FEDERATED GOVERNMENT INCOME SECURITIES INC
485BPOS, 1998-04-28
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                                          1933 Act File No. 2-74191
                                          1940 Act File No. 811-3266

                       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.   37  _....................         X
                                 -------                          ----

                                                                 and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940      X

    Amendment No.   27   ...................................         X
                  -------                                         ----

                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.
                  (formerly Government Income Securities, Inc.)

               (Exact Name of Registrant as Specified in Charter)

                            Federated Investors Funds
                              5800 Corporate Drive
                       Pittsburgh, Pennsylvania 15237-7000
                    (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 April 30, 1998, pursuant to paragraph (b)
    60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph
    (a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
    _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

    This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.



                                                               Copies to:

Charles H. Morin, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C.  20037





<PAGE>


                              CROSS-REFERENCE SHEET


      This Amendment to the Registration Statement of FEDERATED GOVERNMENT
INCOME SECURITIES, INC., which consists of one portfolio offering four classes
of shares, (a) Class F Shares, (b) Class A Shares, (c) Class B Shares, and (d)
Class C Shares, is comprised of the following:

PART A.    INFORMATION REQUIRED IN A PROSPECTUS.

                                          Prospectus Heading
                                          (Rule 404(c) Cross Reference)

Item 1.     Cover Page....................Cover Page.
Item 2.     Synopsis......................Not applicable.
Item 3.     Condensed Financial
            Information...................(a-d) Summary of Fund Expenses; (a)
                                          Financial Highlights-Class F Shares.
Item 4.     General Description of
            Registrant....................(a-d) General Information; (a-d)
                                          Investment Information; (a-d)
                                          Investment Objective; (a-d)
                                          Investment Policies; (a-d) Special
                                          Considerations of Fixed Income
                                          Securities; (a-d) Portfolio
                                         Turnover; (a-d) Investment Limitations.
Item 5.     Management of the Fund........(a-d) Fund Information; (a-d)
                                          Management of the Fund; (a)
                                          Distribution of Class F Shares;
            ----------------------
                                          (b-d) Distribution of Shares; (a-d)
                                          Shareholder Services; (b-d)
                                          Distribution Plan; (a-d)
                                          Supplemental Payments to Financial
                                          Institutions; (a-d) Administration of
                                          the Fund.
Item 6.     Capital Stock and Other
            Securities....................(a-d) Dividends and Distributions;
                                          (a-d) Shareholder Information; (a-d)
                                          Tax Information; (a-d)
                                          Federal Income Tax; (a-d) State and
                                          Local Taxes.
Item 7.     Purchase of Securities Being
            Offered.......................(a-d) Net Asset Value; (a-d) Investing
                                          in the Fund; (a-d) Purchasing Shares;
                                          (a-d) Purchasing Shares Through a
                                          Financial Intermediary; (a-d)
                                          Purchasing Shares by Wire; (a-d)
                                          Purchasing Shares by Check; (a-d)
                                          Systematic Investment Program; (a-d)
                                          Confirmations and Account Statements;
                                          (a-d) Retirement Plans; (b) Class A
                                          Shares; (c) Class B Shares; (d) Class
                                          C Shares; (a) Eliminating the Sales
                                          Charge.
Item 8.     Redemption or Repurchase......(a-d) Redeeming and Exchanging Shares;
                                          (a-d) Redeeming or Exchanging Through
                                          a Financial
            ------------------------
                                          Intermediary; (a-d) Redeeming or
                                          Exchanging Shares by Telephone; (a-d)
                                          Redeeming or Exchanging
                                          Shares by Mail; (a-d) Requirements for
                                          Redemption; (a-d) Requirements for
                                          Exchange; (a-d) Systematic Withdrawal
                                          Program; (c) Systematic Withdrawal
                                          Program ("SWP") on Class B Shares;
                                          (a-d)Contingent Deferred Sales Charge;
                                          (a-d) Accounts with Low Balances.
Item 9.     Pending Legal Proceedings.....None.



<PAGE>


PART B.    INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10.    Cover Page....................(a-d) Cover Page.
Item 11.    Table of Contents.............(a-d) Table of Contents.
Item 12.    General Information and
            History.......................(a-d) General Information About the
                                          Fund; (a-d) About Federated Investors.
Item 13.    Investment Objectives and
            Policies......................(a-d) Investment Objective and
                                          Policies.
Item 14.    Management of the Fund        (a-d) Federated Government Income
                                          Securities, Inc. Management.
Item 15.    Control Persons and Principal
            Holders of Securities         (a-d) Fund Ownership.
Item 16.    Investment Advisory and Other
            Services......................(a-d) Investment Advisory Services;
                                          (a-d) Other Services; (b-d)
                                          Distribution Plan; (a-d)
                                          Shareholder Services.
Item 17.    Brokerage Allocation..........(a-d) Brokerage Transactions.
Item 18.    Capital Stock and Other
            Securities                    Not Applicable.
Item 19.    Purchase, Redemption and
            Pricing of Securities Being
            Offered.......................(a-d) Purchasing Shares; (a-d)
                                          Determining Net Asset Value; (a-d)
                                          Redeeming Shares.
            -------
Item 20.    Tax Status....................(a-d) Tax Status.
            ----------
Item 21.    Underwriters                  Not Applicable.
Item 22.    Calculation of Performance
            Data..........................(a) Total Return; (a) Yield; (a-d)
                                           Performance Comparisons.
Item 23.    Financial Statements..........(a-d)The Financial Statements for the
                                          fiscal year ended February 28, 1998,
                                          are incorporated herein
                                          by reference to the Fund's Annual
                                          Report dated February 28, 1998.
                                          (File Nos. 2-74191 and 811-3266)


FEDERATED GOVERNMENT INCOME SECURITIES, INC.

Class A Shares, Class B Shares, Class C Shares

PROSPECTUS

The shares of Federated Government Income Securities, Inc. (the "Fund")
represent interests in an open-end, diversified management investment company (a
mutual fund) that seeks current income by investing in a professionally managed,
diversified portfolio limited primarily to securities guaranteed as to payment
of principal and interest by the U.S.
government or its agencies or instrumentalities.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY 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 Class A Shares, Class B Shares, and Class C Shares of the Fund.
Keep this prospectus for future reference.     The Fund has also filed a
Statement of Additional Information for Class A Shares, Class B Shares, Class C
Shares, and Class F Shares dated April 30, 1998, with the Securities and
Exchange Commission (the "SEC"). 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 or a paper copy of
this prospectus, if you have received your prospectus electronically, free of
charge by calling 1-800-341-7400. To obtain other information or to make
inquiries about the Fund, contact your financial institution. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).      THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.    
Prospectus dated April 30, 1998      TABLE OF CONTENTS    
 Summary of Fund Expenses                                                 1
 Financial Highlights--Class A Shares                                     2
 Financial Highlights--Class B Shares                                     3
 Financial Highlights--Class C Shares                                     4
 General Information                                                      5
 Calling the Fund                                                         5
 Investment Information                                                   5
 Investment Objective                                                     5
 Investment Policies                                                      5
 Special Considerations of Fixed Income Securities                        7
 Portfolio Turnover                                                       8
 Investment Limitations                                                   9
 Net Asset Value                                                          9
 Investing in the Fund                                                    9
 Purchasing Shares                                                       10
 Purchasing Shares Through a Financial Intermediary                      10
 Purchasing Shares by Wire                                               10
 Purchasing Shares by Check                                              10
 Systematic Investment Program                                           10
 Retirement Plans                                                        10
 Class A Shares                                                          10
 Class B Shares                                                          11
 Class C Shares                                                          11
 Redeeming and Exchanging Shares                                         11
 Redeeming or Exchanging Shares Through a Financial
 Intermediary                                                            11
 Redeeming or Exchanging Shares by Telephone                             12
 Redeeming or Exchanging Shares by Mail                                  12
 Requirements for Redemption                                             12
 Requirements for Exchange                                               12
 Systematic Withdrawal Program                                           12
 Systematic Withdrawal Program ("SWP") on Class B Shares                 13
 Contingent Deferred Sales Charge                                        13
 Account and Share Information                                           13
 Confirmations and Account Statements                                    13
 Dividends and Distributions                                             13
 Accounts with Low Balances                                              14
 Fund Information                                                        14
 Management of the Fund                                                  14
 Distribution of Shares                                                  15
 Administration of the Fund                                              16
 Shareholder Information                                                 16
 Tax Information                                                         16
 Federal Income Tax                                                      16
 State and Local Taxes                                                   16
 Performance Information                                  Inside Back Cover
 Other Classes of Shares                                  Inside Back Cover
    
SUMMARY OF FUND EXPENSES
   
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
                                                                                           Class A  Class B   Class C

 <S>                                                                                         <C>       <C>          <C>
 Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)               4.50%     None         None
 Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price)     None     None         None
 Contingent Deferred Sales Charge (as a percentage of original purchase
 price or redemption proceeds, as applicable)                                                 None    5.50%(1)      1.00%(2)
 Redemption Fee (as a percentage of amount redeemed, if applicable)                           None     None         None
 Exchange Fee                                                                                 None     None         None

 <CAPTION>

 Annual Operating Expenses
(As a percentage of average net assets)
<S>                                                                                          <C>       <C>          <C>
 Management Fee (after waiver)(3)                                                            0.51%     0.51%        0.51%
 12b-1 Fee (after waiver)                                                                    0.00%(4)  0.75%        0.75%
 Total Other Expenses                                                                        0.45%     0.45%        0.45%
 Shareholder Services Fee                                                                    0.25%     0.25%        0.25%
 Total Operating Expenses (after waivers)(5)                                                 0.96%(5)  1.71%(6)(7)  1.71%(7)
 </TABLE>

(1) The contingent deferred sales charge is 5.50% in the first year
declining to 1.00% in the sixth year and 0.00% thereafter. (See "Contingent
Deferred Sales Charge.")

(2) The contingent deferred sales charge assessed is 1.00% of the lesser of the
original purchase price or the net asset value of shares redeemed within one
year of their purchase date. For a more complete description, see "Redeeming and
Exchanging Shares."

(3) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.75%.

(4) The 12b-1 fee has been reduced to reflect the voluntary waiver of the 12b-1
fee. The distributor can terminate the voluntary waiver at any time at its sole
discretion. The maximum 12b-1 fee is 0.25% for Class A Shares.

(5) The total operating expenses would have been 1.45% absent the voluntary
waivers of a portion of the management fee and the 12b-1 fee.

(6) Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase.

(7) The total operating expenses would have been 1.95% absent the voluntary
waiver of a portion of the management fee.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Class A Shares, Class B Shares, and
Class C Shares of the Fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Investing in the
Fund" and "Fund Information." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.

Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted under the rules of the National Association of
Securities Dealers, Inc. <TABLE> <CAPTION>

EXAMPLE                                                                        CLASS A   CLASS B   CLASS 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 charge
<S>                                                                             <C>        <C>       <C>
1 Year                                                                          $ 54       $ 74      $ 28
3 Years                                                                         $ 74       $ 98      $ 54
5 Years                                                                         $ 96       $116      $ 93
10 Years                                                                        $157       $181      $202
<CAPTION>

You would pay the following expenses on the same investment,
assuming no redemption
<S>                                                                             <C>        <C>       <C>
1 Year                                                                          $ 54       $ 17      $ 17
3 Years                                                                         $ 74       $ 54      $ 54
5 Years                                                                         $ 96       $ 93      $ 93
10 Years                                                                        $157       $181      $202
</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.
    
