described in the prospectus.

     STATE EXPENSE LIMITATIONS

       The adviser has undertaken to comply with the expense limitations
       established by certain states for investment companies whose shares are
       registered for sale in those states. If the Fund's normal operating
       expenses (including the investment advisory fee, but not including
       brokerage commissions, interest, taxes, and extraordinary expenses)
       exceed 2-1/2% per year of the first $30 million of average net assets, 2%
       per year of the next $70 million of average net assets, and 1-1/2% per
       year of the remaining average net assets, the adviser will reimburse the
       Fund for its expenses over the limitation.

       If the Fund's monthly projected operating expenses exceed this
       limitation, the investment advisory fee paid will be reduced by the
       amount of the excess, subject to an annual adjustment. If the expense
       limitation is exceeded, the amount to be reimbursed by the adviser will
       be limited, in any single fiscal year, by the amount of the investment
       advisory fee.

       This arrangement is not part of the advisory contract and may be amended
       or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus.

John A. Staley, IV, an officer of the Fund, holds approximately 15% of the
outstanding common stock and serves as a director of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services.

CUSTODIAN
- --------------------------------------------------------------------------------

First Alabama Bank, Birmingham, Alabama is custodian for the securities and cash
of the Fund. Under the custodian agreement, First Alabama Bank holds the Fund's
portfolio securities and keeps all necessary records and documents relating to
its duties. First Alabama Bank's fees for custody services are based upon the
market value of Fund securities held in custody plus certain securities
transaction charges.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.

The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the adviser
and may include:

. advice as to the advisability of investing in securities;

. security analysis and reports;

. economic studies;

. industry studies;

. receipt of quotations for portfolio evaluations; and

. similar services.

The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.

Research services provided by brokers may be used by the adviser in advising the
Fund and other accounts. To the extent that receipt of these services may
supplant services for which the adviser or its affiliates might otherwise have
paid, it would tend to reduce their expenses.


PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value with a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing shares of
the Fund is explained in the prospectus under "Investing in the Fund." As used
in the prospectus, the term "dependent children" means all children under the
age of 19 and full-time students under the age of 23.

DISTRIBUTION PLAN

With respect to shares of the Fund, the Trust has adopted a Plan pursuant to
Rule 12b-1 (the "Plan") which was promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940. The Plan provides for
payment of fees to Federated Securities Corp. to finance any activity which is
principally intended to result in the sale of Fund shares. Such activities may
include the advertising and marketing of Fund shares; preparing, printing and
distributing prospectuses and sales literature to prospective shareholders,
brokers or administrators; and implementing and operating the Plan. Pursuant to
the Plan, the distributor may pay fees to brokers for distribution and
administrative services and to administrators for administrative services as to
Fund shares. The administrative services are provided by a representative who
has knowledge of the shareholder's particular circumstances and goals, and
include, but are not limited to: communicating account openings; communicating
account closings; entering purchase transactions; entering redemption
transactions; providing or arranging to provide accounting support for all
transactions; wiring funds and receiving funds for Fund share purchases and
redemptions; confirming and reconciling all transactions; reviewing the activity
in Fund accounts; and providing training and supervision of broker personnel;
posting and reinvesting dividends to Fund accounts or arranging for this service
to be performed by the Fund's transfer agent; and maintaining and distributing
current copies of prospectuses and shareholder reports to the beneficial owners
of Fund shares and prospective shareholders.

The Board of Trustees expects that the adoption of the Plan will result in the
sale of a sufficient number of Fund shares so as to allow the Fund to achieve
economic viability. It is also anticipated that an increase in the size of the
Fund will facilitate more efficient portfolio management and assist the Fund in
seeking to achieve its investment objective.


EXCHANGING SECURITIES FOR FUND SHARES
- --------------------------------------------------------------------------------

Any securities to be exchanged must meet the investment objective and policies
of the Fund, must have a readily ascertainable market value, must be liquid, and
must not be subject to restrictions on resale. An investor should forward the
securities in negotiable form with an authorized letter of transmittal to First
Alabama Bank. The Fund will notify the investor of its acceptances and valuation
of the securities within five business days of their receipt by Federated
Services Company.

The basis of the exchange will depend upon the net asset value of Fund shares on
the day the securities are valued. One share of the Fund will be issued for each
equivalent amount of securities accepted.

Any interest earned on the securities prior to exchange will be considered in
valuing the securities. All interest, dividends, subscriptions, conversion, or
other rights attached to the securities become the property of the Fund, along
with the securities.

     TAX CONSEQUENCES

       Exercise of this exchange privilege is currently treated as a sale for
       federal income tax purposes. Depending upon the cost basis of the
       securities exchanged for Fund shares, a gain or loss may be realized by
       the investor.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the Fund's prospectus.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's securities are determined as follows:

. as provided by an independent pricing service;

. for short-term obligations, according to the mean bid and asked prices, as
  furnished by an independent pricing service, or for short-term obligations
  with maturities of less than 60 days, at amortized cost unless the Trustees
  determine this is not fair value; or

. at fair value as determined in good faith by the Trustees. Prices provided by
  independent pricing services may be determined without relying exclusively on
  quoted prices.


Pricing services may consider:

. yield;

. quality;

. coupon rate;

. maturity;

. type of issue;

. trading characteristics; and

. other market data.


REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
respective prospectus under "Redeeming Shares."

REDEMPTION IN KIND

Although the Trust intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the respective Fund's portfolio.

Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.

The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Trust is obligated to redeem Shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.


EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

REQUIREMENTS FOR EXCHANGING SHARES

Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund.

Further information on the exchange privilege and prospectuses may be obtained
by calling First Alabama. Instructions for exchanges may be given in writing.
Written instructions may require a signature guarantee.


TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:

. derive at least 90% of its gross income from dividends, interest, and gains
  from the sale of securities;

. derive less than 30% of its gross income from the sale of securities held less
  than three months;

. invest in securities within certain statutory limits; and

. distribute to its shareholders at least 90% of its net income earned during
  the year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations.

     CAPITAL GAINS

       Shareholders will pay federal tax at capital gains rates on long-term
       capital gains distributed to them regardless of how long they have held
       the Fund shares.


TOTAL RETURN
- --------------------------------------------------------------------------------

The average annual total return of the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the net asset value per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at the
beginning of the period with $1,000, less any applicable sales load, adjusted
over the period by any additional shares, assuming the quarterly reinvestment of
all dividends and distributions.

YIELD
- --------------------------------------------------------------------------------

The yield for shares of the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by the Fund over a thirty-day period by the maximum offering price per share on
the last day of the period. This number is then annualized using semi-annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a 12-month period
and is reinvested every six months. The yield does not necessarily reflect
income actually earned by shares because of certain adjustments required by the
Securities and Exchange Commission and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares of
the Fund, the performance will be reduced for shareholders.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The performance of Fund shares depends upon such variables as:

. portfolio quality;

. average portfolio maturity;

. type of instruments in which the portfolio is invested;

. changes in interest rates and market value of portfolio securities;

. changes in the Fund's expenses; and

. various other factors.

The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.

From time to time the Fund may advertise its performance compared to similar
funds or portfolios using certain indices, reporting services, and financial
publications. These may include the following:

. LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
  making comparative calculations using total return. Total return assumes the
  reinvestment of all capital gains distributions and income dividends and takes
  into account any change in net asset value over a specific period of time.
  From time to time, the Fund will quote its Lipper ranking in the "Short U.S.
  Government Funds" category and other relevant categories in advertising and
  sales literature.

. MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an unmanaged index tracking short-
  term U.S. government securities with maturities between 1 and 2.99 years.
  The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.

. MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX is an unmanaged index comprised of
  U.S. government securities with maturities between 1 and 10 years. Index
  returns are calculated as total returns for periods of one, six and twelve
  months, as well as year-to-date. The index is produced by Merrill Lynch,
  Pierce, Fenner & Smith, Inc.

. SHEARSON LEHMAN INTERMEDIATE GOVERNMENT INDEX is an unmanaged index comprised
  of all publicly issued, non-convertible domestic debt of the U.S. government
  or any agency thereof, or any quasi-federal corporation and of corporate debt
  guaranteed by the U.S. government. Only notes and bonds with minimum
  outstanding principal of $1 million and minimum maturity of one year and
  maximum maturity of ten years are included.

. MERRILL LYNCH 2-YEAR TREASURY CURVE INDEX is comprised of the most recently
  issued 2-year U.S. Treasury notes. Index returns are calculated as total
  returns for periods of one, three, six, and twelve months as well as year-to-
  date.

. 2-YEAR TREASURY NOTE--Source: Wall Street Journal, Bloomberg Financial
  Markets, and Telerate.

. MORNINGSTAR, INC., an independent rating service, is the publisher of the
  bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
  NASDQ-listed mutual funds of all types, according to their risk-adjusted
  returns. The maximum rating is five stars, and ratings are effective for two
  weeks.

Investors may use such a reporting service or indices in addition to the Fund's
prospectus to obtain a more complete view of the Fund's performance before
investing. Of course, when comparing performance of the Fund to any
index, factors such as composition of the index and prevailing market conditions
should be considered in assessing the significance of such comparisons.

When comparing funds using reporting services, or total return and yield,
investors should take into consideration any relevant differences in funds such
as permitted portfolio compositions and methods used to value portfolio
securities and compute offering price.

Advertisements and other sales literature may quote total returns which are
calculated on non-standardized base periods. The total returns represent the
historic change in the value of an investment in shares based on monthly
reinvestment of dividends over a specified period of time.

Advertisements may quote performance information which does not reflect the
effect of the sales load.


APPENDIX
- --------------------------------------------------------------------------------

STANDARD AND POOR'S CORPORATE BOND RATINGS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS

AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

P-1--Issuers rated PRIME-1 (for related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. PRIME-1 repayment
capacity will normally be evidenced by the following characteristics:
Conservative capitalization structures with moderate reliance on debt and ample
asset protection; Broad margins in earning coverage of fixed financial charges
and high internal cash generation; Well established access to a range of
financial markets and assured sources of alternative liquidity.

P-2--Issuers rated PRIME-2 (for related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.

A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".

FITCH INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

3092905B (12/93)


                           SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant, FIRST
PRIORITY LIMITED MATURITY GOVERNMENT FUND, certifies that it
meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of Pittsburgh and Commonwealth of Pennsylvania, on the 29th
day of June, 1994.

