FEDERATED U.S. GOVERNMENT SECURITIES FUND:
5-10 YEARS
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
SUPPLEMENT TO PROSPECTUSES AND STATEMENT OF ADDITIONAL INFORMATION, AS
APPROPRIATE, DATED APRIL 30, 1999
I. At the June 21, 1999 shareholder meeting, shareholders approved the
following changes to become effective July 1, 1999:
1. Elected five Trustees.
2. Ratified the selection of the Trust's independent auditors.
3. Made changes to the Trust's fundamental investment limitations:
(a) Amended the Trust's fundamental investment limitation regarding
diversification to read as follows:
"With respect to securities comprising 75% of the value of
its total assets, the Trust will not purchase securities of
any one issuer (other than cash; cash items; securities
issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase
agreements collateralized by 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 Trust would own more than 10% of the outstanding voting
securities of that issuer."
(b) Amended the Trust's fundamental investment limitation regarding
borrowing money and issuing senior securities to read as follows:
"The Trust may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted
under the 1940 Act."
(c) Amended the Trust's fundamental investment limitation regarding
investments in real estate to read as follows:
"The Trust may not purchase or sell real estate, provided
that this restriction does not prevent the Trust from
investing in issuers which invest, deal, or otherwise engage
in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or
interests therein. The Trust may exercise its rights under
agreements relating to such securities, including the right
to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner."
(d) Amended the Trust's fundamental investment limitation regarding
investments in commodities to read as follows:
"The Trust may not purchase or sell physical commodities,
provided that the Trust may purchase securities of companies
that deal in commodities."
(e) Amended the Trust's fundamental investment limitation regarding
lending by the Trust to read as follows:
"The Trust may not make loans, provided that this
restriction does not prevent the Trust from purchasing debt
obligations, entering into repurchase agreements, lending
its assets to broker/dealers or institutional investors and
investing in loans, including assignments and participation
interests."
(f) Amended the Trust's fundamental investment limitation regarding
concentration of the Trust's investments in the securities of
companies in the same industry to read as follows:
"The Trust 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. As an operating
policy, bank instruments will be limited to instruments of
domestic banks."
(g) Amended and made non-fundamental, the Trust's fundamental
investment limitation regarding buying securities on margin to
read as follows:
"The Trust will not purchase securities on margin,
provided that the Trust may obtain short-term credits
necessary for the clearance of purchases and sales of
securities."
(h) Amended and made non-fundamental, the Trust's fundamental
investment limitation regarding pledging assets to read as
follows:
"The Trust will not mortgage, pledge, or hypothecate
any of its assets, provided that this shall not apply
to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in
connection with permissible activities."
4. Eliminated the Trust's fundamental investment limitation on selling
securities short.
II. The following actions were taken by the Board of Trustees with regard to
non-fundamental investment policies and limitations:
1. Approved the elimination of the following non-fundamental investment
limitations of the Trust:
(a) Removed the Trust's non-fundamental investment limitation
regarding purchasing securities to exercise control.
(b) Removed the Trust's non-fundamental investment limitation
regarding dealing in puts and calls.
2. Approved revisions to the Trust's non-fundamental investment
limitations to read as follows:
"The Trust will not purchase securities for which there is
no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than
seven days, if immediately after and as a result, the value
of such securities would exceed, in the aggregate, 15% of
the Trust's net assets."
3. Approved the elimination of the following undertaking of the Trust:
"The Trust does not intend to borrow money, pledge securities, or
invest in illiquid securities in excess of 5% of the value of its
net assets during the coming fiscal year."
4. Approved the addition of a non-fundamental investment limitation as
follows when applying the concentration restriction to the Trust:
"(a) utility companies will be divided according to their
services, for example, gas, gas transmission, electric and
telephone will 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."
5. Approved the elimination of the Trust's non-fundamental investment
policy pertaining to when-issued and delayed delivery transactions
that provides that the Trust will not engage in such transactions to
an extent that would cause the segregation of more than 20% of the
value of its total assets.
June 21, 1999
Cusip 31428S107-IS
Cusip 31428S206-SS
G02644-03 (6/99)