FINANCIAL HIGHLIGHTS--CLASS A SHARES

(For a share outstanding throughout each period)
   
The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated April 23, 1998, on the Fund's
financial statements for the year ended February 28, 1998, and on the following
table for each of the periods presented, is included in the Annual Report, which
is incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund. <TABLE>

                                                               YEAR ENDED
                                                               FEBRUARY 28,
                                                            1998      1997(A)
<S>                                                         <C>       <C>
NET ASSET VALUE, BEGINNING OF PERIOD                        $8.59     $ 8.63
INCOME FROM INVESTMENT OPERATIONS
   Net investment income                                     0.62**     0.30
   Net realized and unrealized gain (loss) on investments    0.22      (0.02)
   Total from investment operations                          0.84       0.28
LESS DISTRIBUTIONS
   Distributions from net investment income                 (0.59)     (0.32)
NET ASSET VALUE, END OF PERIOD                              $8.84     $ 8.59
TOTAL RETURN(B)                                             10.10%      3.34%
RATIOS TO AVERAGE NET ASSETS
   Expenses                                                  0.96%      1.03%*
   Net investment income                                     7.13%      6.45%*
   Expense waiver/reimbursement(c)                           0.49%      0.50%*
SUPPLEMENTAL DATA
   Net assets, end of period (000 omitted)               $138,554       $289
   Portfolio turnover                                         264%        97%
</TABLE>

* Computed on an annualized basis.

** Per share information presented is based upon the average number of shares
outstanding.

(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to February 28, 1997.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

Further information about the Fund's performance is contained in the Fund's
Annual Report dated February 28, 1998, which can be obtained free of charge.
    
FINANCIAL HIGHLIGHTS--CLASS B SHARES

(For a share outstanding throughout each period)
   
The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated April 23, 1998, on the Fund's
financial statements for the year ended February 28, 1998, and on the following
table for each of the periods presented, is included in the Annual Report, which
is incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.

<TABLE>
                                                                YEAR ENDED
                                                               FEBRUARY 28,
                                                            1998      1997(A)
<S>                                                         <C>       <C>
NET ASSET VALUE, BEGINNING OF PERIOD                        $8.59     $ 8.63
INCOME FROM INVESTMENT OPERATIONS
   Net investment income                                     0.58       0.28
   Net realized and unrealized gain (loss) on investments    0.20      (0.02)
   Total from investment operations                          0.78       0.26
LESS DISTRIBUTIONS
   Distributions from net investment income                 (0.53)     (0.30)
NET ASSET VALUE, END OF PERIOD                              $8.84     $ 8.59
TOTAL RETURN(B)                                             9.34%       3.00%
RATIOS TO AVERAGE NET ASSETS
   Expenses                                                  1.71%      1.71%*
   Net investment income                                     6.51%      5.80%*
   Expense waiver/reimbursement(c)                           0.24%      0.26%*
SUPPLEMENTAL DATA
   Net assets, end of period (000 omitted)                $10,819     $2,421
   Portfolio turnover                                         264%        97%
</TABLE>

(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to February 28, 1997.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

Further information about the Fund's performance is contained in the Fund's
Annual Report dated February 28, 1998, which can be obtained free of charge.
    
FINANCIAL HIGHLIGHTS--CLASS C SHARES

(For a share outstanding throughout each period)
   
The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated April 23, 1998, on the Fund's
financial statements for the year ended February 28, 1998, and on the following
table for each of the periods presented, is included in the Annual Report, which
is incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.

<TABLE>
                                                                YEAR ENDED
                                                               FEBRUARY 28,
                                                            1998      1997(A)
<S>                                                         <C>       <C>
NET ASSET VALUE, BEGINNING OF PERIOD                        $8.59     $ 8.63
INCOME FROM INVESTMENT OPERATIONS
   Net investment income                                     0.55       0.27
   Net realized and unrealized gain (loss) on investments    0.23      (0.01)
   Total from investment operations                          0.78       0.26
LESS DISTRIBUTIONS
   Distributions from net investment income                 (0.53)     (0.30)
NET ASSET VALUE, END OF PERIOD                              $8.84     $ 8.59
TOTAL RETURN(B)                                             9.29%       3.02%
RATIOS TO AVERAGE NET ASSETS
   Expenses                                                  1.71%      1.71%*
   Net investment income                                     6.21%      5.65%*
   Expense waiver/reimbursement(c)                           0.24%      0.26%*
SUPPLEMENTAL DATA
   Net assets, end of period (000 omitted)                 $2,836     $1,343
   Portfolio turnover                                         264%        97%
</TABLE>

(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to February 28, 1997.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

Further information about the Fund's performance is contained in the Fund's
Annual Report dated February 28, 1998, which can be obtained free of charge.
    
GENERAL INFORMATION
   
The Fund was established as a Massachusetts business trust on September 23,
1981, and reorganized as a corporation under the laws of the State of Maryland
on February 4, 1986. Class A Shares, Class B Shares and Class C Shares of the
Fund ("Shares") are designed primarily for individuals and institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of U.S. government securities.

The Fund's current net asset value and offering price may be found in the mutual
funds section of local newspapers under "Federated" and the appropriate class
designation listing.

CALLING THE FUND

Call the Fund at 1-800-341-7400.
    
INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide 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 investment policies described below may be changed by the Board of Directors
(the "Directors") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
    
ACCEPTABLE INVESTMENTS

The Fund invests 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 U.S. government securities in which the Fund invests include:

   * direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
     notes, and bonds;
   * notes, bonds, and discount notes issued or guaranteed by U.S.
     government agencies and instrumentalities supported by the full faith
     and credit of the United States;
   * notes, bonds, and discount notes of U.S. government agencies or
     instrumentalities which receive or have access to federal funding; and
   * notes, bonds, and discount notes of other U.S. government
     instrumentalities supported only by the credit of the
     instrumentalities.
   
The obligations of U.S. government agencies or instrumentalities which the Fund
may buy are backed in a variety of ways by the U.S. government or its agencies
or instrumentalities. Some of these obligations, such as Government National
Mortgage Association ("Ginnie Mae") mortgage-backed securities and obligations
of the Farmers Home Administration ("FHA"), are backed by the full faith and
credit of the U.S. Treasury. Obligations of the FHA are also backed by the
issuer's right to borrow from the U.S. Treasury. Obligations of Federal Home
Loan Banks and the FHA are backed by the discretionary authority of the U.S.
government to purchase certain obligations of agencies or instrumentalities.
Obligations of Federal Home Loan Banks, FHA, Farm Credit Banks, Federal National
Mortgage Association ("Fannie Mae"), and Federal Home Loan Mortgage Corporation
("Freddie Mac") are backed by the credit of the agency or instrumentality
issuing the obligations. Some of the securities purchased by the Fund may
represent an interest solely in the principal repayments or solely in the
interest payments on mortgage-backed securities. These securities are usually
structured with two classes and receive different proportions of the interest
and principal distributions on the pool of underlying mortgage-backed securities
("IOs and POs"). In addition, the Fund may engage in certain strategies and
transactions as described in the prospectus.      COLLATERALIZED MORTGAGE
OBLIGATIONS ("CMOS")

CMOs are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by Ginnie Mae,
Fannie Mae or Freddie Mac certificates, but may be collateralized by whole loans
or private pass-through securities. CMOs may have fixed or floating rates of
interest.

The Fund will invest only in CMOs that are rated AAA by a nationally recognized
statistical rating organization. The Fund may also invest in certain CMOs which
are issued by private entities such as investment banking firms and companies
related to the construction industry. The CMOs in which the Fund may invest may
be: (i) securities which are 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; (ii) securities which are collateralized
by pools of mortgages in which payment of principal and interest is guaranteed
by the issuer and such mortgages in which payment of principal and interest is
guaranteed by the issuer and such guarantee is collateralized by U.S. government
securities; or (iii) other securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and interest
is supported by the credit of an agency or instrumentality of the U.S.
government.

CMOs that include a class bearing a floating rate of interest also may include a
class whose yield floats inversely against a specified index rate. These
"inverse floaters" are more volatile than conventional fixed or floating rate
classes of a CMO and the yield thereon, as well as the value thereof, will
fluctuate in inverse proportion to changes in the index on which interest rate
adjustments are based. As a result, the yield on an inverse floater class of a
CMO will generally increase when market yields (as reflected by the index)
decrease and decrease when market yields increase. The extent of the volatility
of inverse floaters depends on the extent of anticipated changes in market rates
of interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments.

TEMPORARY INVESTMENTS

The Fund may invest temporarily in cash and cash items during times of unusual
market conditions for defensive purposes and to maintain liquidity.

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.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The yields generally available
on comparable securities when delivery occurs may be higher than yields on
securities obtained pursuant to such transactions. 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 as interest rates
fluctuate. Accordingly, the Fund may pay more/less than the market value of the
securities on the settlement date. In addition, the seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered to be
advantageous.

The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.

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 Fund's Directors 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.

There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.

Securities lending transactions typically require the Fund to pay interest on
any cash collateral received. The Fund will seek to earn interest and additional
returns by investing cash collateral in repurchase agreements or liquid high
grade securities. The Fund will bear the risk of any losses on such investments
and the risk that the income from such investments are less than the interest
payable to the borrower.

SPECIAL CONSIDERATIONS OF FIXED INCOME SECURITIES

There is no limit to portfolio maturity. The prices of fixed income government
securities fluctuate inversely in relation to the direction of interest rates. A
decline in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market interest rates
results in a decline in market prices of outstanding debt obligations. In either
case, the amount of change in market prices of debt obligations in response to
changes in market interest rates generally depends on the maturity of the debt
obligations: the debt obligations with the longest maturities will experience
the greatest market price changes. The prices of zero coupon securities, IOs and
POs, and certain structures of CMOs are more sensitive to fluctuations in
interest rates than are conventional bonds.

The market value of debt obligations, and therefore the Fund's net asset value,
will fluctuate due to changes in economic conditions and other market factors
such as interest rates which are beyond the control of the Fund's investment
adviser. The Fund's investment adviser could be incorrect in its expectations
about the direction or extent of these market factors. Although debt obligations
with longer maturities offer potentially greater returns, they have greater
exposure to market price fluctuation. Consequently, to the extent the Fund is
significantly invested in debt obligations with longer maturities, there is a
greater possibility of fluctuation in the Fund's net asset value.

Mortgage-backed securities are generally subject to less predictable and, in
many cases higher, prepayment risks than most other types of debt instruments.
Prepayment risks on mortgage securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance their
mortgages to take advantage of the more favorable rates. Depending upon market
conditions, the yield that the Fund receives from the reinvestment of such
prepayments, or any scheduled principal payments, may be lower than the yield on
the original mortgage security. As a consequence, mortgage securities may be a
less effective means of "locking in" interest rates than other types of debt
securities having the same stated maturity and may also have less potential for
capital appreciation.