                 FIRST PRIORITY LIMITED MATURITY

               BY: /s/Jay S. Neuman
               Jay S. Neuman, Assistant Secretary
               Attorney in Fact for John F. Donahue
               June 29, 1994


   Pursuant to the requirements of the Securities Act of 1933,
this Amendment to its Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:

   NAME                       TITLE                         DATE

By:  /s/Jay S. Neuman
   Jay S. Neuman            Attorney In Fact      June 29, 1994
   ASSISTANT SECRETARY      For the Persons
                            Listed Below

   NAME                       TITLE

John F. Donahue*            Vice President, Chairman and Trustee
                            (Chief Executive Officer)

Edward C. Gonzales*         President and Treasurer
                            (Principal Financial and
                            Accounting Officer)

John T. Conroy, Jr.*        Trustee

William J. Copeland*        Trustee

James E. Dowd*              Trustee

Lawrence D. Ellis, M.D.*    Trustee

Edward L. Flaherty, Jr.*    Trustee

Peter E. Madden*            Trustee

Gregor F. Meyer*            Trustee

Wesley W. Posvar*           Trustee

Marjorie P. Smuts*          Trustee

* By Power of Attorney




                              Exhibit 18 under Form N-1A
                              Exhibit 99 under Item 601/Reg. S-K

              HOUSTON, HOUSTON & DONNELLY
                    ATTORNEYS AT LAW
                 2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, PA.  15222
FRED CHALMERS HOUSTON, JR.__________
THOMAS J. DONNELLY
JOHN F. MECK         (412) 471-5828      FRED CHALMERS HOUSTON
                    FAX (412) 471-0736     (1914 - 1971)


MARIO SANTILLI, JR.
THEODORE M. HAMMER

June 27, 1994



First Priority Funds
Federated Investors Tower
Pittsburgh, PA  15222-3779

Gentlemen:

     As counsel to First Priority Funds ("Trust") we have
reviewed Post-effective Amendment No. 6 to the Trust's
Registration Statement to be filed with the Securities and
Exchange Commission under the Securities Act of 1933 (File No. 33-
44737).  The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective
pursuant to said Rule on June 29, 1994.

     Our review also included an examination of other relevant
portions of the amended 1933 Act Registration Statement of the
Trust and such other documents and records deemed appropriate.
On the basis of this review we are of the opinion that Post-
effective Amendment No. 6 does not contain disclosures which
would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.

     We hereby consent to the filing of this representation
letter as a part of the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and as part of any application or registration statement
filed under the Securities Laws of the States of the United
States.

                                   Very truly yours,

                                   Houston, Houston & Donnelly


                                   By: /s/ Thomas J. Donnelly
TJD:heh


                                     Exhibit 5 under Form N-1A
                            Exhibit 10 under Item 601/Reg. S-K



                                 EXHIBIT D
                                  to the
                       Investment Advisory Contract
                                     
                           FIRST PRIORITY FUNDS

              First Priority Limited Maturity Government Fund

     For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to 0.70 of 1% of the average daily net assets of the
Fund.

     The portion of the fee based upon average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.70 of 1% applied to the
daily net assets of the Fund.

     The advisory fee so accrued shall be paid to Adviser daily.

     Witness the due execution hereof this 1st day of December, 1993.

Attest:                            FIRST ALABAMA BANK



By: /s/Virginia L. Martin       By: /s/ Richard E. Wambsganss
     Assistant Secretary           Executive Vice President


Attest:                            FIRST PRIORITY FUNDS



By: /s/ John W. McGonigle       By: /s/ J. F. Donahue
     Secretary                     President





                                          Exhibit 6 under Form N-1A
                                          Exhibit 1 under Item 601/Reg. S-K



                                 Exhibit C
                                  to the
                          Distributor's Contract
                                     
                           FIRST PRIORITY FUNDS

              First Priority Limited Maturity Government Fund


     In consideration of the mutual covenants set forth in the
Distributor's Contract dated
February 26, 1992 between First Priority Funds  and Federated Securities
Corp., First Priority Funds executes and delivers this Exhibit on behalf of
the Fund first set forth in this Exhibit.


     Witness the due execution hereof this 1st day of December, 1993



Attest:                            First Priority Funds


/s/ John W. McGonigle              /s/ E. C. Gonzales
Secretary                            President




Attest:                            Federated Securities Corp.



/s/ S. Elliott Cohan               /s/ John A. Staley IV
Secretary                            Executive Vice President






                                     Exhibit 8 under Form N-1A
                          Exhibit E 10 under Item 601/Reg. S-K

                                
                                
                       CUSTODIAN CONTRACT
                             Between
                      FIRST PRIORITY FUNDS
                               and
               STATE STREET BANK AND TRUST COMPANY
                        TABLE OF CONTENTS


Page
1.    Employment of Custodian and Property to be Held by It 1

2.    Duties of the Custodian With Respect to Property
      of the Funds Held by the Custodian               1
      2.1    Holding Securities                        1
      2.2    Delivery of Securities                    2
      2.3    Registration of Securities                4
      2.4    Bank Accounts                             4
      2.5    Payments for Shares                       4
      2.6    Availability of Federal Funds             4
      2.7    Collection of Income                      5
      2.8    Payment of Fund Moneys                    5
      2.9    Liability for Payment in Advance of
             Receipt of Securities Purchased            6
      2.10   Payments for Repurchases or Redemptions
             of Shares of a Fund                       6
      2.11   Appointment of Agents                     6
      2.12   Deposit of Fund Assets in Securities System.   7
      2.13   Segregated Account                        8
      2.14   Joint Repurchase Agreements               8
      2.15   Ownership Certificates for Tax Purposes   8
      2.16   Proxies                                   9
      2.17   Communications Relating to Fund Portfolio
             Securities                                             9
      2.18   Proper Instructions                       9
      2.19   Actions Permitted Without Express Authority    9
      2.20   Evidence of Authority                     10

3.    Duties of Custodian with Respect to the Books of Account
      and Regulatory Reporting                             10

4.    Records                                          10

5.    Opinion of Funds' Auditors.                      11

6.    Reports to Trust by Auditors                     11

7.    Compensation of Custodian                        11

8.    Responsibility of Custodian                      11

9.    Effective Period, Termination and Amendment      13

10.   Successor Custodian                              13

11.   Interpretive and Additional Provisions           14

12.   Massachusetts Law to Apply                       14

13.   Notices                                          14

14.   Counterparts                                     14

15.   Limitations of Liability                         15

                       CUSTODIAN CONTRACT


     This Contract between FIRST PRIORITY FUNDS, (the
"Trust"), a Massachusetts business trust, on behalf of the
portfolios (hereinafter collectively called the "Funds" and
individually referred to as a "Fund") of the Trust, organized
and existing under the laws of the Commonwealth of
Massachusetts, having its principal place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-
3779, and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",

     WITNESSETH:  That in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto agree as follows:

1.    Employment of Custodian and Property to be Held by It.

     The Trust hereby employs the Custodian as the custodian
of the assets of each of the Funds of the Trust.  Except as
otherwise expressly provided herein, the securities and other
assets of each of the Funds shall be segregated from the
assets of each of the other Funds and from all other persons
and entities.  The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of
income, payments of principal or capital distributions
received by them with respect to all securities owned by the
Funds from time to time, and the cash consideration received
by them for shares ("Shares") of beneficial interest of the
Funds as may be issued or sold from time to time.  The
Custodian shall not be responsible for any property of the
Funds held or received by the Funds and not delivered to the
Custodian.

     Upon receipt of "Proper Instructions" (within the meaning
of Section 2.18), the Custodian shall from time to time employ
one or more sub-custodians upon the terms specified in the
Proper Instructions, provided that the Custodian shall have no
more or less responsibility or liability to the Trust or any
of the Funds on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the
Custodian.

2.    Duties of the Custodian With Respect to Property of the
     Funds Held by the Custodian.

2.1   Holding Securities.  The Custodian shall hold and
     physically segregate for the account of each Fund all non-
     cash property, including all securities owned by each
     Fund, other than securities which are maintained pursuant
     to Section 2.12 in a clearing agency which acts as a
     securities depository or in a book-entry system
     authorized by the U.S. Department of the Treasury,
     collectively referred to herein as "Securities System",
     or securities which are subject to a joint repurchase
     agreement with affiliated funds pursuant to Section 2.14.
     The Custodian shall maintain records of all receipts,
     deliveries and locations of such securities, together
     with a current inventory thereof, and shall conduct
     periodic physical inspections of certificates
     representing stocks, bonds and other securities held by
     it under this Contract in such manner as the Custodian
     shall determine from time to time to be advisable in
     order to verify the accuracy of such inventory.  With
     respect to securities held by any agent appointed
     pursuant to Section 2.11 hereof, and with respect to
     securities held by any sub-custodian appointed pursuant
     to Section 1 hereof, the Custodian may rely upon
     certificates from such agent as to the holdings of such
     agent and from such sub-custodian as to the holdings of
     such sub-custodian, it being understood that such
     reliance in no way relieves the Custodian of its
     responsibilities under this Contract.  The Custodian will
     promptly report to the Trust the results of such
     inspections, indicating any shortages or discrepancies
     uncovered thereby, and take appropriate action to remedy
     any such shortages or discrepancies.

2.2   Delivery of Securities.  The Custodian shall release and
     deliver securities owned by a Fund held by the Custodian
     or in a Securities System account of the Custodian only
     upon receipt of Proper Instructions, which may be
     continuing instructions when deemed appropriate by the
     parties, and only in the following cases:

         (1)  Upon sale of such securities for the account of
         a Fund and receipt of payment therefor;

         (2)  Upon the receipt of payment in connection with
         any repurchase agreement related to such securities
         entered into by the Trust;

         (3)  In the case of a sale effected through a
         Securities System, in accordance with the provisions
         of Section 2.12 hereof;

         (4)  To the depository agent in connection with
         tender or other similar offers for portfolio
         securities of a Fund, in accordance with the
         provisions of Section 2.17 hereof;

         (5)  To the issuer thereof or its agent when such
         securities are called, redeemed, retired or otherwise
         become payable; provided that, in any such case, the
         cash or other consideration is to be delivered to the
         Custodian;

         (6)  To the issuer thereof, or its agent, for
         transfer into the name of a Fund or into the name of
         any nominee or nominees of the Custodian or into the
         name or nominee name of any agent appointed pursuant
         to Section 2.11 or into the name or nominee name of
         any sub-custodian appointed pursuant to Section 1; or
         for exchange for a different number of bonds,
         certificates or other evidence representing the same
         aggregate face amount or number of units; provided
         that, in any such case, the new securities are to be
         delivered to the Custodian;

         (7)  Upon the sale of such securities for the account
         of a Fund, to the broker or its clearing agent,
         against a receipt, for examination in accordance with
         "street delivery custom"; provided that in any such
         case, the Custodian shall have no responsibility or
         liability for any loss arising from the delivery of
         such securities prior to receiving payment for such
         securities except as may arise from the Custodian's
         own failure to act in accordance with the standard of
         reasonable care or any higher standard of care
         imposed upon the Custodian by any applicable law or
         regulation if such above-stated standard of
         reasonable care were not part of this Contract;

         (8)  For exchange or conversion pursuant to any plan
         of merger, consolidation, recapitalization,
         reorganization or readjustment of the securities of
         the issuer of such securities, or pursuant to
         provisions for conversion contained in such
         securities, or pursuant to any deposit agreement;
         provided that, in any such case, the new securities
         and cash, if any, are to be delivered to the
         Custodian;

