FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
(A PORTFOLIO OF FEDERATED INSTITUTIONAL TRUST)
SUPPLEMENT TO PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, AS
APPROPRIATE, DATED SEPTEMBER 30, 1998
I. At the June 21, 1999 shareholder meeting, shareholders approved the
following changes to become effective July 1, 1999:
(1) Elected seven Trustees.
(2) Ratified the selection of the Trust's independent
auditors.
(3) Made changes to the Fund's fundamental investment
limitations:
(a) Amended the Fund's fundamental investment limitation
regarding diversification to read as follows:
"With respect to securities comprising 75% of the
value of its total assets, the Fund will not purchase
securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such U.S. government securities;
and securities of other investment companies) if, as
a result, more than 5% of the value of its total
assets would be invested in securities of that
issuer, or the Fund would own more than 10% of the
outstanding voting securities of that issuer."
(b) Amended the Fund's fundamental investment limitation
regarding borrowing money and issuing senior securities to read as follows:
"The Fund may borrow money, directly or indirectly,
and issue senior securities to the maximum extent permitted under the 1940 Act."
(c) Amended the Fund's fundamental investment limitation
regarding investments in real estate to read as follows:
"The Fund may not purchase or sell real estate,
provided that this restriction does not prevent the
Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or
interests therein, or investing in securities that
are secured by real estate or interests therein. The
Fund may exercise its rights under agreements
relating to such securities, including the right to
enforce security interests and to hold real estate
acquired by reason of such enforcement until that
real estate can be liquidated in an orderly manner."
(d) Amended the Fund's fundamental investment limitation
concerning investments in commodities to read as follows:
"The Fund may not purchase or sell physical
commodities, provided that the Fund may purchase securities of companies that
deal in commodities."
(e) Amended the Fund's fundamental investment limitation
regarding underwriting securities to read as follows:
"The Fund may not underwrite the securities of
other issuers, except that the Fund may engage in
transactions involving the acquisition, disposition
or resale of its portfolio securities, under
circumstances where it may be considered to be an
underwriter under the Securities Act of 1933."
(f) Amended the Fund's fundamental investment limitation
regarding lending by the Fund to read as follows:
"The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing
debt obligations, entering into repurchase
agreements, lending its assets to broker/dealers or
institutional investors and investing in loans,
including assignments and participation interests."
(g) Amended the Fund's fundamental investment limitation
regarding concentration of the Fund's investments in
the securities of companies in the same industry to
read as follows:
"The Fund will not make investments that will
result in the concentration of its investments in the
securities of issuers primarily engaged in the same
industry. Government securities, municipal securities
and bank instruments will not be deemed to constitute
an industry. To conform to the current view of the
SEC staff that only domestic bank instruments may be
excluded from industry concentration limitations, as
a matter of non-fundamental policy, the Fund will not
exclude foreign bank instruments from industry
concentration tests so long as the policy of the SEC
remains in effect. As a non-fundamental operating
policy, the Fund will consider concentration to be
the investment of more than 25% of the value of its
total assets in any one industry."
(h) Amended, and made non-fundamental, the Fund's
fundamental investment limitation regarding buying securities on margin to read
as follows:
"The Fund will not purchase securities on margin,
provided that the Fund may obtain short-term credits
necessary for the clearance of purchases and sales of
securities."
(i) Amended, and made non-fundamental, the Fund's
fundamental investment limitation regarding pledging assets to read as follows:
"The Fund will not mortgage, pledge, or hypothecate
any of its assets, provided that this shall not apply
to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements
in connection with permissible activities."
(4) Eliminated the Fund's fundamental investment limitation on
selling securities short.
II. The following actions were taken by the Board of Trustees with regard to
non-fundamental limitations:
(1) Amended the Fund's non-fundamental investment limitation
regarding illiquid securities to read as follows:
"The Fund will not purchase securities for which there is
no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than
seven days, if immediately after and as a result, the
value of such securities would exceed, in the aggregate,
15% of the Fund's net assets."
(2) Approved the elimination of the following undertaking of
the Fund:
"The Fund does not expect to borrow money or invest in reverse repurchase
agreements in excess of 5% of the value of its net assets during the coming
fiscal year."
(3) Approved the addition of a non-fundamental investment
limitation as follows when applying the concentration restriction to the Fund:
"In applying the Fund's concentration restriction: (a)
utility companies will be divided according to their
services, for example, gas, gas transmission, electric and
telephone will each be considered a separate industry; (b)
financial service companies will be classified according
to the end users of their services, for example,
automobile finance, bank finance and diversified finance
will each be considered a separate industry; and (c)
asset-backed securities will be classified according to
the underlying assets securing such securities."
(4) Approved the elimination of the of the Fund's
non-fundamental investment policy pertaining to
when-issued and delayed delivery transactions that
provides that the Fund will not engage in such
transactions to an extent that would cause the segregation
of more than 20% of the value of its total assets.
June 21, 1999
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
www.federatedinvestors.com
Cusip 31420B102
G02647-03 (6/99)