With respect to securities that represent an interest solely in the interest
payments on mortgage-backed securities, because the yield to maturity is
extremely sensitive to the rate of principal payments (including prepayments) on
the related underlying mortgage-backed securities, it is possible that the Fund
might not recover its original investment on these securities if there are
substantial prepayments on the underlying mortgage.

In addition, the Fund may, but is not required to, utilize various other
investment strategies as described herein to manage the effective maturity or
duration of the Fund's fixed income securities or to enhance potential gain.
Such strategies are generally accepted by modern portfolio managers and are
regularly utilized by mutual funds and other institutional investors. These
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed.

For example, the Fund expects to purchase portfolio securities using investment
leverage. The Fund expects that substantially all of its leverage will be used
in connection with when-issued and delayed delivery transactions and portfolio
securities lending. Leveraging creates an opportunity for capital appreciation
but, at the same time, the use of leverage in a declining market will cause a
greater decline in the asset value of the shares than if the Fund were not
leveraged.

PUT AND CALL OPTIONS

The Fund may purchase put and call options on its portfolio securities. These
options will be used as a hedge to attempt to protect securities which the Fund
holds, or will be purchasing, against decreases or increases in value. The Fund
may also write (sell) put and call options on all or any portion of its
portfolio to generate income for the Fund. The Fund will write call options on
securities either held in its portfolio or for which it has the right to obtain
without payment of further consideration or for which it has segregated cash in
the amount of any additional consideration.

In the case of put options, the Fund will segregate cash or U.S. Treasury
obligations with a value equal to or greater than the exercise price of the
underlying securities.

The Fund may generally purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the options
since options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the Fund's adviser.

Over-the-counter options are two-party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.

FINANCIAL FUTURES AND OPTIONS ON FUTURES

The Fund may purchase and sell financial futures contracts to hedge all or a
portion of its portfolio of long-term debt securities against changes in
interest rates. Financial futures contracts call for the delivery of particular
debt instruments issued or guaranteed by the U.S. Treasury or by specified
agencies or instrumentalities of the U.S. government at a certain time in the
future. The seller of the contract agrees to make delivery of the type of
instrument called for in the contract and the buyer agrees to take delivery of
the instrument at the specified future time.

The Fund may write call options and purchase put options on financial futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value resulting from anticipated increases in market interest
rates. When the Fund writes a call option on a futures contract, it is
undertaking the obligation of selling the futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.

The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of portfolio
securities resulting from anticipated decreases in market interest rates. The
Fund will use these transactions to attempt to protect its ability to purchase
portfolio securities in the future at price levels existing at the time it
enters into the transactions. When the Fund writes a put option on a futures
contract, it is undertaking to buy a particular futures contract at a fixed
price at any time during a specified period if the option is exercised. As a
purchaser of a call option on a futures contract, the Fund is entitled (but not
obligated) to purchase a futures contract at a fixed price at any time during
the life of the option.

The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets.

RISKS

When the Fund uses financial futures and options on financial futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the securities
in the Fund's portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its expectations
about the direction or extent of market factors such as interest rate movements.
In these events, the Fund may lose money on the futures contract or option. It
is not certain that a secondary market for positions in futures contracts or for
options will exist at all times. Although the investment adviser will consider
liquidity before entering into options transactions, there is no assurance that
a liquid secondary market on an exchange will exist for any particular futures
contract or option at any particular time. The Fund's ability to establish and
close out futures and options positions depends on this secondary market.    
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.
    
PORTFOLIO TURNOVER

Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in its portfolio will be sold whenever the Fund's
investment adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held.

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 agreement 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 net assets and pledge up to
     10% of the value of its total assets to secure such borrowings; or
   * invest more than 10% of its total assets in securities subject to
     restrictions on resale under the Securities Act of 1933, except for certain
     restricted securities which meet the criteria for liquidity as established
     by the Directors.

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

The Fund will not:

   * invest more than 10% of its total assets in securities which are not
     readily marketable or which are otherwise considered illiquid, including
     over-the-counter options and repurchase agreements providing for settlement
     in more than seven days after notice.

NET ASSET VALUE
   
The Fund's net asset value ("NAV") per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The NAV for each
class of Shares may differ due to the variance in daily net income realized by
each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.

All purchases, redemptions and exchanges are processed at the NAV next
determined after the request in proper form is received by the Fund. The NAV is
determined as of the close of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time) every day the New York Stock Exchange is open.

INVESTING IN THE FUND

This prospectus offers three classes of Shares each with the characteristics
described below.
<TABLE>
<CAPTION>

                           Class A      Class B     Class C
<S>                      <C>          <C>          <C>
Minimum and
Subsequent
Investment Amounts       $1500/$100   $1500/$100   $1500/$100
Minimum and
Subsequent
Investment Amount for
Retirement Plans         $250/$100    $250/$100    $250/$100
Maximum Sales Charge     4.50%*       None         None
Maximum Contingent       None         5.50+        1.00%#
Deferred Sales Charge**
Conversion Feature       No           Yes++        No

* Class A Shares are sold at NAV, plus a sales charge as follows:

<CAPTION>

                                        Sales Charge               Dealer
                                     as a Percentage of        Concession as
                                     Public      Net          a Percentage of
                                    Offering    Amount        Public Offering
Amount of Transaction                Price     Invested            Price
<S>                                  <C>       <C>            <C>
Less than $100,000                   4.50%       4.71%             4.00%
$100,000 but less than $250,000      3.75%       3.90%             3.25%
$250,000 but less than $500,000      2.50%       2.56%             2.25%
$500,000 but less than $1 million    2.00%       2.04%             1.80%
$1 million or greater                0.00%       0.00%             0.25%
</TABLE>

** Computed on the lesser of the NAV of the redeemed Shares at the time of
purchase or the NAV of the redeemed Shares at the time of redemption.

+ The following contingent deferred sales charge schedule applies to Class B
Shares:
<TABLE>
<CAPTION>

Year of Redemption           Contingent Deferred
After Purchase                  Sales Charge
<S>                          <C>
First                              5.50%
Second                             4.75%
Third                              4.00%
Fourth                             3.00%
Fifth                              2.00%
Sixth                              1.00%
Seventh and thereafter             0.00%
</TABLE>

++ Class B Shares convert to Class A Shares (which pay
lower ongoing expenses) approximately eight years after purchase. See
"Conversion of Class B Shares."

# The contingent deferred sales charge is assessed on Shares redeemed within one
year of their purchase date.

PURCHASING SHARES

Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either through a
financial intermediary (such as a bank or broker/dealer) or by sending a wire or
check directly to the Fund. Financial intermediaries may impose different
minimum investment requirements on their customers. An account must be
established with a financial intermediary or by completing, signing, and
returning the new account form available from the Fund before Shares can be
purchased. Shareholders in certain other funds advised and distributed by
affiliates of Federated Investors ("Federated Funds") may exchange their Shares
for Shares of the corresponding class of the Fund. The Fund reserves the right
to reject any purchase or exchange request.

In connection with any sale, Federated Securities Corp. may, from time to time,
offer certain items of nominal value to any shareholder or investor.

PURCHASING SHARES THROUGH A FINANCIAL INTERMEDIARY

Orders placed through a financial intermediary are considered received when the
Fund is notified of the purchase order or when payment is converted into federal
funds. Purchase orders through a broker/dealer must be received by the broker
before 4:00 p.m. (Eastern time) and must be transmitted by the broker to the
Fund before 5:00 p.m. (Eastern time) in order for Shares to be purchased at that
day's price. Purchase orders through other financial intermediaries must be
received by the financial intermediary and transmitted to the Fund before 4:00
p.m. (Eastern time) in order for Shares to be purchased at that day's price. It
is the financial intermediary's responsibility to transmit orders promptly.
Financial intermediaries may charge fees for their services.      The financial
intermediary which maintains investor accounts in Class B Shares or Class C
Shares with the Fund must do so on a fully disclosed basis unless it accounts
for share ownership periods used in calculating the contingent deferred sales
charge (see "Contingent Deferred Sales Charge"). In addition, advance payments
made to financial intermediaries may be subject to reclaim by the distributor
for accounts transferred to financial intermediaries which do not maintain
investor accounts on a fully disclosed basis and do not account for share
ownership periods.

PURCHASING SHARES BY WIRE
   
Shares may be purchased by Federal Reserve wire by calling the Fund. All
information needed will be taken over the telephone, and the order is considered
received when State Street Bank receives payment by wire. Federal funds should
be wired as follows: Federated Shareholder Services Company, c/o State Street
Bank and Trust Company, Boston, MA 02266-8600; Attention; EDGEWIRE; For Credit
to: (Fund Name) (Fund Class); (Fund Numberthis number can be found on the
account statement or by contacting the Fund); Account Number; Trade Date and
Order Number; Group Number or Dealer Number; Nominee or Institution Name; and
ABA Number 011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted.

PURCHASING SHARES BY CHECK

Shares may be purchased by mailing a check made payable to the name of the Fund
(designate class of Shares and account number) to: Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received).

SYSTEMATIC INVESTMENT PROGRAM

Under this program, funds in a minimum amount of $50 may be automatically
withdrawn periodically from the shareholder's checking account at an
Automated Clearing House ("ACH") member and invested in the Fund.
Shareholders should contact their financial intermediary or the Fund to
participate in this program.
    
RETIREMENT PLANS

Fund Shares can be purchased as an investment for retirement plans or IRA
accounts. For further details, contact the Fund and consult a tax adviser.
   
CLASS A SHARES

Class A Shares are sold at NAV, plus a sales charge. However:

NO SALES CHARGE IS IMPOSED FOR CLASS A SHARES PURCHASED:

   * through financial intermediaries that do not receive sales charge
     dealer concessions;
   * by Federated Life Members; or
   * through "wrap accounts" or similar programs under which clients pay a fee
     for services.

IN ADDITION, THE SALES CHARGE CAN BE ELIMINATED BY:

   * purchasing in quantity;
   * combining concurrent purchases of :
       * Shares by you, your spouse, and your children under age 21, or * Shares
       of the same class of two or more Federated Funds (other than money
         market funds);
   * accumulating purchases. In calculating the sales charge on an
     additional purchase, you may count the current value of previous Share
     purchases still invested in the Fund;
   * signing a letter of intent to purchase a specific dollar amount of
     Shares within 13 months; or
   * using the reinvestment privilege within 120 days of redeeming Shares of an
     equal or lesser amount.

Consult a financial intermediary or Federated Securities Corp. for details
on these programs. In order to eliminate the sales charge or receive sales
charge reductions, Federated Securities Corp. must be notified by the
shareholder in writing or by a financial intermediary at the time of
purchase.
    
DEALER CONCESSION

For sales of Class A Shares, a dealer will normally receive up to 90% 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 may offer
to pay dealers up to 100% of the sales charge retained by it. Such payments may
take the form of cash or promotional incentives, such as reimbursement of
certain expenses of qualified employees and their spouses to attend
informational meetings about the Fund or other special events at
recreational-type 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 a significant amount of Shares. On purchases of $1 million or
more, the investor pays no sales charge; however, the distributor will make
twelve monthly payments to the dealer totaling 0.25% of the public offering
price over the first year following the purchase. Such payments are based on the
original purchase price of Shares outstanding at each month end. The sales
charge for Shares sold other than through registered broker/dealers will be
retained by Federated Securities Corp.
   