         (9)  In the case of warrants, rights or similar
         securities, the surrender thereof in the exercise of
         such warrants, rights or similar securities or the
         surrender of interim receipts or temporary securities
         for definitive securities; provided that, in any such
         case, the new securities and cash, if any, are to be
         delivered to the Custodian;

         (10)  For delivery in connection with any loans of
         portfolio securities of a Fund, but only against
         receipt of adequate collateral in the form of (a)
         cash, in an amount specified by the Trust, (b)
         certificated securities of a description specified by
         the Trust, registered in the name of the Fund or in
         the name of a nominee of the Custodian referred to in
         Section 2.3 hereof or in proper form for transfer, or
         (c) securities of a description specified by the
         Trust, transferred through a Securities System in
         accordance with Section 2.12 hereof;

         (11)  For delivery as security in connection with any
         borrowings requiring a pledge of assets by a Fund,
         but only against receipt of amounts borrowed, except
         that in cases where additional collateral is required
         to secure a borrowing already made, further
         securities may be released for the purpose;

         (12)  For delivery in accordance with the provisions
         of any agreement among the Trust, the Custodian and a
         broker-dealer registered under the Securities
         Exchange Act of 1934, as amended, (the "Exchange
         Act") and a member of The National Association of
         Securities Dealers, Inc. ("NASD"), relating to
         compliance with the rules of The Options Clearing
         Corporation and of any registered national securities
         exchange, or of any similar organization or
         organizations, regarding escrow or other arrangements
         in connection with transactions for a Fund;

         (13)  For delivery in accordance with the provisions
         of any agreement among the Trust, the Custodian, and
         a Futures Commission Merchant registered under the
         Commodity Exchange Act, relating to compliance with
         the rules of the Commodity Futures Trading Commission
         and/or any Contract Market, or any similar
         organization or organizations, regarding account
         deposits in connection with transaction for a Fund;

         (14)  Upon receipt of instructions from the transfer
         agent ("Transfer Agent") for a Fund, for delivery to
         such Transfer Agent or to the holders of shares in
         connection with distributions in kind, in
         satisfaction of requests by holders of Shares for
         repurchase or redemption; and

         (15)  For any other proper corporate purpose, but
         only upon receipt of, in addition to Proper
         Instructions, a certified copy of a resolution of the
         Executive Committee of the Trust on behalf of a Fund
         signed by an officer of the Trust and certified by
         its Secretary or an Assistant Secretary, specifying
         the securities to be delivered, setting forth the
         purpose for which such delivery is to be made,
         declaring such purpose to be a proper corporate
         purpose, and naming the person or persons to whom
         delivery of such securities shall be made.

2.3   Registration of Securities.  Securities held by the
     Custodian (other than bearer securities) shall be
     registered in the name of a particular Fund or in the
     name of any nominee of the Fund or of any nominee of the
     Custodian which nominee shall be assigned exclusively to
     the Fund, unless the Trust has authorized in writing the
     appointment of a nominee to be used in common with other
     registered investment companies affiliated with the Fund,
     or in the name or nominee name of any agent appointed
     pursuant to Section 2.11 or in the name or nominee name
     of any sub-custodian appointed pursuant to Section 1.
     All securities accepted by the Custodian on behalf of a
     Fund under the terms of this Contract shall be in "street
     name" or other good delivery form.

2.4   Bank Accounts.  The Custodian shall open and maintain a
     separate bank account or accounts in the name of each
     Fund, subject only to draft or order by the Custodian
     acting pursuant to the terms of this Contract, and shall
     hold in such account or accounts, subject to the
     provisions hereof, all cash received by it from or for
     the account of each Fund, other than cash maintained in a
     joint repurchase account with other affiliated funds
     pursuant to Section 2.14 of this Contract or by a
     particular Fund in a bank account established and used in
     accordance with Rule 17f-3 under the Investment Company
     Act of 1940, as amended, (the "1940 Act").  Funds held by
     the Custodian for a Fund may be deposited by it to its
     credit as Custodian in the Banking Department of the
     Custodian or in such other banks or trust companies as it
     may in its discretion deem necessary or desirable;
     provided, however, that every such bank or trust company
     shall be qualified to act as a custodian under the 1940
     Act and that each such bank or trust company and the
     funds to be deposited with each such bank or trust
     company shall be approved by vote of a majority of the
     Board of Trustees ("Board") of the Trust.  Such funds
     shall be deposited by the Custodian in its capacity as
     Custodian for the Fund and shall be withdrawable by the
     Custodian only in that capacity.  If requested by the
     Trust, the Custodian shall furnish the Trust, not later
     than twenty (20) days after the last business day of each
     month, an internal reconciliation of the closing balance
     as of that day in all accounts described in this section
     to the balance shown on the daily cash report for that
     day rendered to the Trust.

2.5   Payments for Shares.  The Custodian shall make such
     arrangements with the Transfer Agent of each Fund, as
     will enable the Custodian to receive the cash
     consideration due to each Fund and will deposit into each
     Fund's account such payments as are received from the
     Transfer Agent.  The Custodian will provide timely
     notification to the Trust and the Transfer Agent of any
     receipt by it of payments for Shares of the respective
     Fund.

2.6   Availability of Federal Funds.  Upon mutual agreement
     between the Trust and the Custodian, the Custodian shall
     make federal funds available to the Funds as of specified
     times agreed upon from time to time by the Trust and the
     Custodian in the amount of checks, clearing house funds,
     and other non-federal funds received in payment for
     Shares of the Funds which are deposited into the Funds'
     accounts.

2.7   Collection of Income.

         (1)  The Custodian shall collect on a timely basis
         all income and other payments with respect to
         registered securities held hereunder to which each
         Fund shall be entitled either by law or pursuant to
         custom in the securities business, and shall collect
         on a timely basis all income and other payments with
         respect to bearer securities if, on the date of
         payment by the issuer, such securities are held by
         the Custodian or its agent thereof and shall credit
         such income, as collected, to each Fund's custodian
         account.  Without limiting the generality of the
         foregoing, the Custodian shall detach and present for
         payment all coupons and other income items requiring
         presentation as and when they become due and shall
         collect interest when due on securities held
         hereunder.  The collection of income due the Funds on
         securities loaned pursuant to the provisions of
         Section 2.2 (10) shall be the responsibility of the
         Trust.  The Custodian will have no duty or
         responsibility in connection therewith, other than to
         provide the Trust with such information or data as
         may be necessary to assist the Trust in arranging for
         the timely delivery to the Custodian of the income to
         which each Fund is properly entitled.

         (2)  The Trust shall promptly notify the Custodian
         whenever income due on securities is not collected in
         due course and will provide the Custodian with
         monthly reports of the status of past due income.
         The Trust will furnish the Custodian with a weekly
         report of accrued/past due income for the fund.  Once
         an item is identified as past due and the Trust has
         furnished the necessary claim documentation to the
         Custodian, the Custodian will then initiate a claim
         on behalf of the Trust.  The Custodian will furnish
         the Trust with a status report monthly unless the
         parties otherwise agree.

2.8   Payment of Fund Moneys.  Upon receipt of Proper
     Instructions, which may be continuing instructions when
     deemed appropriate by the parties, the Custodian shall
     pay out moneys of each Fund in the following cases only:

         (1)  Upon the purchase of securities, futures
         contracts or options on futures contracts for the
         account of a Fund but only (a) against the delivery
         of such securities, or evidence of title to futures
         contracts, to the Custodian (or any bank, banking
         firm or trust company doing business in the United
         States or abroad which is qualified under the
         Investment Company Act of 1940, as amended, to act as
         a custodian and has been designated by the Custodian
         as its agent for this purpose) registered in the name
         of the Fund or in the name of a nominee of the
         Custodian referred to in Section 2.3 hereof or in
         proper form for transfer, (b) in the case of a
         purchase effected through a Securities System, in
         accordance with the conditions set forth in Section
         2.12 hereof or (c) in the case of repurchase
         agreements entered into between the Trust and any
         other party, (i) against delivery of the securities
         either in certificate form or through an entry
         crediting the Custodian's account at the Federal
         Reserve Bank with such securities or (ii) against
         delivery of the receipt evidencing purchase for the
         account of the Fund of securities owned by the
         Custodian along with written evidence of the
         agreement by the Custodian to repurchase such
         securities from the Fund;

         (2)  In connection with conversion, exchange or
         surrender of securities owned by a Fund as set forth
         in Section 2.2 hereof;

         (3)  For the redemption or repurchase of Shares of a
         Fund issued by the Trust as set forth in Section 2.10
         hereof;

         (4)  For the payment of any expense or liability
         incurred by a Fund, including but not limited to the
         following payments for the account of the Fund:
         interest; taxes; management, accounting, transfer
         agent and legal fees; and operating expenses of the
         Fund, whether or not such expenses are to be in whole
         or part capitalized or treated as deferred expenses;

         (5)  For the payment of any dividends on Shares of a
         Fund declared pursuant to the governing documents of
         the Trust;

         (6)  For payment of the amount of dividends received
         in respect of securities sold short;

         (7)  For any other proper purpose, but only upon
         receipt of, in addition to Proper Instructions, a
         certified copy of a resolution of the Executive
         Committee of the Trust on behalf of a Fund  signed by
         an officer of the Trust and certified by its
         Secretary or an Assistant Secretary, specifying the
         amount of such payment, setting forth the purpose for
         which such payment is to be made, declaring such
         purpose to be a proper purpose, and naming the person
         or persons to whom such payment is to be made.

2.9   Liability for Payment in Advance of Receipt of
     Securities Purchased.  In any and every case where
     payment for purchase of securities for the account of a
     Fund is made by the Custodian in advance of receipt of
     the securities purchased, in the absence of specific
     written instructions from the Trust to so pay in advance,
     the Custodian shall be absolutely liable to the Fund for
     such securities to the same extent as if the securities
     had been received by the Custodian.

2.10  Payments for Repurchases or Redemptions of Shares of a
     Fund.  From such funds as may be available for the
     purpose of repurchasing or redeeming Shares of a Fund,
     but subject to the limitations of the Declaration of
     Trust and any applicable votes of the Board of the Trust
     pursuant thereto, the Custodian shall, upon receipt of
     instructions from the Transfer Agent, make funds
     available for payment to holders of shares of such Fund
     who have delivered to the Transfer Agent a request for
     redemption or repurchase of their shares including
     without limitation through bank drafts, automated
     clearinghouse facilities, or by other means.  In
     connection with the redemption or repurchase of Shares of
     the Funds, the Custodian is authorized upon receipt of
     instructions from the Transfer Agent to wire funds to or
     through a commercial bank designated by the redeeming
     shareholders.

2.11  Appointment of Agents.  The Custodian may at any time or
     times in its discretion appoint (and may at any time
     remove) any other bank or trust company which is itself
     qualified under the Investment Company Act of 1940, as
     amended, and any applicable state law or regulation, to
     act as a custodian, as its agent to carry out such of the
     provisions of this Section 2 as the Custodian may from
     time to time direct; provided, however, that the
     appointment of any agent shall not relieve the Custodian
     of its responsibilities or liabilities hereunder.

2.12  Deposit of Fund Assets in Securities System.  The
     Custodian may deposit and/or maintain securities owned by
     the Funds in a clearing agency registered with the
     Securities and Exchange Commission ("SEC") under Section
     17A of the Exchange Act, which acts as a securities
     depository, or in the book-entry system authorized by the
     U.S. Department of the Treasury and certain federal
     agencies, collectively referred to herein as "Securities
     System" in accordance with applicable Federal Reserve
     Board and SEC rules and regulations, if any, and subject
     to the following provisions:

         (1)  The Custodian may keep securities of each Fund
         in a Securities System provided that such securities
         are represented in an account ("Account") of the
         Custodian in the Securities System which shall not
         include any assets of the Custodian other than assets
         held as a fiduciary, custodian or otherwise for
         customers;

         (2)  The records of the Custodian with respect to
         securities of the Funds which are maintained in a
         Securities System shall identify by book-entry those
         securities belonging to each Fund;

         (3)  The Custodian shall pay for securities purchased
         for the account of each Fund upon (i) receipt of
         advice from the Securities System that such
         securities have been transferred to the Account, and
         (ii) the making of an entry on the records of the
         Custodian to reflect such payment and transfer for
         the account of the Fund.  The Custodian shall
         transfer securities sold for the account of a Fund
         upon (i) receipt of advice from the Securities System
         that payment for such securities has been transferred
         to the Account, and (ii) the making of an entry on
         the records of the Custodian to reflect such transfer
         and payment for the account of the Fund.  Copies of
         all advices from the Securities System of transfers
         of securities for the account of a Fund shall
         identify the Fund, be maintained for the Fund by the
         Custodian and be provided to the Trust at its
         request.  Upon request, the Custodian shall furnish
         the Trust confirmation of each transfer to or from
         the account of a Fund in the form of a written advice
         or notice and shall furnish to the Trust copies of
         daily transaction sheets reflecting each day's
         transactions in the Securities System for the account
         of a Fund.

         (4)  The Custodian shall provide the Trust with any
         report obtained by the Custodian on the Securities
         System's accounting system, internal accounting
         control and procedures for safeguarding securities
         deposited in the Securities System;

         (5)  The Custodian shall have received the initial
         certificate, required by Section 9 hereof;

         (6)  Anything to the contrary in this Contract
         notwithstanding, the Custodian shall be liable to the
         Trust for any loss or damage to a Fund resulting from
         use of the Securities System by reason of any
         negligence, misfeasance or misconduct of the
         Custodian or any of its agents or of any of its or
         their employees or from failure of the Custodian or
         any such agent to enforce effectively such rights as
         it may have against the Securities System; at the
         election of the Trust, it shall be entitled to be
         subrogated to the rights of the Custodian with
         respect to any claim against the Securities System or
         any other person which the Custodian may have as a
         consequence of any such loss or damage if and to the
         extent that a Fund has not been made whole for any
         such loss or damage.

            (7)  The authorization contained in this Section
        2.12 shall not relieve the Custodian from using
        reasonable care and diligence in making use of any
        Securities System.

2.13  Segregated Account.  The Custodian shall upon receipt of
     Proper Instructions establish and maintain a segregated
     account or accounts for and on behalf of each Fund, into
     which account or accounts may be transferred cash and/or
     securities, including securities maintained in an account
     by the Custodian pursuant to Section 2.12 hereof, (i) in
     accordance with the provisions of any agreement among the
     Trust, the Custodian and a broker-dealer registered under
     the Exchange Act and a member of the NASD (or any futures
     commission merchant registered under the Commodity
     Exchange Act), relating to compliance with the rules of
     The Options Clearing Corporation and of any registered
     national securities exchange (or the Commodity Futures
     Trading Commission or any registered contract market), or
     of any similar organization or organizations, regarding
     escrow or other arrangements in connection with
     transactions for a Fund, (ii) for purpose of segregating
     cash or government securities in connection with options
     purchased, sold or written for a Fund or commodity
     futures contracts or options thereon purchased or sold
     for a Fund, (iii) for the purpose of compliance by the
     Trust or a Fund with the procedures required by any
     release or releases of the SEC relating to the
     maintenance of segregated accounts by registered
     investment companies and (iv) for other proper corporate
     purposes, but only, in the case of clause (iv), upon
     receipt of, in addition to Proper Instructions, a
     certified copy of a resolution of the Board or of the
     Executive Committee signed by an officer of the Trust and
     certified by the Secretary or an Assistant Secretary,
     setting forth the purpose or purposes of such segregated
     account and declaring such purposes to be proper
     corporate purposes.

2.14  Joint Repurchase Agreements.  Upon the receipt of Proper
     Instructions, the Custodian shall deposit and/or maintain
     any assets of a Fund and any affiliated funds which are
     subject to joint repurchase transactions in an account
     established solely for such transactions for the Fund and
     its affiliated funds.  For purposes of this Section 2.14,
     "affiliated funds" shall include all investment companies
     and their portfolios for which subsidiaries or affiliates
     of Federated Investors serve as investment advisers,
     distributors or administrators in accordance with
     applicable exemptive orders from the SEC.  The
     requirements of segregation set forth in Section 2.1
     shall be deemed to be waived with respect to such assets.

2.15  Ownership Certificates for Tax Purposes.  The Custodian
     shall execute ownership and other certificates and
     affidavits for all federal and state tax purposes in
     connection with receipt of income or other payments with
     respect to securities of a Fund held by it and in
     connection with transfers of securities.

2.16  Proxies.  The Custodian shall, with respect to the
     securities held hereunder, cause to be promptly executed
     by the registered holder of such securities, if the
     securities are registered otherwise than in the name of a
     Fund or a nominee of a Fund, all proxies, without
     indication of the manner in which such proxies are to be
     voted, and shall promptly deliver to the Trust such
     proxies, all proxy soliciting materials and all notices
     relating to such securities.

2.17  Communications Relating to Fund Portfolio Securities.
     The Custodian shall transmit promptly to the Trust all
     written information (including, without limitation,
     pendency of calls and maturities of securities and
     expirations of rights in connection therewith and notices
     of exercise of call and put options written by the Fund
     and the maturity of futures contracts purchased or sold
     by the Fund) received by the Custodian from issuers of
     the securities being held for the Fund.  With respect to
     tender or exchange offers, the Custodian shall transmit
     promptly to the Trust all written information received by
     the Custodian from issuers of the securities whose tender
     or exchange is sought and from the party (or his agents)
     making the tender or exchange offer.  If the Trust
     desires to take action with respect to any tender offer,
     exchange offer or any other similar transaction, the
     Trust shall notify the Custodian in writing at least
     three business days prior to the date on which the
     Custodian is to take such action.  However, the Custodian
     shall nevertheless exercise its best efforts to take such
     action in the event that notification is received three
     business days or less prior to the date on which action
     is required.  For securities which are not held in
     nominee name, the Custodian will act as a secondary
     source of information and will not be responsible for
     providing corporate action notification to the Trust.

2.18  Proper Instructions.  Proper Instructions as used
     throughout this Section 2 means a writing signed or
     initialed by one or more person or persons as the Board
     shall have from time to time authorized.  Each such
     writing shall set forth the specific transaction or type
     of transaction involved.  Oral instructions will be
     considered Proper Instructions if the Custodian
     reasonably believes them to have been given by a person
     previously authorized in Proper Instructions to give such
     instructions with respect to the transaction involved.
     The Trust shall cause all oral instructions to be
     confirmed in writing.  Upon receipt of a certificate of
     the Secretary or an Assistant Secretary as to the
     authorization by the Board of the Trust accompanied by a
     detailed description of procedures approved by the Board,
     Proper Instructions may include communications effected
     directly between electro-mechanical or electronic devices
     provided that the Board and the Custodian are satisfied
     that such procedures afford adequate safeguards for a
     Fund's assets.

2.19  Actions Permitted Without Express Authority.  The
     Custodian may in its discretion, without express
     authority from the Trust:

         (1)  make payments to itself or others for minor
         expenses of handling securities or other similar
         items relating to its duties under this Contract,
         provided that all such payments shall be accounted
         for to the Trust in such form that it may be
         allocated to the affected Fund;

         (2)  surrender securities in temporary form for
         securities in definitive form;

         (3)  endorse for collection, in the name of a Fund,
         checks, drafts and other negotiable instruments; and

         (4)  in general, attend to all non-discretionary
         details in connection with the sale, exchange,
         substitution, purchase, transfer and other dealings
         with the securities and property of each Fund except
         as otherwise directed by the Trust.

2.20  Evidence of Authority.  The Custodian shall be protected
     in acting upon any instructions, notice, request,
     consent, certificate or other instrument or paper
     reasonably believed by it to be genuine and to have been
     properly executed on behalf of a Fund.  The Custodian may
     receive and accept a certified copy of a vote of the
     Board of the Trust as conclusive evidence (a) of the
     authority of any person to act in accordance with such
     vote or (b) of any determination of or any action by the
     Board pursuant to the Declaration of Trust as described
     in such vote, and such vote may be considered as in full
     force and effect until receipt by the Custodian of
     written notice to the contrary.

3.    Duties of Custodian With Respect to the Books of Account
     and Regulatory Reporting.

     The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board
of the Trust to keep the books of account of each Fund and
appointed to report on behalf of each Fund to the Board, the
SEC and other regulatory bodies.

4.    Records.

     The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract
in such manner as will meet the obligations of the Trust and
the Funds under the 1940 Act, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, and
specifically including identified cost records used for tax
purposes.  All such records shall be the property of the Trust
and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized
officers, employees or agents of the Trust and employees and
agents of the SEC.  In the event of termination of this
Contract, the Custodian will deliver all such records to the
Trust, to a successor Custodian, or to such other person as
the Trust may direct.  The Custodian shall supply daily to the
Trust a tabulation of securities owned by a Fund and held by
the Custodian and shall, when requested to do so by the Trust
and for such compensation as shall be agreed upon between the
Trust and the Custodian, include certificate numbers in such
tabulations.  When requested by the Trust and for such
compensation as shall be agreed upon between the Trust and the
Custodian, this tabulation shall include certificate numbers.
In addition, the Custodian shall electronically transmit daily
to the Trust information pertaining to security trading and
other investment activity and all other cash activity of a
Fund.

5.    Opinion of Funds' Independent Auditors.

     The Custodian shall take all reasonable action, as the
Trust may from time to time request, to obtain from year to
year favorable opinions from each Fund's independent auditors
with respect to its activities hereunder in connection with
the preparation of the Fund's registration statement, periodic
reports, or any other reports to the SEC and with respect to
any other requirements of such Commission.

6.    Reports to Trust by Independent Auditors.

     The Custodian shall provide the Trust, at such times as
the Trust may reasonably require, with reports by independent
auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for the
Fund under this Contract; such reports shall be of sufficient
scope and in sufficient detail, as may reasonably be required
by the Trust, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination
and, if there are no such inadequacies, the reports shall so
state.