Federated Securities Corp. 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 establishment of customer accounts
and purchases of Shares.

CLASS B SHARES

Class B Shares are sold at NAV. Under certain circumstances, a contingent
deferred sales charge will be assessed at the time of a redemption. Orders for
$250,000 or more of Class B Shares will automatically be invested in Class A
Shares.

CONVERSION OF CLASS B SHARES

Class B Shares will automatically convert into Class A Shares after eight full
years from the purchase date. Such conversion will be on the basis of the
relative NAVs per Share, without the imposition of any charges. Class B Shares
acquired by exchange from Class B Shares of another Federated Fund will convert
into Class A Shares based on the time of the initial purchase.

CLASS C SHARES

Class C Shares are sold at NAV. A contingent deferred sales charge of 1.00% will
be charged on assets redeemed within the first full 12 months following
purchase.

REDEEMING AND EXCHANGING SHARES

Shares of the Fund may be redeemed for cash or exchanged for Shares of the same
class of other Federated Funds on days on which the Fund computes its NAV.
Shares are redeemed at NAV less any applicable contingent deferred sales charge.
Exchanges are made at NAV. Shareholders who desire to automatically exchange
Shares, of a like class, in a pre-determined amount on a monthly, quarterly, or
annual basis may take advantage of a systematic exchange privilege. Information
on this privilege is available from the Fund or your financial intermediary.
Depending upon the circumstances, a capital gain or loss may be realized when
Shares are redeemed or exchanged.

REDEEMING OR EXCHANGING SHARES THROUGH A FINANCIAL INTERMEDIARY

Shares of the Fund may be redeemed or exchanged by contacting your financial
intermediary before 4:00 p.m. (Eastern time). In order for these transactions to
be processed at that day's NAV, financial intermediaries (other than
broker/dealers) must transmit the request to the Fund before 4:00 p.m. (Eastern
time), while broker/dealers must transmit the request to the Fund before 5:00
p.m. (Eastern time). The financial intermediary is responsible for promptly
submitting transaction requests and providing proper written instructions.
Customary fees and commissions may be charged by the financial intermediary for
this service. Appropriate authorization forms for these transactions must be on
file with the Fund.

REDEEMING OR EXCHANGING SHARES BY TELEPHONE

Shares acquired directly from the Fund may be redeemed in any amount, or
exchanged, by calling 1-800-341-7400. Appropriate authorization forms for these
transactions must be on file with the Fund. Shares held in certificate form must
first be returned to the Fund as described in the instructions under "Redeeming
or Exchanging Shares by Mail." Redemption proceeds will either be mailed in the
form of a check to the shareholder's address of record or wire-transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. The minimum amount for a wire transfer is $1,000.
Proceeds from redeemed Shares purchased by check or through ACH will not be
wired until that method of payment has cleared.

Telephone instructions will be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
this occurs, "Redeeming or Exchanging Shares By Mail" should be considered. The
telephone transaction privilege may be modified or terminated at any time.
Shareholders would be promptly notified.

REDEEMING OR EXCHANGING SHARES BY MAIL

Shares may be redeemed in any amount, or exchanged, by mailing a written request
to: Federated Shareholder Services Company, Fund Name, Fund Class, P.O. Box
8600, Boston, MA 02266-8600. If share certificates have been issued, they must
accompany the written request. It is recommended that certificates be sent
unendorsed by registered or certified mail.

All written requests should state: Fund Name and the Share Class name; the
account name as registered with the Fund; the account number; and the number of
Shares to be redeemed or the dollar amount of the transaction. An exchange
request should also state the name of the Fund into which the exchange is to be
made. All owners of the account must sign the request exactly as the Shares are
registered. A check for redemption proceeds is normally mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request. Dividends are paid up to and including the day that
a redemption or exchange request is processed.

REQUIREMENTS FOR REDEMPTION

Shareholders requesting 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 their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.      REQUIREMENTS
FOR EXCHANGE     Shareholders must exchange Shares having an NAV equal to the
minimum investment requirements of the fund into which the exchange is being
made. Contact your financial intermediary directly or the Fund for free
information on and prospectuses for the Federated Funds into which your Shares
may be exchanged. Before the exchange, the shareholder must receive a prospectus
of the fund for which the exchange is being made.

Upon receipt of proper instructions and required supporting documents, Shares
submitted for exchange are redeemed and proceeds invested in the same class of
shares of the other fund. Signature guarantees will be required to exchange
between fund accounts not having identical shareholder registrations. The
exchange privilege may be modified or terminated at any time. Shareholders will
be notified of the modification or termination of the exchange privilege.

SYSTEMATIC WITHDRAWAL PROGRAM

Under this program, Shares are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder of not less than $100. To be
eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through his financial intermediary or by calling the Fund.

Because participation in this program may reduce, and eventually deplete the
shareholder's investment in the Fund, payments under this program should not be
considered as yield or income. It is not advisable for shareholders to continue
to purchase Class A Shares subject to a sales charge while participating in this
program. A contingent deferred sales charge may be imposed on Class B and C
Shares.

SYSTEMATIC WITHDRAWAL PROGRAM ("SWP") ON CLASS B SHARES

A contingent deferred sales charge will not be charges on SWP redemptions of
Class B Shares if:

   * shares redeemed are 12% or less of the account value in a single year; *
   the account is at least one year old; * all dividends and capital gains
   distributions are reinvested; and * the account has at least a $10,000
   balance when the SWP is established;
     (multiple Class B Share accounts cannot be aggregated to meet this minimum
     balance).

A contingent deferred sales charge will be charged on redemption amounts that
exceed the 12% annual limit. In measuring the redemption percentage, the account
is valued when the SWP is established and then annually at calender year-end.
Redemptions can be made only at a rate of 1% monthly, 3% quarterly, or 6%
semi-annually.      CONTINGENT DEFERRED SALES CHARGE     The contingent deferred
sales charge will be deducted from the redemption proceeds otherwise payable to
the shareholder and will be retained by the distributor. Redemptions will be
processed in a manner intended to maximize the amount of redemption which will
not be subject to a contingent deferred sales charge. The contingent deferred
sales charge will not be imposed with respect to Shares acquired through the
reinvestment of dividends or distributions of long-term capital gains. In
determining the applicability of the contingent deferred sales charge, the
required holding period for your new Shares received through an exchange will
include the period for which your original Shares were held.

ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE

Upon written notification to Federated Securities Corp. or the transfer
agent, no contingent deferred sales charge will be imposed on redemptions:

   * following the death or disability, as defined in Section 72(m)(7) of the
     Internal Revenue Code of 1986, of the last surviving shareholder;
   * representing minimum required distributions from an Individual Retirement
     Account or other retirement plan to a shareholder who has attained the age
     of 70 1U2;
   * which are involuntary redemptions of shareholder accounts that do not
     comply with the minimum balance requirements;
   * which are qualifying redemptions of Class B Shares under a Systematic
     Withdrawal Program;
   * which are reinvested in the Fund under the reinvestment privilege; * of
   Shares held by Directors, employees and sales representatives of the
     Fund, the distributor, or affiliates of the Fund or distributor, employees
     of any financial intermediary that sells Shares of the Fund pursuant to a
     sales agreement with the distributor, and their immediate family members to
     the extent that no payments were advanced for purchases made by these
     persons; and
   * of Shares originally purchased through a bank trust department, an
     investment adviser registered under the Investment Advisers Act of 1940 or
     retirement plans where the third party administrator has entered into
     certain arrangements with Federated Securities Corp. or its affiliates, or
     any other financial intermediary, to the extent that no payments were
     advanced for purchases made through such entities.

For more information regarding the elimination of the contingent deferred sales
charge through a Systematic Withdrawal Program, or any of the above provisions,
contact your financial intermediary or the Fund. The Fund reserves the right to
discontinue or modify these provisions. Shareholders will be notified of such
action.      ACCOUNT AND SHARE INFORMATION     CONFIRMATIONS AND ACCOUNT
STATEMENTS

Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends paid.
The Fund will not issue share certificates.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Net long-term capital gains realized by the Fund, if any,
will be distributed at least once every twelve months. Dividends and
distributions are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date NAV without a sales charge, unless
shareholders request cash payments on the new account form or by contacting the
transfer agent.      ACCOUNTS WITH LOW BALANCES     Due to the high cost of
maintaining accounts with low balances, the Fund may close an account by
redeeming all Shares and paying the proceeds to the shareholder if the account
balance falls below the applicable minimum investment amount. Retirement plan
accounts and accounts where the balance falls below the minimum due to NAV
changes will not be closed in this manner. Before an account is closed, the
shareholder will be notified and allowed 30 days to purchase additional Shares
to meet the minimum.      FUND INFORMATION

MANAGEMENT OF THE FUND

Board of Directors

The Fund is managed by a Board of Directors. The Directors are responsible for
managing the Fund's business affairs and for exercising all the Fund's powers
except those reserved for the shareholders. An Executive Committee of the Board
of Directors handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER

Investment decisions for the Fund are made by Federated Advisers (the
"Adviser"), the Fund's investment adviser, subject to direction by the
Directors. 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 a fee from the Fund.

ADVISORY FEES
   
The Adviser receives an annual investment advisory fee equal to 0.75% of the
Fund's average daily net assets. Under the investment advisory contract which
provides for the voluntary waiver and reimbursement of expenses by the Adviser,
the Adviser may voluntarily choose to waive a portion of its fee or reimburse
the Funds for certain operating expenses. The Adviser can terminate this
voluntary reimbursement of expenses at any time at its sole discretion.     
ADVISER'S BACKGROUND

Federated Advisers, a Delaware business trust organized on April 11, 1989, is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.     Federated Advisers and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide administrative
services to a number of investment companies. With over $120 billion invested
across more than 300 funds under management and/or administration by its
subsidiaries, as of December 31, 1997, Federated Investors is one of the largest
mutual fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
approximately 4,000 financial institutions nationwide.      Both the Fund and
the Adviser have adopted strict codes of ethics governing the conduct of all
employees who manage the Fund and its portfolio securities. These codes
recognize that such persons owe a fiduciary duty to the Fund's shareholders and
must place the interests of shareholders ahead of the employees' own interest.
Among other things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in securities
being purchased or sold, or being considered for purchase or sale by the Fund;
prohibit purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of the codes are
subject to review by the Directors and could result in severe penalties.    
Kathleen Foody-Malus has been the Fund's portfolio manger since July 1993. Ms.
Foody-Malus joined Federated Investors in 1983 and has been a Vice President of
the Fund's Adviser since 1993. Ms. Foody-Malus served as an Assistant Vice
President of the Adviser from 1990 until 1992. Ms. Foody-Malus received her
M.B.A. in Accounting/Finance from the University of Pittsburgh.

Edward J. Tiedge has been the Fund's portfolio manager since April 1997. Mr.
Tiedge joined Federated Investors in 1993 and has been a Vice President of
the Fund's Adviser since January 1996. He served as an Assistant Vice
President of the Fund's Adviser in 1995, and an Investment Analyst during
1993 and 1994. Mr. Tiedge served as Director of Investments at Duquesne
Light Company from 1990 to 1993. Mr. Tiedge is a Chartered Financial Analyst
and received his M.S. in Industrial Administration from Carnegie Mellon
University.
    