7.    Compensation of Custodian.

     The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Trust and the
Custodian.

8.    Responsibility of Custodian.

     The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract;
provided, however, that the Custodian shall be held to any
higher standard of care which would be imposed upon the
Custodian by any applicable law or regulation if such above
stated standard of reasonable care was not part of this
Contract.  The Custodian shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Trust)
on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided
that such action is not in violation of applicable federal or
state laws or regulations, and is in good faith and without
negligence.  Subject to the limitations set forth in Section
15 hereof, the Custodian shall be kept indemnified by the
Trust but only from the assets of the Fund involved in the
issue at hand and be without liability for any action taken or
thing done by it in carrying out the terms and provisions of
this Contract in accordance with the above standards.

     In order that the indemnification provisions contained in
this Section 8 shall apply, however, it is understood that if
in any case the Trust may be asked to indemnify or save the
Custodian harmless, the Trust shall be fully and promptly
advised of all pertinent facts concerning the situation in
question, and it is further understood that the Custodian will
use all reasonable care to identify and notify the Trust
promptly concerning any situation which presents or appears
likely to present the probability of such a claim for
indemnification.  The Trust shall have the option to defend
the Custodian against any claim which may be the subject of
this indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the Trust
shall take over complete defense of the claim, and the
Custodian shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under
this Section.  The Custodian shall in no case confess any
claim or make any compromise in any case in which the Trust
will be asked to indemnify the Custodian except with the
Trust's prior written consent.

     Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall
be in accordance with a separate Agreement entered into
between the Custodian and the Trust.

     If the Trust requires the Custodian to take any action
with respect to securities, which action involves the payment
of money or which action may, in the reasonable opinion of the
Custodian, result in the Custodian or its nominee assigned to
a Fund being liable for the payment of money or incurring
liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take
such action, to provide indemnity to the Custodian in an
amount and form satisfactory to the Custodian.

     Subject to the limitations set forth in Section 15
hereof, the Trust  agrees to indemnify and hold harmless the
Custodian and its nominee from and against all taxes, charges,
expenses, assessments, claims and liabilities (including
counsel fees) (referred to herein as authorized charges)
incurred or assessed against it or its nominee in connection
with the performance of this Contract, except such as may
arise from it or its nominee's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care which would be imposed upon the Custodian by
any applicable law or regulation if such above-stated standard
of reasonable care were not part of this Contract.  To secure
any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any
purpose which results in the Fund incurring an overdraft at
the end of any business day or for extraordinary or emergency
purposes during any business day, the Trust hereby grants to
the Custodian a security interest in and pledges to the
Custodian securities held for the Fund by the Custodian, in an
amount not to exceed 10 percent of the Fund's gross assets,
the specific securities to be designated in writing from time
to time by the Trust or the Fund's  investment adviser.
Should the Trust fail to make such designation, or should it
instruct the Custodian to make advances exceeding the
percentage amount set forth above and should the Custodian do
so, the Trust hereby agrees that the Custodian shall have a
security interest in all securities or other property
purchased for a Fund with the advances by the Custodian, which
securities or property shall be deemed to be pledged to the
Custodian, and the written instructions of the Trust
instructing their purchase shall be considered the requisite
description and designation of the property so pledged for
purposes of the requirements of the Uniform Commercial Code.
Should the Trust fail to cause a Fund to repay promptly any
authorized charges or advances of cash or securities, subject
to the provision of the second paragraph of this Section 8
regarding indemnification, the Custodian shall be entitled to
use available cash and to dispose of pledged securities and
property as is necessary to repay any such advances.

9.    Effective Period, Termination and Amendment.

     This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take
effect not sooner than sixty (60) days after the date of such
delivery or mailing; provided, however that the Custodian
shall not act under Section 2.12 hereof in the absence of
receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of the Trust has approved
the initial use of a particular Securities System as required
in each case by Rule 17f-4 under the Investment Company Act of
1940, as amended; provided further, however, that the Trust
shall not amend or terminate this Contract in contravention of
any applicable federal or state regulations, or any provision
of the Declaration of Trust and further provided, that the
Trust may at any time by action of its Board (i) substitute
another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a
like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.

     Upon termination of the Contract, the Trust shall pay to
the Custodian such compensation as may be due as of the date
of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.

10.   Successor Custodian.

     If a successor custodian shall be appointed by the Board
of the Trust, the Custodian shall, upon termination, deliver
to such successor custodian at the office of the Custodian,
duly endorsed and in the form for transfer, all securities
then held by it hereunder for each Fund and shall transfer to
separate accounts of the successor custodian all of each
Fund's securities held in a Securities System.

     If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Board of the Trust, deliver at the
office of the Custodian and transfer such securities, funds
and other properties in accordance with such vote.

     In the event that no written order designating a
successor custodian or certified copy of a vote of the Board
shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than
$100,000,000, all securities, funds and other properties held
by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this
Contract for each Fund and to transfer to separate  accounts
of such successor custodian all of each Fund's securities held
in any Securities System.  Thereafter, such bank or trust
company shall be the successor of the Custodian under this
Contract.

      In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to
failure of the Trust to procure the certified copy of the vote
referred to or of the Board to appoint a successor custodian,
the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains
possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and
effect.

11.   Interpretive and Additional Provisions.

     In connection with the operation of this Contract, the
Custodian and the Trust may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract.  Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of
the Declaration of Trust.  No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.


12.   Massachusetts Law to Apply.

     This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.

13.   Notices.

     Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to the
Trust at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to the Custodian at 225 Franklin Street,
Boston, Massachusetts, 02110, or to such other address as the
Trust or the Custodian may hereafter specify, shall be deemed
to have been properly delivered or given hereunder to the
respective address.

14.   Counterparts.

     This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.

15.   Limitations of Liability.

     The Custodian is expressly put on notice of the
limitation of liability as set forth in Article XI of the
Declaration of Trust and agrees that the obligations and
liabilities assumed by the Trust and any Fund pursuant to this
Contract, including, without limitation, any obligation or
liability to indemnify the Custodian pursuant to Section 8
hereof, shall be limited in any case to the relevant Fund and
its assets and that the Custodian shall not seek satisfaction
of any such obligation from the shareholders of the relevant
Fund, from any other Fund or its shareholders or from the
Trustees, Officers, employees or agents of the Trust, or any
of them.  In addition, in connection with the discharge and
satisfaction of any claim made by the Custodian against the
Trust, for whatever reasons, involving more than one Fund, the
Trust shall have the exclusive right to determine the
appropriate allocations of liability for any such claim
between or among the Funds.

     IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
as of the 1st day of October, 1992.


ATTEST: FIRST PRIORITY FUNDS


By: /s/ S. Elliott Cohan        By: /s/ John W. McGonigle
     Assistant Secretary             Vice President


ATTEST  STATE STREET BANK AND TRUST COMPANY

By: /s/ Claire E. Rodowicz      By: /s/ Ronald E. Logue
     Assistant Secretary             Senior Vice President


                                      Exhibit 9 under Form N-1A
                                      Exhibit 10 under Item 601/Reg. S-K
                                     
                                     
                                 AGREEMENT
                                    for
                             FUND ACCOUNTING,
                        SHAREHOLDER RECORDKEEPING,
                                    and
                       CUSTODY SERVICES PROCUREMENT

  AGREEMENT made as of the 1st day of December, 1993, by and between
those investment companies listed on Exhibit 1 as may be amended from
time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA  15222-3779 (the "Trust"), on
behalf of the portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a
Delaware business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779 (the "Company").
  WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
  WHEREAS, the Trust wishes to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes"), and the
Company is willing to furnish such services; and
  WHEREAS, the Trust desires to appoint the Company as its transfer
agent, dividend disbursing agent, and agent in connection with certain
other activities, and the Company desires to accept such appointment; and
  WHEREAS, the Trust desires to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks and the Company desires to accept such
appointment; and
  WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
  WHEREAS, the words Trust and Fund may be used interchangeably for those
investment companies consisting of only one portfolio;
  NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE:  Fund Accounting.
Article 1.  Appointment.
  The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement.  The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2.  The Company and Duties.
  Subject to the supervision and control of the Trust's Board of Trustees
or Directors ("Board"), the Company will assist the Trust with regard to
fund accounting for the Trust, and/or the Funds, and/or the Classes, and
in connection therewith undertakes to perform the following specific
services;
  A. Value the assets of the Funds and determine the net asset value per
      share of each Fund and/or Class, at the time and in the manner from
      time to time determined by the Board and as set forth in the
      Prospectus and Statement of Additional Information ("Prospectus")
      of each Fund;
  B. Calculate the net income of each of the Funds, if any;
  C. Calculate capital gains or losses of each of the Funds resulting
      from sale or disposition of assets, if any;
  D. Maintain the general ledger and other accounts, books and financial
      records of the Trust, including for each Fund, and/or Class, as
      required under Section 31(a) of the 1940 Act and the Rules
      thereunder in connection with the services provided by the Company;
  E. Preserve for the periods prescribed by Rule 31a-2 under the 1940
      Act the records to be maintained by Rule 31a-1 under the 1940 Act
      in connection with the services provided by the Company.  The
      Company further agrees that all such records it maintains for the
      Trust are the property of the Trust and further agrees to surrender
      promptly to the Trust such records upon the Trust's request;
  F. At the request of the Trust, prepare various reports or other
      financial documents required by federal, state and other applicable
      laws and regulations; and
  G. Such other similar services as may be reasonably requested by the
      Trust.
Article 3.  Compensation and Allocation of Expenses.
  A. The Funds will compensate the Company for its services rendered
      pursuant to Section One of this Agreement in accordance with the
      fees set forth on Fee Schedules A ("A1, A2, A3 etc..."), annexed
      hereto and incorporated herein, as may be added or amended from
      time to time.  Such fees do not include out-of-pocket disbursements
      of the Company for which the Funds shall reimburse the Company upon
      receipt of a separate invoice.  Out-of-pocket disbursements shall
      include, but shall not be limited to, the items specified in
      Schedules B ("B1, B2, B3, etc..."), annexed hereto and incorporated
      herein, as may be added or amended from time to time.  Schedules B
      may be modified by the Company upon not less than thirty days'
      prior written notice to the Trust.
  B. The Fund and/or the Class, and not the Company, shall bear the cost
      of:  custodial expenses; membership dues in the Investment Company
      Institute or any similar organization; transfer agency expenses;
      investment advisory expenses; costs of printing and mailing stock
      certificates, Prospectuses, reports and notices; administrative
      expenses; interest on borrowed money; brokerage commissions; taxes
      and fees payable to federal, state and other governmental agencies;
      fees of Trustees or Directors of the Trust; independent auditors
      expenses; Federated Administrative Services and/or Federated
      Administrative Services, Inc. legal and audit department expenses
      billed to Federated Services Company for work performed related to
      the Trust, the Funds, or the Classes; law firm expenses; or other
      expenses not specified in this Article 3 which may be properly
      payable by the Funds and/or classes.
  C. The Company will send an invoice to each of the Funds as soon as
      practicable after the end of each month.  Each invoice will provide
      detailed information about the compensation and out-of-pocket
      expenses in accordance with Schedules A and Schedules B.  The Funds
      and or the Classes will pay to the Company the amount of such
      invoice within 30 days of receipt of the invoices.
  D. Any compensation agreed to hereunder may be adjusted from time to
      time by attaching to Schedules A revised Schedules dated and signed
      by a duly authorized officer of the Trust and/or the Funds and a
      duly authorized officer of the Company.
  E. The fee for the period from the effective date of this Agreement
      with respect to a Fund or a Class to the end of the initial month
      shall be prorated according to the proportion that such period
      bears to the full month period.  Upon any termination of this
      Agreement before the end of any month, the fee for such period
      shall be prorated according to the proportion which such period
      bears to the full month period.  For purposes of determining fees
      payable to the Company, the value of the Fund's net assets shall be
      computed at the time and in the manner specified in the Fund's
      Prospectus.
  F. The Company, in its sole discretion, may from time to time
      subcontract to, employ or associate with itself such person or
      persons as the Company may believe to be particularly suited to
      assist it in performing services under this Section One.  Such
      person or persons may be third-party service providers, or they may
      be officers and employees who are employed by both the Company and
      the Funds.  The compensation of such person or persons shall be
      paid by the Company and no obligation shall be incurred on behalf
      of the Trust, the Funds, or the Classes in such respect.
SECTION TWO:  Shareholder Recordkeeping.
Article 4.  Terms of Appointment.
  Subject to the terms and conditions set forth in this Agreement, the
Trust hereby  appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
  As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized.  Each such writing shall set
forth the specific transaction or type of transaction involved.  Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets.  Proper Instructions may only be
amended in writing.
Article 5.  Duties of the Company.
  The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
  A. Purchases
      (1) The Company shall receive orders and payment for the purchase
           of shares and promptly deliver payment and appropriate
           documentation therefore to the custodian of the relevant Fund,
           (the "Custodian").  The Company shall notify the Fund and the
           Custodian on a daily basis of the total amount of orders and
           payments so delivered.
      (2) Pursuant to purchase orders and in accordance with the Fund's
           current Prospectus, the Company shall compute and issue the
           appropriate number of Shares of each Fund and/or Class and
           hold such Shares in the appropriate Shareholder accounts.
      (3) For certificated Funds and/or Classes, if a Shareholder or its
           agent requests a certificate, the Company, as Transfer Agent,
           shall countersign and mail by first class mail, a certificate
           to the Shareholder at its address as set forth on the transfer
           books of the Funds, and/or Classes, subject to any Proper
           Instructions regarding the delivery of certificates.
      (4) In the event that any check or other order for the purchase of
           Shares of the Fund and/or Class is returned unpaid for any
           reason, the Company shall debit the Share account of the
           Shareholder by the number of Shares that had been credited to
           its account upon receipt of the check or other order, promptly
           mail a debit advice to the Shareholder, and notify the Fund
           and/or Class of its action.  In the event that the amount paid
           for such Shares exceeds proceeds of the redemption of such
           Shares plus the amount of any dividends paid with respect to
           such Shares, the Fund and/the Class or its distributor will
           reimburse the Company on the amount of such excess.
  B. Distribution
      (1) Upon notification by the Funds of the declaration of any
           distribution to Shareholders, the Company shall act as
           Dividend Disbursing Agent for the Funds in accordance with the
           provisions of its governing document and the then-current
           Prospectus of the Fund.  The Company shall prepare and mail or
           credit income, capital gain, or any other payments to
           Shareholders.  As the Dividend Disbursing Agent, the Company
           shall, on or before the payment date of any such distribution,
           notify the Custodian of the estimated amount required to pay
           any portion of said distribution which is payable in cash and
           request the Custodian to make available sufficient funds for
           the cash amount to be paid out.  The Company shall reconcile
           the amounts so requested and the amounts actually received
           with the Custodian on a daily basis.  If a Shareholder is
           entitled to receive additional Shares by virtue of any such
           distribution or dividend, appropriate credits shall be made to
           the Shareholder's account, for certificated Funds and/or
           Classes, delivered where requested; and
      (2) The Company shall maintain records of account for each Fund
           and Class and advise the Trust, each Fund and Class and its
           Shareholders as to the foregoing.
  C. Redemptions and Transfers
      (1) The Company shall receive redemption requests and redemption
           directions and, if such redemption requests comply with the
           procedures as may be described in the Fund Prospectus or set
           forth in Proper Instructions, deliver the appropriate
           instructions therefor to the Custodian.  The Company shall
           notify the Funds on a daily basis of the total amount of
           redemption requests processed and monies paid to the Company
           by the Custodian for redemptions.
      (2) At the appropriate time upon receiving redemption proceeds
           from the Custodian with respect to any redemption, the Company
           shall pay or cause to be paid the redemption proceeds in the
           manner instructed by the redeeming Shareholders, pursuant to
           procedures described in the then-current Prospectus of the
           Fund.
      (3) If any certificate returned for redemption or other request
           for redemption does not comply with the procedures for
           redemption approved by the Fund, the Company shall promptly
           notify the Shareholder of such fact, together with the reason
           therefor, and shall effect such redemption at the price
           applicable to the date and time of receipt of documents
           complying with said procedures.
      (4) The Company shall effect transfers of Shares by the registered
           owners thereof.
      (5) The Company shall identify and process abandoned accounts and
           uncashed checks for state escheat requirements on an annual
           basis and report such actions to the Fund.
  D. Recordkeeping
      (1) The Company shall record the issuance of Shares of each Fund,
           and/or Class, and maintain pursuant to applicable rules of the
           Securities and Exchange Commission ("SEC") a record of the
           total number of Shares of the Fund and/or Class which are
           authorized, based upon data provided to it by the Fund, and
           issued and outstanding.  The Company shall also provide the
           Fund on a regular basis or upon reasonable request with the
           total number of Shares which are authorized and issued and
           outstanding, but shall have no obligation when recording the
           issuance of Shares, except as otherwise set forth herein, to
           monitor the issuance of such Shares or to take cognizance of
           any laws relating to the issue or sale of such Shares, which
           functions shall be the sole responsibility of the Funds.
      (2) The Company shall establish and maintain records pursuant to
           applicable rules of the SEC relating to the services to be
           performed hereunder in the form and manner as agreed to by the
           Trust or the Fund to include a record for each Shareholder's
           account of the following:
           (a) Name, address and tax identification number (and whether
                such number has been certified);
           (b) Number of Shares held;
           (c) Historical information regarding the account, including
                dividends paid and date and price for all transactions;
           (d) Any stop or restraining order placed against the account;
           (e) Information with respect to withholding in the case of a
                foreign account or an account for which withholding is
                required by the Internal Revenue Code;
           (f) Any dividend reinvestment order, plan application,
                dividend address and correspondence relating to the
                current maintenance of the account;
           (g) Certificate numbers and denominations for any Shareholder
                holding certificates;
           (h) Any information required in order for the Company to
                perform the calculations contemplated or required by this
                Agreement.
      (3) The Company shall preserve any such records required to be
           maintained pursuant to the rules of the SEC for the periods
           prescribed in said rules as specifically noted below.  Such
           record retention shall be at the expense of the Company, and
           such records may be inspected by the Fund at reasonable times.
           The Company may, at its option at any time, and shall
           forthwith upon the Fund's demand, turn over to the Fund and
           cease to retain in the Company's files, records and documents
           created and maintained by the Company pursuant to this
           Agreement, which are no longer needed by the Company in
           performance of its services or for its protection.  If not so
           turned over to the Fund, such records and documents will be
           retained by the Company for six years from the year of
           creation, during the first two of which such documents will be
           in readily accessible form.  At the end of the six year
           period, such records and documents will either be turned over
           to the Fund or destroyed in accordance with Proper
           Instructions.
  E. Confirmations/Reports
      (1) The Company shall furnish to the Fund periodically the
           following information:
           (a) A copy of the transaction register;
           (b) Dividend and reinvestment blotters;
           (c) The total number of Shares issued and outstanding in each
                state for "blue sky" purposes as determined according to
                Proper Instructions delivered from time to time by the
                Fund to the Company;
           (d) Shareholder lists and statistical information;
           (e) Payments to third parties relating to distribution
                agreements, allocations of sales loads, redemption fees,
                or other transaction- or sales-related payments;
           (f) Such other information as may be agreed upon from time to
                time.
      (2) The Company shall prepare in the appropriate form, file with
           the Internal Revenue Service and appropriate state agencies,
           and, if required, mail to Shareholders, such notices for
           reporting dividends and distributions paid as are required to
           be so filed and mailed and shall withhold such sums as are
           required to be withheld under applicable federal and state
           income tax laws, rules and regulations.
      (3) In addition to and not in lieu of the services set forth
           above, the Company shall:
           (a) Perform all of the customary services of a transfer
                agent, dividend disbursing agent and, as relevant, agent
                in connection with accumulation, open-account or similar
                plans (including without limitation any periodic
                investment plan or periodic withdrawal program),
                including but not limited to:  maintaining all
                Shareholder accounts, mailing Shareholder reports and
                Prospectuses to current Shareholders, withholding taxes
                on accounts subject to back-up or other withholding
                (including non-resident alien accounts), preparing and
                filing reports on U.S. Treasury Department Form 1099 and
                other appropriate forms required with respect to
                dividends and distributions by federal authorities for
                all Shareholders, preparing and mailing confirmation
                forms and statements of account to Shareholders for all
                purchases and redemptions of Shares and other confirmable
                transactions in Shareholder accounts, preparing and
                mailing activity statements for Shareholders, and
                providing Shareholder account information; and
           (b) provide a system which will enable the Fund to monitor
                the total number of Shares of each Fund and/or Class sold
                in each state ("blue sky reporting").  The Fund shall by
                Proper Instructions (i) identify to the Company those
                transactions and assets to be treated as exempt from the
                blue sky reporting for each state and (ii) verify the
                classification of transactions for each state on the
                system prior to activation and thereafter monitor the
                daily activity for each state.  The responsibility of the
                Company for each Fund's and/or Class's state blue sky
                registration status is limited solely to the recording of
                the initial classification of transactions or accounts
                with regard to blue sky compliance and the reporting of
                such transactions and accounts to the Fund as provided
                above.
  F. Other Duties
      (1) The Company shall answer correspondence from Shareholders
           relating to their Share accounts and such other correspondence
           as may from time to time be addressed to the Company;
      (2) The Company shall prepare Shareholder meeting lists, mail
           proxy cards and other material supplied to it by the Fund in
           connection with Shareholder Meetings of each Fund;  receive,
           examine and tabulate returned proxies, and certify the vote of
           the Shareholders;
      (3) The Company shall establish and maintain facilities and
           procedures for safekeeping of stock certificates, check forms
           and facsimile signature imprinting devices, if any; and for
           the preparation or use, and for keeping account of, such
           certificates, forms and devices.
Article 6.  Duties of the Trust.
  A. Compliance
      The Trust or Fund assume full responsibility for the preparation,
      contents and distribution of their own and/or their classes'
      Prospectus and for complying with all applicable requirements of
      the Securities Act of 1933, as amended (the "1933 Act"), the 1940
      Act and any laws, rules and regulations of government authorities
      having jurisdiction.
  B. Share Certificates
      The Trust shall supply the Company with a sufficient supply of
      blank Share certificates and from time to time shall renew such
      supply upon request of the Company.  Such blank Share certificates
      shall be properly signed, manually or by facsimile, if authorized
      by the Trust and shall bear the seal of the Trust or facsimile
      thereof; and notwithstanding the death, resignation or removal of
      any officer of the Trust authorized to sign certificates, the
      Company may continue to countersign certificates which bear the
      manual or facsimile signature of such officer until otherwise
      directed by the Trust.
  C. Distributions
      The Fund shall promptly inform the Company of the declaration of