DISTRIBUTION OF SHARES
   
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.

The distributor may offer to pay financial institutions an amount up to 1.00% of
the net asset value of Class C Shares purchased by their clients or customers at
the time of purchase. These payments will be made directly by the distributor
from its assets, and will not be made from assets of the Fund. Financial
institutions may elect to waive the initial payment described above; such waiver
will result in the waiver by the Fund of the otherwise applicable contingent
deferred sales charge.
    
The distributor will pay dealers an amount equal to 5.50% of the net asset value
of Class B Shares purchased by their clients or customers. These payments will
be made directly by the distributor from its assets, and will not be made from
the assets of the Fund. Dealers may voluntarily waive receipt of all or any
portion of these payments. The distributor may pay a portion of the distribution
fee discussed below to financial institutions that waive all or any portion of
the advance payments.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
   
Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Distribution Plan"), Class A Shares, Class B Shares and Class C
Shares will pay a fee to the distributor in an amount computed at an annual rate
of 0.25%, 0.75%, and 0.75%, respectively, of the average daily net assets of
each class of Shares to finance any activity which is principally intended to
result in the sale of Shares subject to the Distribution Plan. For Class C
Shares, the distributor may select financial institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers. With respect to Class B
Shares, because distribution fees to be paid by the Fund to the distributor may
not exceed an annual rate of 0.75% of each class of Shares' average daily net
assets, it will take the distributor a number of years to recoup the expenses it
has incurred for its distribution and distribution-related services pursuant to
the Plan. The Fund is not currently making payments for Class A Shares under the
Distribution Plan, nor does it anticipate doing so in the immediate future.
    
The Distribution 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 Shares
under the Distribution Plan.
   
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to 0.25% of the average daily net asset value of
Class A Shares, Class B Shares, and Class C Shares to obtain certain personal
services for shareholders and for the maintenance of shareholder accounts
("shareholder services"). Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or will
select financial institutions to perform shareholder services. Financial
institutions will receive fees 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 Fund and Federated Shareholder
Services.
    
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS

Federated Securities Corp. and Federated Shareholder Services may offer to pay a
fee, from their own assets, to financial institutions as financial assistance
for providing substantial sales services, distribution-related support services,
or shareholder services. The support may include sponsoring sales, educational
and training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. 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.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES

Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at an annual rate which relates to the average aggregate daily
net assets of all Federated Funds as specified below:
   
Maximum               Average Aggregate
  Fee                  Daily Net Assets
 0.150%           on the first $250 million
 0.125%           on the next $250 million
 0.100%           on the next $250 million
 0.075%     on assets in excess of $750 million
    
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.

SHAREHOLDER INFORMATION
   
Each Share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote. All Shares of each portfolio
or class in the Fund have equal voting rights, except that in matters affecting
only a particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.

Directors may be removed by the Directors or shareholders at a special meeting.
A special meeting of shareholders shall be called by the Directors upon the
written request of shareholders owning at least 10% of the Fund's outstanding
Shares of all series entitled to vote.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class A Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class A Shares for its clients), owned
approximately 15,982,289 shares (98.85%) of the Fund and therefore may, for
certain purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class C Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class C Shares for its clients), owned
approximately 178,892 shares (49.38%) of the Fund and therefore may, for certain
purposes, be deemed to control the Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class F Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class F Shares for its clients), owned
approximately 65,470,560 shares (41.17%) of the Fund and therefore may, for
certain purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.
    
TAX INFORMATION

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended (the "Code") applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their Shares. No federal income tax is due on
any dividends earned in an IRA or qualified retirement plan until distributed,
so long as such IRA or qualified retirement plan meets the applicable
requirements of the Code.

STATE AND LOCAL TAXES
   
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 for each class
of Shares including Class F Shares (as described under "Other Classes of
Shares").

Total return represents the change, over a specified period of time, in the
value of an investment in each class of Shares 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 each class of Shares is calculated by dividing the net investment
income per Share (as defined by the SEC) earned by each class of Shares over a
thirty-day period by the maximum offering price per Share of each class 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 each class of Shares, and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
    
The performance information reflects the effect of non-recurring charges such as
the maximum sales charge or contingent deferred sales charge, which, if
excluded, would increase the total return and yield.

Total return and yield will be calculated separately for Class A Shares, Class B
Shares, Class C Shares, and Class F Shares.

From time to time, advertisements for Class A Shares, Class B Shares, Class C
Shares, and Class F Shares of the Fund may refer to ratings, rankings, and other
information in certain financial publications and/or compare the performance of
Class A Shares, Class B Shares, Class C Shares, and Class F Shares to certain
indices.

OTHER CLASSES OF SHARES
   
The Fund also offers another class of shares called Class F Shares. Class F
Shares are sold primarily to customers of financial institutions and are subject
to a front-end sales charge, a contingent deferred sales charge, and a minimum
initial investment of $1,500, unless the investment is in a retirement account,
in which case the minimum initial investment is $250.
    
Class A Shares, Class B Shares, Class C Shares, and Class F Shares are subject
to certain of the same expenses. Expense differences, however, between Class A
Shares, Class B Shares, Class C Shares, and Class F Shares may affect the
performance of each class.

To obtain more information and a prospectus for Class F Shares, investors may
call 1-800-341-7400 or contact their financial institution.

[Graphic]

Federated Investors

FEDERATED GOVERNMENT
INCOME SECURITIES, INC.

Class A Shares, Class B Shares, Class C Shares

Prospectus
   
April 30, 1998
    
An Open-End, Diversified Management Investment Company

FEDERATED GOVERNMENT INCOME SECURITIES, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
   
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER
Federated Advisers
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222-5401
    

Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com

   
Cusip 313912206
Cusip 313912305
Cusip 313912404
G01090-01 (4/98)
    
[Graphic]



FEDERATED GOVERNMENT INCOME SECURITIES, INC.

Class F Shares

PROSPECTUS

The Class F Shares of Federated Government Income Securities, Inc. (the "Fund"),
represent interests in an open-end, diversified management investment company (a
mutual fund) that seeks current income by investing in a professionally managed,
diversified portfolio limited primarily to securities guaranteed as to payment
of principal and interest by the U.S.
government or its agencies or instrumentalities.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY 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 Class F Shares of the Fund. Keep this prospectus for future
reference.     The Fund has also filed a Statement of Additional Information for
Class A Shares, Class B Shares, Class C Shares, and Class F Shares dated April
30, 1998, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information or to make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information, material
incorporated by reference into this document, and other information regarding
the Fund is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).      THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.     Prospectus dated April
30, 1998      TABLE OF CONTENTS    
 Summary of Fund Expenses 1 Financial HighlightsClass F Shares 2 General
 Information 3 Calling the Fund 3 Investment Information 3 Investment Objective
 3 Investment Policies 3 Special Considerations of Fixed Income Securities 5
 Portfolio Turnover 6 Investment Limitations 7 Net Asset Value 7 Investing in
 the Fund 7 Purchasing Shares 7 Purchasing Shares Through a Financial
 Intermediary 8 Purchasing Shares by Wire 8 Purchasing Shares by Check 8
 Systematic Investment Program 8 Retirement Plans 8 Eliminating the Sales Charge
 8 Redeeming and Exchanging Shares 9 Redeeming or Exchanging Shares Through a
 Financial Intermediary 9 Redeeming or Exchanging Shares by Telephone 9
 Redeeming or Exchanging Shares by Mail 9 Requirements for Redemption 10
 Requirements for Exchange 10 Systematic Withdrawl Program 10 Contingent
 Deferred Sales Charge 10 Account and Share Information 11 Confirmations and
 Account Statements 11 Dividends and Distributions 11 Accounts with Low Balances
 11 Fund Information 11 Management of the Fund 11 Distribution of Class F Shares
 12 Shareholder Services 12 Other Payments to Financial Institutions 12
 Supplemental Payments to Financial Institutions 12 Administration of the Fund
 13 Shareholder Information 13 Tax Information 13 Federal Income Tax 13 State
 and Local Taxes 13 Performance Information 14 Other Classes of Shares 14
    
SUMMARY OF FUND EXPENSES
   
 <TABLE>
 <CAPTION>
  SHAREHOLDER TRANSACTION EXPENSES

 <S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) 1.00% Maximum Sales Charge 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)(1)                                          1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable)                          None
Exchange Fee                                                                                None

 <CAPTION>
  ANNUAL OPERATING EXPENSES

 <S>                                                                                 <C>    <C>
Management Fee (after waiver)(2)                                                            0.51%
12b-1 Fee                                                                                   None
Total Other Expenses                                                                        0.45%
   Shareholder Services Fee                                                           0.25%
Total Operating Expenses (after waiver)(3)                                                  0.96%
 </TABLE>
(1) The contingent deferred sales charge is 1.00% of the lesser of the original
purchase price or the net asset value of shares redeemed within four years of
their purchase date. For a more complete description, see "Contingent Deferred
Sales Charge."

(2) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.75%.

(3) The total operating expenses would have been 1.20% absent the voluntary
waiver of a portion of the management fee.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Class F Shares of the Fund will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in the Fund," "Redeeming and Exchanging
Shares," and "Fund Information." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.

 EXAMPLE
 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 charge
1 Year                                                       $ 30
3 Years                                                      $ 51
5 Years                                                      $ 63
10 Years                                                     $127

 You would pay the following expenses on the same investment,
 assuming no redemption

1 Year                                                       $ 20
3 Years                                                      $ 40
5 Years                                                      $ 63
10 Years                                                     $127

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
    
FINANCIAL HIGHLIGHTS--CLASS F SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
   
The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated April 23, 1998, on the Fund's
financial statements for the year ended February 28, 1998, and on the following
table for each of the periods presented, is included in the Annual Report, which
is incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.

 <TABLE>
 <CAPTION>
                                                               YEAR ENDED FEBRUARY 28 OR 29,
                           1998       1997       1996       1995      1994       1993       1992       1991      1990       1989
 <S>                     <C>       <C>        <C>        <C>        <C>       <C>        <C>        <C>        <C>       <C>
 NET ASSET VALUE,           $ 8.59     $ 8.75     $ 8.55     $ 9.00    $ 9.44     $ 9.48     $ 9.32     $ 9.19    $ 9.00     $ 9.49
 BEGINNING OF PERIOD
 INCOME FROM INVESTMENT
 OPERATIONS
   Net investment income      0.61       0.55       0.62       0.63      0.68       0.79       0.83       0.87      0.87       0.86
   Net realized and           0.24     (0.15)       0.20     (0.46)    (0.44)     (0.05)       0.17       0.15      0.24     (0.53)
 unrealized gain (loss)
 on investments
   Total from investment      0.85       0.40       0.82       0.17      0.24       0.74       1.00       1.02      1.11       0.33
 operations
 LESS DISTRIBUTIONS
   Distributions from net    (0.61)     (0.56)     (0.62)     (0.62)    (0.68)     (0.78)     (0.83)     (0.87)    (0.91)    (0.82)
 investment income
   Distributions in                                                                        (0.01)(a)  (0.02)(a) (0.01)(a)
 excess of net investment
 income
   Total distributions       (0.61)     (0.56)     (0.62)     (0.62)    (0.68)     (0.78)     (0.84)     (0.89)    (0.92)    (0.82)
 NET ASSET VALUE, END OF    $ 8.83     $ 8.59     $ 8.75     $ 8.55    $ 9.00     $ 9.44     $ 9.48     $ 9.32    $ 9.19     $ 9.00
 PERIOD
 TOTAL RETURN(B)            10.19%      4.81%      9.87%      2.11%     2.63%      8.08%     11.12%     11.63%    12.81%      3.65%
 RATIOS TO AVERAGE NET
 ASSETS
   Expenses                  0.96%      0.96%      0.96%      0.97%     0.97%      0.90%      0.92%      0.90%     0.93%      0.88%
   Net investment income     6.87%      6.42%      6.96%      7.34%     7.39%      8.27%      8.86%      9.43%     9.42%      9.33%
   Expense                   0.24%      0.26%      0.25%      0.23%     0.19%
 waiver/reimbursement(c)
 SUPPLEMENTAL DATA
   Net assets, end of   $1,428,591 $1,773,905 $2,264,374 $2,538,013 $3,542,078$3,643,180 $2,261,762 $1,322,749 $1,320,710$1,482,030
 period (000 omitted)
   Portfolio turnover         264%        97%       161%       143%      134%        43%        36%        37%       76%        62%
 </TABLE>
(a) Distributions in excess of net investment income for the years ended
February 29, 1992, February 28, 1991, and 1990 were a result of certain book and
tax timing differences. These distributions did not represent a return of
capital for federal income tax purposes.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

FURTHER INFORMATION ABOUT THE FUND'S PERFORMANCE IS CONTAINED IN THE FUND'S
ANNUAL REPORT DATED FEBRUARY 28, 1998, WHICH CAN BE OBTAINED FREE OF CHARGE.
    
GENERAL INFORMATION
   
The Fund was established as a Massachusetts business trust on September 23,
1981, and reorganized as a corporation under the laws of the State of Maryland
on February 4, 1986. Class F Shares of the Fund ("Shares") are designed
primarily for individuals and institutions as a convenient means of accumulating
an interest in a professionally managed, diversified portfolio of U.S.
government securities.

The Fund's current net asset value and offering price may be found in the mutual
funds section of local newspapers under "Federated" and the appropriate class
designation listing.

CALLING THE FUND

Call the Fund at 1-800-341-7400.
    
INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide 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 investment policies described below may be changed by the Board of Directors
(the "Directors") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
    
ACCEPTABLE INVESTMENTS

The Fund invests 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 U.S. government securities in which the Fund invests include:

   * direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
     notes, and bonds;
   * notes, bonds, and discount notes issued or guaranteed by U.S.
     government agencies and instrumentalities supported by the full faith
     and credit of the United States;
   * notes, bonds, and discount notes of U.S. government agencies or
     instrumentalities which receive or have access to federal funding; and
   * notes, bonds, and discount notes of other U.S. government
     instrumentalities supported only by the credit of the
     instrumentalities.
   
The obligations of U.S. government agencies or instrumentalities which the Fund
may buy are backed in a variety of ways by the U.S. government or its agencies
or instrumentalities. Some of these obligations, such as Government National
Mortgage Association ("Ginnie Mae") mortgage-backed securities and obligations
of the Farmers Home Administration ("FHA"), are backed by the full faith and
credit of the U.S. Treasury. Obligations of the FHA are also backed by the
issuer's right to borrow from the U.S. Treasury. Obligations of Federal Home
Loan Banks and the FHA are backed by the discretionary authority of the U.S.
government to purchase certain obligations of agencies or instrumentalities.
Obligations of Federal Home Loan Banks, FHA, Farm Credit Banks, Federal National
Mortgage Association ("Fannie Mae"), and Federal Home Loan Mortgage Corporation
("Freddie Mac") are backed by the credit of the agency or instrumentality
issuing the obligations. Some of the securities purchased by the Fund may
represent an interest solely in the principal repayments or solely in the
interest payments on mortgage-backed securities. These securities are usually
structured with two classes and receive different proportions of the interest
and principal distributions on the pool of underlying mortgage-backed securities
("IOs and POs"). In addition, the Fund may engage in certain strategies and
transactions as described in the prospectus.      COLLATERALIZED MORTGAGE
OBLIGATIONS ("CMOS")

CMOs are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by Ginnie Mae,
Fannie Mae or Freddie Mac certificates, but may be collateralized by whole loans
or private pass-through securities. CMOs may have fixed or floating rates of
interest.

The Fund will invest only in CMOs that are rated AAA by a nationally recognized
statistical rating organization. The Fund may also invest in certain CMOs which
are issued by private entities such as investment banking firms and companies
related to the construction industry. The CMOs in which the Fund may invest may
be: (i) securities which are 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; (ii) securities which are collateralized
by pools of mortgages in which payment of principal and interest is guaranteed
by the issuer and such mortgages in which payment of principal and interest is
guaranteed by the issuer and such guarantee is collateralized by U.S. government
securities; or (iii) other securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and interest
is supported by the credit of an agency or instrumentality of the U.S.
government.

CMOs that include a class bearing a floating rate of interest also may include a
class whose yield floats inversely against a specified index rate. These
"inverse floaters" are more volatile than conventional fixed or floating rate
classes of a CMO and the yield thereon, as well as the value thereof, will
fluctuate in inverse proportion to changes in the index on which interest rate
adjustments are based. As a result, the yield on an inverse floater class of a
CMO will generally increase when market yields (as reflected by the index)
decrease and decrease when market yields increase. The extent of the volatility
of inverse floaters depends on the extent of anticipated changes in market rates
of interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments.

TEMPORARY INVESTMENTS

The Fund may invest temporarily in cash and cash items during times of unusual
market conditions for defensive purposes and to maintain liquidity.

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.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The yields generally available
on comparable securities when delivery occurs may be higher than yields on
securities obtained pursuant to such transactions. 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 as interest rates
fluctuate. Accordingly, the Fund may pay more/less than the market value of the
securities on the settlement date. In addition, the seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered to be
advantageous.

The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.

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 Fund's Directors 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.

There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.

Securities lending transactions typically require the Fund to pay interest on
any cash collateral received. The Fund will seek to earn interest and additional
returns by investing cash collateral in repurchase agreements or liquid high
grade securities. The Fund will bear the risk of any losses on such investments
and the risk that the income from such investments are less than the interest
payable to the borrower.

SPECIAL CONSIDERATIONS OF FIXED INCOME SECURITIES

There is no limit to portfolio maturity. The prices of fixed income government
securities fluctuate inversely in relation to the direction of interest rates. A
decline in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market interest rates
results in a decline in market prices of outstanding debt obligations. In either
case, the amount of change in market prices of debt obligations in response to
changes in market interest rates generally depends on the maturity of the debt
obligations: the debt obligations with the longest maturities will experience
the greatest market price changes. The prices of zero coupon securities, IOs and
POs, and certain structures of CMOs are more sensitive to fluctuations in
interest rates than are conventional bonds.

The market value of debt obligations, and therefore the Fund's net asset value,
will fluctuate due to changes in economic conditions and other market factors
such as interest rates which are beyond the control of the Fund's investment
adviser. The Fund's investment adviser could be incorrect in its expectations
about the direction or extent of these market factors. Although debt obligations
with longer maturities offer potentially greater returns, they have greater
exposure to market price fluctuation. Consequently, to the extent the Fund is
significantly invested in debt obligations with longer maturities, there is a
greater possibility of fluctuation in the Fund's net asset value.

Mortgage-backed securities are generally subject to less predictable and, in
many cases higher, prepayment risks than most other types of debt instruments.
Prepayment risks on mortgage securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance their
mortgages to take advantage of the more favorable rates. Depending upon market
conditions, the yield that the Fund receives from the reinvestment of such
prepayments, or any scheduled principal payments, may be lower than the yield on
the original mortgage security. As a consequence, mortgage securities may be a
less effective means of "locking in" interest rates than other types of debt
securities having the same stated maturity and may also have less potential for
capital appreciation.

With respect to securities that represent an interest solely in the interest
payments on mortgage-backed securities, because the yield to maturity is
extremely sensitive to the rate of principal payments (including prepayments) on
the related underlying mortgage-backed securities, it is possible that the Fund
might not recover its original investment on these securities if there are
substantial prepayments on the underlying mortgage.

In addition, the Fund may, but is not required to, utilize various other
investment strategies as described herein to manage the effective maturity or
duration of the Fund's fixed income securities or to enhance potential gain.
Such strategies are generally accepted by modern portfolio managers and are
regularly utilized by mutual funds and other institutional investors. These
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed.

For example, the Fund expects to purchase portfolio securities using investment
leverage. The Fund expects that substantially all of its leverage will be used
in connection with when-issued and delayed delivery transactions and portfolio
securities lending. Leveraging creates an opportunity for capital appreciation
but, at the same time, the use of leverage in a declining market will cause a
greater decline in the asset value of the shares than if the Fund were not
leveraged.

PUT AND CALL OPTIONS

The Fund may purchase put and call options on its portfolio securities. These
options will be used as a hedge to attempt to protect securities which the Fund
holds, or will be purchasing, against decreases or increases in value. The Fund
may also write (sell) put and call options on all or any portion of its
portfolio to generate income for the Fund. The Fund will write call options on
securities either held in its portfolio or for which it has the right to obtain
without payment of further consideration or for which it has segregated cash in
the amount of any additional consideration.

In the case of put options, the Fund will segregate cash or U.S. Treasury
obligations with a value equal to or greater than the exercise price of the
underlying securities.

The Fund may generally purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the options
since options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the Fund's adviser.

Over-the-counter options are two-party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.

FINANCIAL FUTURES AND OPTIONS ON FUTURES

The Fund may purchase and sell financial futures contracts to hedge all or a
portion of its portfolio of long-term debt securities against changes in
interest rates. Financial futures contracts call for the delivery of particular
debt instruments issued or guaranteed by the U.S. Treasury or by specified
agencies or instrumentalities of the U.S. government at a certain time in the
future. The seller of the contract agrees to make delivery of the type of
instrument called for in the contract and the buyer agrees to take delivery of
the instrument at the specified future time.

The Fund may write call options and purchase put options on financial futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value resulting from anticipated increases in market interest
rates. When the Fund writes a call option on a futures contract, it is
undertaking the obligation of selling the futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.

The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of portfolio
securities resulting from anticipated decreases in market interest rates. The
Fund will use these transactions to attempt to protect its ability to purchase
portfolio securities in the future at price levels existing at the time it
enters into the transactions. When the Fund writes a put option on a futures
contract, it is undertaking to buy a particular futures contract at a fixed
price at any time during a specified period if the option is exercised. As a
purchaser of a call option on a futures contract, the Fund is entitled (but not
obligated) to purchase a futures contract at a fixed price at any time during
the life of the option.

The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets.