      any dividend or distribution on account of any Fund's shares.
Article 7.  Compensation and Expenses.
  A. Annual Fee
      For performance by the Company pursuant to Section Two of this
      Agreement, the Trust and/or the Fund agree to pay the Company an
      annual maintenance fee for each Shareholder account as set out in
      Schedules C ("C1, C2, C3 etc..."), attached hereto, as may be added
      or amended from time to time.  Such fees may be changed from time
      to time subject to written agreement between the Trust and the
      Company.  Pursuant to information in the Fund Prospectus or other
      information or instructions from the Fund, the Company may sub-
      divide any Fund into Classes or other sub-components for
      recordkeeping purposes.  The Company will charge the Fund the fees
      set forth on Schedule C for each such Class or sub-component the
      same as if each were a Fund.
  B. Reimbursements
      In addition to the fee paid under Article 7A above, the Trust
      and/or Fund agree to reimburse the Company for out-of-pocket
      expenses or advances incurred by the Company for the items set out
      in Schedules D ("D1, D2, D3 etc..."), attached hereto, as may be
      added or amended from time to time.  In addition, any other
      expenses incurred by the Company at the request or with the consent
      of the Trust and/or the Fund, will be reimbursed by the appropriate
      Fund.
  C. Payment
      The Company shall send an invoice with respect to fees and
      reimbursable expenses to the Trust or each of the Funds as soon as
      practicable at the end of each month.  Each invoice will provide
      detailed information about the Compensation and out-of-pocket
      expenses in accordance with Schedules C and Schedules D.  The Trust
      or the Funds will pay to the Company the amount of such invoice
      within 30 days following the receipt of the invoices.
Article 8.  Assignment of Shareholder Recordkeeping.
      Except as provided below, no right or obligation under this Section
      Two may be assigned by either party without the written consent of
      the other party.
      (1) This Agreement shall inure to the benefit of and be binding
           upon the parties and their respective permitted successors and
           assigns.
      (2) The Company may without further consent on the part of the
           Trust subcontract for the performance hereof with (A) State
           Street Bank and its subsidiary, Boston Financial Data
           Services, Inc., a Massachusetts Trust ("BFDS"), which is duly
           registered as a transfer agent pursuant to Section 17A(c)(1)
           of the Securities Exchange Act of 1934, as amended, or any
           succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
           subsidiary duly registered as a transfer agent pursuant to
           Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other
           provider of services duly registered as a transfer agent under
           Section 17A(c)(1) as Company shall select; provided, however,
           that the Company shall be as fully responsible to the Trust
           for the acts and omissions of any subcontractor as it is for
           its own acts and omissions; or
      (3) The Company shall upon instruction from the Trust subcontract
           for the performance hereof with an Agent selected by the
           Trust, other than BFDS or a provider of services selected by
           Company, as described in (2) above; provided, however, that
           the Company shall in no way be responsible to the Trust for
           the acts and omissions of the Agent.
SECTION THREE:  Custody Services Procurement
Article 9.     Appointment.
      The Trust hereby appoints Company as its agent to evaluate and
      obtain custody services from a financial institution that (i) meets
      the criteria established in Section 17(f) of the 1940 Act and (ii)
      has been approved by the Board as eligible for selection by the
      Company as a custodian (the "Eligible Custodian").  The Company
      accepts such appointment.
Article 10.    The Company and Its Duties.
      Subject to the review, supervision and control of the Board, the
      Company shall:
      (1) evaluate the nature and the quality of the custodial services
           provided by the Eligible Custodian;
      (2) employ the Eligible Custodian to serve on behalf of the Trust
           as Custodian of the Trust's assets substantially on the terms
           set forth as the form of agreement in Exhibit 2;
      (3) negotiate and enter into agreements with the Custodians for
           the benefit of the Trust, with the Trust as a party to each
           such agreement.  The Company shall not be a party to any
           agreement with any such Custodian;
      (4) establish procedures to monitor the nature and the quality of
           the services provided by the Custodians;
      (5) continuously monitor the nature and the quality of services
           provided by the Custodians; and
      (6) periodically provide to the Trust (i) written reports on the
           activities and services of the Custodians; (ii) the nature and
           amount of disbursement made on account of the Trust with
           respect to each custodial agreement; and (iii) such other
           information as the Board shall reasonably request to enable it
           to fulfill its duties and obligations under Sections 17(f) and
           36(b) of the 1940 Act and other duties and obligations
           thereof.
Article 11.    Fees and Expenses.
  A. Annual Fee
      For the performance by the Company pursuant to Section Three of
      this Agreement, the Trust and/or the Fund agree to pay the Company
      an annual fee as set forth in Schedule E, attached hereto.
  B. Payment
      The Company shall send an invoice with respect to fees and
      reimbursable expenses to each of the Trust/or Fund as soon as
      practicable at the end of each month.  Each invoice will provide
      detailed information about the Compensation and out-of-pocket
      expenses in occurrence with Schedule E.  The Trust and/or Fund will
      pay to the Company the amount of such invoice within 30 days
      following the receipt of the invoice.
Article 12.    Representations.
      The Company represents and warrants that it has obtained all
      required approvals from all government or regulatory authorities
      necessary to enter into this arrangement and to provide the
      services contemplated in Section Three of this Agreement.
SECTION FOUR:  General Provisions.
Article 13.  Documents.
  A. In connection with the appointment of the Company under this
      Agreement, the Trust shall file with the Company the following
      documents:
      (1) A copy of the Charter and By-Laws of the Trust and all
           amendments thereto;
      (2) A copy of the resolution of the Board of the Trust authorizing
           this Agreement;
      (3) Specimens of all forms of outstanding Share certificates of
           the Trust or the Funds in the forms approved by the Board of
           the Trust with a certificate of the Secretary of the Trust as
           to such approval;
      (4) All account application forms and other documents relating to
           Shareholders accounts; and
      (5) A copy of the current Prospectus for each Fund.
  B. The Fund will also furnish from time to time the following
      documents:
      (1) Each resolution of the Board of the Trust authorizing the
           original issuance of each Fund's, and/or Class's Shares;
      (2) Each Registration Statement filed with the SEC and amendments
           thereof and orders relating thereto in effect with respect to
           the sale of Shares of any Fund, and/or Class;
      (3) A certified copy of each amendment to the governing document
           and the By-Laws of the Trust;
      (4) Certified copies of each vote of the Board authorizing
           officers to give Proper Instructions to the Custodian and
           agents for fund accountant, custody services procurement, and
           shareholder recordkeeping or transfer agency services;
      (5) Specimens of all new Share certificates representing Shares of
           any Fund, accompanied by Board resolutions approving such
           forms;
      (6) Such other certificates, documents or opinions which the
           Company may, in its discretion, deem necessary or appropriate
           in the proper performance of its duties; and
      (7) Revisions to the Prospectus of each Fund.
Article 14.  Representations and Warranties.
  A. Representations and Warranties of the Company
      The Company represents and warrants to the Trust that:
      (1) It is a business trust duly organized and existing and in good
           standing under the laws of the State of Delaware.
      (2) It is duly qualified to carry on its business in the State of
           Delaware.
      (3) It is empowered under applicable laws and by its charter and
           by-laws to enter into and perform this Agreement.
      (4) All requisite corporate proceedings have been taken to
           authorize it to enter into and perform its obligations under
           this Agreement.
      (5) It has and will continue to have access to the necessary
           facilities, equipment and personnel to perform its duties and
           obligations under this Agreement.
      (6) It is in compliance with federal securities law requirements
           and in good standing as a transfer agent.
  B. Representations and Warranties of the Trust
      The Trust represents and warrants to the Company that:
      (1) It is an investment company duly organized and existing and in
           good standing under the laws of its state of organization;
      (2) It is empowered under applicable laws and by its Charter and
           By-Laws to enter into and perform its obligations under this
           Agreement;
      (3) All corporate proceedings required by said Charter and By-Laws
           have been taken to authorize it to enter into and perform its
           obligations under this Agreement;
      (4) The Trust is an open-end investment company registered under
           the 1940 Act; and
      (5) A registration statement under the 1933 Act will be effective,
           and appropriate state securities law filings have been made
           and will continue to be made, with respect to all Shares of
           each Fund being offered for sale.
Article 15.  Indemnification.
  A. Indemnification by Trust
      The Company shall not be responsible for and the Trust or Fund
      shall indemnify and hold the Company, including its officers,
      directors, shareholders and their agents employees and affiliates,
      harmless against any and all losses, damages, costs, charges,
      counsel fees, payments, expenses and liabilities arising out of or
      attributable to:
      (1) The acts or omissions of any Custodian,
      (2) The Trust's or Fund's refusal or failure to comply with the
           terms of this Agreement, or which arise out of the Trust's or
           The Fund's lack of good faith, negligence or willful
           misconduct or which arise out of the breach of any
           representation or warranty of the Trust or Fund hereunder or
           otherwise.
      (3) The reliance on or use by the Company or its agents or
           subcontractors of information, records and documents in proper
           form which
           (a) are received by the Company or its agents or
                subcontractors and furnished to it by or on behalf of the
                Fund, its Shareholders or investors regarding the
                purchase, redemption or transfer of Shares and
                Shareholder account information; or
           (b) have been prepared and/or maintained by the Fund or its
                affiliates or any other person or firm on behalf of the
                Trust.
      (4) The reliance on, or the carrying out by the Company or its
           agents or subcontractors of Proper Instructions of the Trust
           or the Fund.
      (5) The offer or sale of Shares in violation of any requirement
           under the federal securities laws or regulations or the
           securities laws or regulations of any state that such Shares
           be registered in such state or in violation of any stop order
           or other determination or ruling by any federal agency or any
           state with respect to the offer or sale of such Shares in such
           state.
           Provided, however, that the Company shall not be protected by
           this Article 15.A. from liability for any act or omission
           resulting from the Company's willful misfeasance, bad faith,
           gross negligence or reckless disregard of its duties.
  B. Indemnification by the Company
      The Company shall indemnify and hold the Trust or each Fund
      harmless from and against any and all losses, damages, costs,
      charges, counsel fees, payments, expenses and liabilities arising
      out of or attributable to any action or failure or omission to act
      by the Company as a result of the Company's willful misfeasance,
      bad faith, gross negligence or reckless disregard of its duties.
  C. Reliance
      At any time the Company may apply to any officer of the Trust or
      Fund for instructions, and may consult with legal counsel with
      respect to any matter arising in connection with the services to be
      performed by the Company under this Agreement, and the Company and
      its agents or subcontractors shall not be liable and shall be
      indemnified by the Trust or the appropriate Fund for any action
      reasonably taken or omitted by it in reliance upon such
      instructions or upon the opinion of such counsel provided such
      action is not in violation of applicable federal or state laws or
      regulations.  The Company, its agents and subcontractors shall be
      protected and indemnified in recognizing stock certificates which
      are reasonably believed to bear the proper manual or facsimile
      signatures of the officers of the Trust or the Fund, and the proper
      countersignature of any former transfer agent or registrar, or of a
      co-transfer agent or co-registrar.
  D. Notification
      In order that the indemnification provisions contained in this
      Article 15 shall apply, upon the assertion of a claim for which
      either party may be required to indemnify the other, the party
      seeking indemnification shall promptly notify the other party of
      such assertion, and shall keep the other party advised with respect
      to all developments concerning such claim.  The party who may be
      required to indemnify shall have the option to participate with the
      party seeking indemnification in the defense of such claim.  The
      party seeking indemnification shall in no case confess any claim or
      make any compromise in any case in which the other party may be
      required to indemnify it except with the other party's prior
      written consent.
Article 16.  Termination of Agreement.
      This Agreement may be terminated by either party upon one hundred
      twenty (120) days written notice to the other.  Should the Trust
      exercise its rights to terminate, all out-of-pocket expenses
      associated with the movement of records and materials will be borne
      by the Trust or the appropriate Fund.  Additionally, the Company
      reserves the right to charge for any other reasonable expenses
      associated with such termination.  The provisions of Article 15
      shall survive the termination of this Agreement.
Article 17.  Amendment.
      This Agreement may be amended or modified by a written agreement
      executed by both parties.
Article 18.  Interpretive and Additional Provisions.
      In connection with the operation of this Agreement, the Company and
      the Trust may from time to time agree on such provisions
      interpretive of or in addition to the provisions of this Agreement
      as may in their joint opinion be consistent with the general tenor
      of this Agreement.  Any such interpretive or additional provisions
      shall be in a writing signed by both parties and shall be annexed
      hereto, provided that no such interpretive or additional provisions
      shall contravene any applicable federal or state regulations or any
      provision of the Charter.  No interpretive or additional provisions
      made as provided in the preceding sentence shall be deemed to be an
      amendment of this Agreement.
Article 19.  Governing Law.
      This Agreement shall be construed and the provisions hereof
      interpreted under and in accordance with the laws of the
      Commonwealth of Massachusetts
Article 20.  Notices.
      Except as otherwise specifically provided herein, Notices and other
      writings delivered or mailed postage prepaid to the Trust at
      Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
      to the Company at Federated Investors Tower, Pittsburgh,
      Pennsylvania, 15222-3779, or to such other address as the Trust or
      the Company may hereafter specify, shall be deemed to have been
      properly delivered or given hereunder to the respective address.
Article 21.  Counterparts.
      This Agreement may be executed simultaneously in two or more
      counterparts, each of which shall be deemed an original.
Article 22.  Limitations of Liability of Trustees and Shareholders of
              the Trust.
      The execution and delivery of this Agreement have been authorized
      by the Trustees of the Trust and signed by an authorized officer of
      the Trust, acting as such, and neither such authorization by such
      Trustees nor such execution and delivery by such officer shall be
      deemed to have been made by any of them individually or to impose
      any liability on any of them personally, and the obligations of
      this Agreement are not binding upon any of the Trustees or
      Shareholders of the Trust, but bind only the appropriate  property
      of the Fund, or Class, as provided in the Declaration of Trust.
Article 23.  Limitations of Liability of Trustees and Shareholders of
              the Company.
      The execution and delivery of this Agreement have been authorized
      by the Trustees of the Company and signed by an authorized officer
      of the Company, acting as such, and neither such authorization by
      such Trustees nor such execution and delivery by such officer shall
      be deemed to have been made by any of them individually or to
      impose any liability on any of them personally, and the obligations
      of this Agreement are not binding upon any of the Trustees or
      Shareholders of the Company, but bind only the property of the
      Company as provided in the Declaration of Trust.
Article 24.  Assignment.
      This Agreement and the rights and duties hereunder shall not be
      assignable with respect to the Trust or the Funds by either of the
      parties hereto except by the specific written consent of the other
      party.
Article 25.  Merger of Agreement.
      This Agreement constitutes the entire agreement between the parties
      hereto and supersedes any prior agreement with respect to the
      subject hereof whether oral or written.
Article 26.  Successor Agent.
      If a successor agent for the Trust shall be appointed by the Trust,
      the Company shall upon termination of this Agreement deliver to
      such successor agent at the office of the Company all properties of
      the Trust held by it hereunder.  If no such successor agent shall
      be appointed, the Company shall at its office upon receipt of
      Proper Instructions deliver such properties in accordance with such
      instructions.
      In the event that no written order designating a successor agent or
      Proper Instructions shall have been delivered to the Company on or
      before the date when such termination shall become effective, then
      the Company shall have the right to deliver to a bank or trust
      company, which is a "bank" as defined in the 1940 Act, of its own
      selection, having an aggregate capital, surplus, and undivided
      profits, as shown by its last published report, of not less than
      $2,000,000, all properties held by the Company under this
      Agreement.  Thereafter, such bank or trust company shall be the
      successor of the Company under this Agreement.
Article 27.  Force Majeure.
      The Company shall have no liability for cessation of services
      hereunder or any damages resulting therefrom to the Fund as a
      result of work stoppage, power or other mechanical failure, natural
      disaster, governmental action, communication disruption or other
      impossibility of performance.
Article 28.  Assignment; Successors.
      This Agreement shall not be assigned by either party without the
      prior written consent of the other party, except that either party
      may assign to a successor all of or a substantial portion of its
      business, or to a party controlling, controlled by, or under common
      control with such party.  Nothing in this Article 28 shall prevent
      the Company from delegating its responsibilities to another entity
      to the extent provided herein.
Article 29.  Severability.
      In the event any provision of this Agreement is held illegal, void
      or unenforceable, the balance shall remain in effect.
  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.