RISKS

When the Fund uses financial futures and options on financial futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the securities
in the Fund's portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its expectations
about the direction or extent of market factors such as interest rate movements.
In these events, the Fund may lose money on the futures contract or option. It
is not certain that a secondary market for positions in futures contracts or for
options will exist at all times. Although the investment adviser will consider
liquidity before entering into options transactions, there is no assurance that
a liquid secondary market on an exchange will exist for any particular futures
contract or option at any particular time. The Fund's ability to establish and
close out futures and options positions depends on this secondary market.    
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.
    
PORTFOLIO TURNOVER

Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in its portfolio will be sold whenever the Fund's
investment adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held.

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 agreement 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 net assets and pledge up to
     10% of the value of its total assets to secure such borrowings; or
   * invest more than 10% of its total assets in securities subject to
     restrictions on resale under the Securities Act of 1933, except for certain
     restricted securities which meet the criteria for liquidity as established
     by the Directors.

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

The Fund will not:

   * invest more than 10% of its total assets in securities which are not
     readily marketable or which are otherwise considered illiquid, including
     over-the-counter options and repurchase agreements providing for settlement
     in more than seven days after notice.

NET ASSET VALUE
   
The Fund's net asset value ("NAV") per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The NAV for each
class of Shares may differ due to the variance in daily net income realized by
each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.

All purchases, redemptions and exchanges are processed at the NAV next
determined after the request in proper form is received by the Fund. The NAV is
determined as of the close of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time) every day the New York Stock Exchange is open.

INVESTING IN THE FUND

This prospectus offers Class F Shares with the characteristics described below.

                                                                   CLASS F
 Minimum and Subsequent Investment Amount                        $1500/$100
 Minimum and Subsequent Investment Amount for
 Retirement Plans                                                $250/$100
 Maximum Sales Charge                                            1.00%*
 Maximum Sales Charge as a Percentage of the Net
 Amount Invested                                                 1.01%
 Maximum Contingent Deferred Sales Charge**                      1.00%**

* There is no sales charge for purchases of $1 million or more. In addition, no
sales charge is imposed for Shares purchased through certain entities or
programs. Please see the section entitled "Reducing or Eliminating the Sales
Charge."

** Computed on the lesser of the NAV of the redeemed Shares at the time of
purchase or the NAV of the redeemed Shares at the time of redemption.

The following contingent deferred sales charge schedule applies to Class F
Shares:

                                                    CONTINGENT
                                                      DEFERRED
AMOUNT OF PURCHASE               SHARES HELD        SALES CHARGE
Up to $1,999,999             Four Years or less       1.00%
$2,000,000 to $4,999,999     Two Years or less        0.50%
$5,000,000 or more           One Year or less         0.25%
    
PURCHASING SHARES
   
Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either through a
financial intermediary (such as a bank or broker/dealer) or by sending a wire or
check directly to the Fund. Financial intermediaries may impose different
minimum investment requirements on their customers. An account must be
established with a financial intermediary or by completing, signing, and
returning the new account form available from the Fund before Shares can be
purchased. Shareholders in Class F Shares of certain other funds advised and
distributed by affiliates of Federated Investors ("Federated Funds") may
exchange their Shares for Class F Shares of the Fund. The Fund reserves the
right to reject any purchase or exchange request.

In connection with any sale, Federated Securities Corp. may, from time to time,
offer certain items of nominal value to any shareholder or investor.

PURCHASING SHARES THROUGH A FINANCIAL INTERMEDIARY

Orders placed through a financial intermediary are considered received when the
Fund is notified of the purchase order or when payment is converted into federal
funds. Purchase orders through a broker/dealer must be received by the broker
before 4:00 p.m. (Eastern time) and must be transmitted by the broker to the
Fund before 5:00 p.m. (Eastern time) in order for Shares to be purchased at that
day's price. Purchase orders through other financial intermediaries must be
received by the financial intermediary and transmitted to the Fund before 4:00
p.m. (Eastern time) in order for Shares to be purchased at that day's price. It
is the financial intermediary's responsibility to transmit orders promptly.
Financial intermediaries may charge fees for their services.

The financial intermediary which maintains investor accounts in Class F Shares
with the Fund must do so on a fully disclosed basis unless it accounts for share
ownership periods used in calculating the contingent deferred sales charge (see
"Contingent Deferred Sales Charge"). In addition, advance payments made to
financial intermediaries may be subject to reclaim by the distributor for
accounts transferred to financial intermediaries which do not maintain investor
accounts on a fully disclosed basis and do not account for share ownership
periods.

PURCHASING SHARES BY WIRE

Shares may be purchased by Federal Reserve wire by calling the Fund. All
information needed will be taken over the telephone, and the order is considered
received when State Street Bank receives payment by wire. Federal funds should
be wired as follows: Federated Shareholder Services Company, c/o State Street
Bank and Trust Company, Boston, MA 02266-8600; Attention; EDGEWIRE; For Credit
to: (Fund Name) (Fund Class); (Fund Numberthis number can be found on the
account statement or by contacting the Fund); Account Number; Trade Date and
Order Number; Group Number or Dealer Number; Nominee or Institution Name; and
ABA Number 011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted.

PURCHASING SHARES BY CHECK

Shares may be purchased by mailing a check made payable to the name of the Fund
(designate class of Shares and account number) to: Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received).

SYSTEMATIC INVESTMENT PROGRAM

Under this program, funds in a minimum amount of $50 may be automatically
withdrawn periodically from the shareholder's checking account at an Automated
Clearing House ("ACH") member and invested in the Fund. Shareholders should
contact their financial intermediary or the Fund to participate in this program.

RETIREMENT PLANS

Fund Shares can be purchased as an investment for retirement plans or IRA
accounts. For further details, contact the Fund and consult a tax adviser.
    
ELIMINATING THE SALES CHARGE
   
Class F Shares are sold at NAV, plus a sales charge. However:

NO SALES CHARGE IS IMPOSED FOR CLASS F SHARES PURCHASED:

   * through bank trust departments or investment advisers registered under the
     Investment Advisers Act of 1940 purchasing on behalf of their clients;
   * by sales representatives, Directors, and employees of the Fund,
     Federated Advisers, Federated Securities Corp. or their affiliates and
     their immediate family members;
   * by any investment dealer who has a sales agreement with Federated
     Securities Corp. and their immediate family members, or by any trusts or
     pension or profit-sharing plans for these persons or retirement plans where
     the third party administrator has entered into certain arrangements with
     Federated Securities Corp. or its affiliates.

IN ADDITION, THE SALES CHARGE CAN BE ELIMINATED BY:

   * purchasing in quantity;
   * combining concurrent purchases of :
       * Shares by you, your spouse, and your children under age 21, or * Shares
       of the same class of two or more Federated Funds (other than money
         market funds);
   * accumulating purchases. In calculating the sales charge on an
     additional purchase, you may count the current value of previous Share
     purchases still invested in the Fund;
   * signing a letter of intent to purchase a specific dollar amount of
     Shares within 13 months; or
   * using the reinvestment privilege within 120 days of redeeming Shares of an
     equal or lesser amount.

Consult a financial intermediary or Federated Securities Corp. for details on
these programs. In order to eliminate the sales charge, Federated Securities
Corp. must be notified by the shareholder in writing or by a financial
intermediary at the time of purchase.      DEALER CONCESSION     For sales of
Shares, a dealer will normally receive up to 100% 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 may offer to pay dealers
up to 100% of the sales charge retained by it. The sales charge for Shares sold
other than through registered broker/dealers will be retained by Federated
Securities Corp.

Federated Securities Corp. 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 establishment of customer accounts and
purchases of Shares.      REDEEMING AND EXCHANGING SHARES     Shares of the Fund
may be redeemed for cash or exchanged for Class F Shares of other Federated
Funds on days on which the Fund computes its NAV. Shares are redeemed at NAV
less any applicable contingent deferred sales charge. Exchanges are made at NAV.
Shareholders who desire to automatically exchange Shares, of a like Share class,
in a pre-determined amount on a monthly, quarterly, or annual basis may take
advantage of a systematic exchange privilege. Information on this privilege is
available from the Fund or your financial intermediary. Depending upon the
circumstances, a capital gain or loss may be realized when Shares are redeemed
or exchanged.

REDEEMING OR EXCHANGING SHARES THROUGH A FINANCIAL INTERMEDIARY

Shares of the Fund may be redeemed or exchanged by contacting your financial
intermediary before 4:00 p.m. (Eastern time). In order for these transactions to
be processed at that day's NAV, financial intermediaries (other than
broker/dealers) must transmit the request to the Fund before 4:00 p.m. (Eastern
time), while broker/dealers must transmit the request to the Fund before 5:00
p.m. (Eastern time). The financial intermediary is responsible for promptly
submitting transaction requests and providing proper written instructions.
Customary fees and commissions may be charged by the financial intermediary for
this service. Appropriate authorization forms for these transactions must be on
file with the Fund.

REDEEMING OR EXCHANGING SHARES BY TELEPHONE

Shares acquired directly from the Fund may be redeemed in any amount, or
exchanged, by calling 1-800-341-7400. Appropriate authorization forms for these
transactions must be on file with the Fund. Shares held in certificate form must
first be returned to the Fund as described in the instructions under "Redeeming
or Exchanging Shares by Mail." Redemption proceeds will either be mailed in the
form of a check to the shareholder's address of record or wire-transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. The minimum amount for a wire transfer is $1,000.
Proceeds from redeemed Shares purchased by check or through ACH will not be
wired until that method of payment has cleared.

Telephone instructions will be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
this occurs, "Redeeming or Exchanging Shares by Mail" should be considered. The
telephone transaction privilege may be modified or terminated at any time.
Shareholders would be promptly notified.

REDEEMING OR EXCHANGING SHARES BY MAIL

Shares may be redeemed in any amount, or exchanged, by mailing a written request
to: Federated Shareholder Services Company, Fund Name, Fund Class, P.O. Box
8600, Boston, MA 02266-8600. If share certificates have been issued, they must
accompany the written request. It is recommended that certificates be sent
unendorsed by registered or certified mail.

All written requests should state: Fund Name and the Share Class name; the
account name as registered with the Fund; the account number; and the number of
Shares to be redeemed or the dollar amount of the transaction. An exchange
request should also state the name of the Fund into which the exchange is to be
made. All owners of the account must sign the request exactly as the Shares are
registered. A check for redemption proceeds is normally mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request. Dividends are paid up to and including the day that
a redemption or exchange request is processed.

REQUIREMENTS FOR REDEMPTION

Shareholders requesting 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 their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.

REQUIREMENTS FOR EXCHANGE

Shareholders must exchange Shares having a NAV equal to the minimum investment
requirements of the fund into which the exchange is being made. Contact your
financial intermediary directly or the Fund for free information on and
prospectuses for the Federated Funds into which your Shares may be exchanged.
Before the exchange, the shareholder must receive a prospectus of the fund for
which the exchange is being made.

Upon receipt of proper instructions and required supporting documents, Shares
submitted for exchange are redeemed and proceeds invested in the same class of
shares of the other fund. Signature guarantees will be required to exchange
between fund accounts not having identical shareholder registrations. The
exchange privilege may be modified or terminated at any time. Shareholders will
be notified of the modification or termination of the exchange privilege.

SYSTEMATIC WITHDRAWAL PROGRAM

Under this program, Shares are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder of not less than $100. To be
eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through his financial intermediary or by calling the Fund.