ATTEST:                        INVESTMENT COMPANIES (listed on Exhibit 1)


/s/ John W. McGonigle_______     By:__/s/ John F. Donahue___
John W. McGonigle                John F. Donahue
Secretary                        Chairman

ATTEST:                          FEDERATED SERVICES COMPANY


/s/ Jeannette Fisher-Garber      By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber          James J. Dolan
Secretary                        President


EXHIBIT 1

First Priority Funds
          First Priority Equity Fund
           Investment Shares
           Trust Shares
          First Priority Fixed Income Fund
           Investment Shares
           Trust Shares
          First Priority Treasury Money Market Fund
          Investment Shares
           Trust Shares
          First Priority Limited Maturity Government Fund





                               Exhibit 15 under Form N-1A
                        Exhibit 1 under Form 601/Reg. S-K
                                     
                                     
                                     
                                     
                                 EXHIBIT B
                                  to the
                                   Plan

                           FIRST PRIORITY FUNDS

              First Priority Limited Maturity Government Fund


     This Plan is adopted by First Priority Funds with respect to the Class
of Shares of the portfolio of the Trust set forth above.

     In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of .25 of 1% of the
average aggregate net asset value of the First Priority Limited Maturity
Government Fund held during the month.

     Witness the due execution hereof this 1st day of December , 1993.


                                   FIRST PRIORITY FUNDS


                                   By:  /s/ E. C. Gonzales
                                        President





                                Exhibit 16 under Form N-1A
                                Exhibit 99 under Item 601/Reg. S-K
                                                              
Schedule for Computation        Initial                             
of Fund Performance Data        Invest of:      $1,000      
                                Offering                           
First Prior. Ltd Mat Gvt        Price/                             
                                Share=          $10.20         
Return Since Inception                                          
  ending 5/31/94                NAV=            $10.00   
                                                          
FYE:  November 30                                                 
                                                                   
                                                             
<TABLE>
                                   <S>          <C>         <C>         <C>         <C>        <C>        <C>         <C>
                                                                    
                                                Begin                   Capital   Reinvest   Ending                 Total     
DECLARED:  DAILY                  Reinvest     Period      Dividend      Gain      Price     Period    Ending      Invest     
PAID:  MONTHLY                      Dates      Shares       /Share      /Share     /Share    Shares     Price       Value     
                                     12/12/93    98.039    0.000000000   0.00000    $10.00     98.039   $10.20     $1,000.00  
                                     12/31/93    98.039    0.020094324   0.00000     $9.99     98.236    $9.99       $981.38  
                                      1/31/94    98.236    0.033015067   0.00000    $10.02     98.560   $10.02       $987.57  
                                      2/28/94    98.560    0.032816228   0.00000     $9.91     98.886    $9.91       $979.96  
                                      3/31/94    98.886    0.034645302   0.00000     $9.81     99.236    $9.81       $973.50  
                                      4/30/94    99.236    0.034119241   0.00000     $9.74     99.583    $9.74       $969.94  
                                      5/31/94    99.583    0.035726605   0.00000     $9.71     99.950    $9.71       $970.51  
                                                                                                                              
                $1,000 (1+T) =  End Value                                                                                     
                            T =        -2.95%                                                                                 
</TABLE>


                                 Exhibit 16 under Form N-1A
                                 Exhibit 99 under Item 601/Reg. S/K
                                                                   

<TABLE>
                                                    <S>                 <C>               <C>                        <C>    
First Priority Ltd Mat Gt.                        Yield = 2{(      $211,448.46  -    $14,352.81  )+1)^6-1}=                
Computation of SEC Yield                                              4,860,583 *         $9.91  -               0.00000 ) 
As of:  May 31, 1994                                                                                                       
                                                                 SEC Yield =               4.96%                           
                                                                                                                           
Dividend and/or Interest                                                                                                   
Inc for the 30 days ended            $211,448.46                                                                           
                                                                                                                           
Net Expenses for                      $14,352.81                                                                           
the Period                                                                                                                 
                                                                                                                           
Avg Daily Shares                                                                                                           
Outstanding and entitled                                                                                                   
to receive dividends                    4,860,583                                                                          
                                                                                                                           
Maxium offering price                      $9.91                                                                           
per share as of 5-31-94                                                                                               
                                                                                                                           
Undistributed net income                  0.00000                                                                          

</TABLE>



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