Because participation in this program may reduce, and eventually deplete, the
shareholder's investment in the Fund, payments under this program should not be
considered as yield or income. It is not advisable for shareholders to continue
to purchase Class F Shares subject to a sales charge while participating in this
program. A contingent deferred sales charge will be imposed on Shares redeemed
through this program within four years of their purchase dates.      CONTINGENT
DEFERRED SALES CHARGE     The contingent deferred sales charge will be deducted
from the redemption proceeds otherwise payable to the shareholder and will be
retained by the distributor. Redemptions will be processed in a manner intended
to maximize the amount of redemption which will not be subject to a contingent
deferred sales charge. The contingent deferred sales charge will not be imposed
with respect to Shares acquired through the reinvestment of dividends or
distributions of long-term capital gains. In determining the applicability of
the contingent deferred sales charge, the required holding period for your new
Shares received through an exchange will include the period for which your
original Shares were held.

ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE

Upon written notification to Federated Securities Corp. or the transfer
agent, no contingent deferred sales charge will be imposed on redemptions:

   * following the death or disability, as defined in Section 72(m)(7) of the
     Internal Revenue Code of 1986, of the last surviving shareholder;
   * representing a total or partial distribution from an Individual Retirement
     Account, Keogh Plan, or a custodial account to a shareholder who has
     attained the age of 70 1U2;
   * representing a total or partial distribution from a qualified plan, other
     than an Individual Retirement Account, Keogh Plan, or a custodial account
     following retirement;
   * which are involuntary redemptions of shareholder accounts that do not
     comply with the minimum balance requirements;
   * which are reinvested in the Fund under the reinvestment privilege; * of
   Shares held by Directors, employees and sales representatives of the
     Fund, the distributor, or affiliates of the Fund or distributor, employees
     of any financial intermediary that sells Shares of the Fund pursuant to a
     sales agreement with the distributor, and their immediate family members to
     the extent that no payments were advanced for purchases made by these
     persons; and
   * of Shares originally purchased through a bank trust department, an
     investment adviser registered under the Investment Advisers Act of 1940 or
     retirement plans where the third party administrator has entered into
     certain arrangements with Federated Securities Corp. or its affiliates, or
     any other financial intermediary, to the extent that no payments were
     advanced for purchases made through such entities.

For more information regarding the contingent deferred sales charge or any of
the above provisions, contact your financial intermediary or the Fund. The Fund
reserves the right to discontinue or modify these provisions.
Shareholders will be notified of such action.

ACCOUNT AND SHARE INFORMATION
    
CONFIRMATIONS AND ACCOUNT STATEMENTS
   
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends paid.
The Fund will not issue share certificates.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Net long-term capital gains realized by the Fund, if any,
will be distributed at least once every twelve months. Dividends and
distributions are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date NAV without a sales charge, unless
shareholders request cash payments on the new account form or by contacting the
transfer agent.      ACCOUNTS WITH LOW BALANCES     Due to the high cost of
maintaining accounts with low balances, the Fund may close an account by
redeeming all Shares and paying the proceeds to the shareholder if the account
balance falls below the applicable minimum investment amount. Retirement plan
accounts and accounts where the balance falls below the minimum due to NAV
changes will not be closed in this manner. Before an account is closed, the
shareholder will be notified and allowed 30 days to purchase additional Shares
to meet the minimum.      FUND INFORMATION

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

The Fund is managed by a Board of Directors. The Directors are responsible for
managing the Fund's business affairs and for exercising all the Fund's powers
except those reserved for the shareholders. An Executive Committee of the Board
of Directors handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER

Investment decisions for the Fund are made by Federated Advisers (the
"Adviser"), the Fund's investment adviser, subject to direction by the
Directors. 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 Fund.

ADVISORY FEES
   
The Adviser receives an annual investment advisory fee equal to 0.75% of the
Fund's average daily net assets. Under the investment advisory contract, which
provides for the voluntary waiver and reimbursement of expenses by the Adviser,
the Adviser may voluntarily waive all or a portion of the advisory fee and
reimburse some of the operating expenses of the Fund. The Adviser can terminate
this voluntary waiver of its fee or reimbursement of expenses at any time at its
sole discretion.      ADVISER'S BACKGROUND

Federated Advisers, a Delaware business trust organized on April 11, 1989, is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.     Federated Advisers and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide administrative
services to a number of investment companies. With over $120 billion invested
across more than 300 funds under management and/or administration by its
subsidiaries, as of December 31, 1997, Federated Investors is one of the largest
mutual fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
approximately 4,000 financial institutions nationwide.      Both the Fund and
the Adviser have adopted strict codes of ethics governing the conduct of all
employees who manage the Fund and its portfolio securities. These codes
recognize that such persons owe a fiduciary duty to the Fund's shareholders and
must place the interests of shareholders ahead of the employees' own interest.
Among other things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in securities
being purchased or sold, or being considered for purchase or sale, by the Fund;
prohibit purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of the codes are
subject to review by the Directors, and could result in severe penalties.

Kathleen M. Foody-Malus has been the Fund's portfolio manager since July
1993. Ms. Foody-Malus joined Federated Investors in 1983 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Foody-Malus served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms.
Foody-Malus received her M.B.A. in Accounting/Finance from the University of
Pittsburgh.

Edward J. Tiedge has been the Fund's portfolio manager since April 1997. Mr.
Tiedge joined Federated Investors in 1993 and has been a Vice President of
the Fund's Adviser since January 1996. He served as an Assistant Vice
President of the Fund's Adviser in 1995, and an Investment Analyst during
1993 and 1994. Mr. Tiedge served as Director of Investments at Duquesne
Light Company from 1990 to 1993. Mr. Tiedge is a Chartered Financial Analyst
and received his M.S. in Industrial Administration from Carnegie Mellon
University.

DISTRIBUTION OF CLASS F SHARES
   
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.
    
SHAREHOLDER SERVICES
   
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the Fund
may make payments up to 0.25% of the average daily net asset value of Shares to
obtain certain personal services for shareholders and for the maintenance of
shareholder accounts ("shareholder services"). Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees 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 Fund and
Federated Shareholder Services.
    
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS

In addition, the distributor will pay financial institutions, for distribution
and/or administrative services, an amount equal to 1.00% of the offering price
of the Shares acquired by their clients or customers on purchases up to
$1,999,999, 0.50% of the offering price on purchases of $2,000,000 to
$4,999,999, and 0.25% of the offering price on purchases of $5,000,000 or more.
(This fee is in addition to the 1.00% sales charge on purchases of less than $1
million). The financial institutions may elect to receive amounts less than
those stated, which would reduce the stated contingent deferred sales charge
and/or the holding period used to calculate the fee.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS

Federated Securities Corp. and Federated Shareholder Services may offer to pay a
fee, from their own assets, to financial institutions as financial assistance
for providing substantial sales services, distribution-related support services,
or shareholder services. The support may include sponsoring sales, educational
and training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. 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.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES

Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at an annual rate which relates to the average aggregate daily
net assets of the Federated Funds as specified below:

 MAXIMUM         AVERAGE AGGREGATE
   FEE            DAILY NET ASSETS
 0.150%      on the first $250 million
 0.125%       on the next $250 million
 0.100%       on the next $250 million
 0.075% on assets in excess of $750 million

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.

SHAREHOLDER INFORMATION
   
Each Share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote. All Shares of each portfolio
or class in the Fund have equal voting rights, except that in matters affecting
only a particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.

Directors may be removed by the Directors or by shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding shares of all series entitled to vote.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class F Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class F Shares for its clients), owned
approximately 65,470,560 shares (41.17%) of the Fund and therefore may, for
certain purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class A Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class A Shares for its clients), owned
approximately 15,982,289 shares (98.85%) of the Fund and therefore may, for
certain purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.

As of April 8, 1998, the following shareholder of record owned 25% or more of
the outstanding Class C Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith (as record owner holding Class C Shares for its clients), owned
approximately 178,892 shares (49.38%) of the Fund and therefore may, for certain
purposes, be deemed to control the Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders.
    
TAX INFORMATION

FEDERAL INCOME TAX

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

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their Shares. No federal income tax is due on
any dividends earned in an IRA or qualified retirement plan until distributed,
so long as such IRA or qualified retirement plan meets the applicable
requirements of the Code.

STATE AND LOCAL TAXES
   
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 for Class F
Shares.

Total return represents the change, over a specified period of time, in the
value of an investment in Shares 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 Shares is
calculated by dividing the net investment income per Share (as defined by the
SEC) 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
reflects the effect of the maximum sales charge and other similar non-recurring
charges, such as the contingent deferred sales charge, which, if excluded, would
increase the total return and yield.

Total return and yield will be calculated separately for Class F Shares, Class A
Shares, Class B Shares, and Class C Shares.
   
From time to time, advertisements for the Class F Shares, Class A Shares, Class
B Shares and Class C Shares of the Fund may refer to ratings, rankings, and
other information in certain financial publications and/or compare the
performance of Class F Shares, Class A Shares, Class B Shares and Class C Shares
to certain indices.      OTHER CLASSES OF SHARES

The Fund also offers other classes of shares called Class A Shares, Class B
Shares, and Class C Shares which are all sold primarily to customers of
financial institutions subject to certain differences.
   
Class A Shares are sold subject to a front-end sales charge and a Shareholder
Services Agreement. Investments in Class A Shares are subject to a minimum
initial investment of $1,500, unless the investment is in a retirement account,
in which case the minimum investment is $250.

Class B Shares are sold at net asset value and are subject to a Rule 12b-1 Plan
and a Shareholder Services Agreement. Investments in Class B Shares are subject
to a minimum initial investment of $1,500, unless the investment is in a
retirement account, in which case the minimum investment is $250. A contingent
deferred sales charge is imposed on certain Shares which are redeemed within six
full years of purchase.

Class C Shares are sold at net asset value and are subject to a Rule 12b-1 Plan
and a Shareholder Services Agreement. Investments in Class C Shares are subject
to a minimum investment of $1,500, unless the investment is in a retirement
account, in which case the minimum investment is $250. A contingent deferred
sales charge of 1.00% is imposed on assets redeemed within the first twelve
months following purchase.

Class F Shares, Class A Shares, Class B Shares, and Class C Shares are subject
to certain of the same expenses. Expense differences, however, between Class F
Shares, Class A Shares, Class B Shares, and Class C Shares may affect the
performance of each class.      To obtain more information and a combined
prospectus for Class A Shares, Class B Shares, and Class C Shares, investors may
call 800-341-7400 or contact their financial institution.

NOTES

NOTES

[Graphic]
Federated Investors

FEDERATED GOVERNMENT INCOME SECURITIES, INC.

Class F Shares

PROSPECTUS
   
APRIL 30, 1998
    
An Open-End, Diversified Management Investment Company

FEDERATED GOVERNMENT
INCOME SECURITIES, INC.
CLASS F SHARES
   
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER
Federated Advisers
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222-5401


Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com

Cusip 313912107
G01090-02 (4/98)
    
[Graphic]



FEDERATED GOVERNMENT INCOME SECURITIES, INC.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

CLASS F SHARES

STATEMENT OF ADDITIONAL INFORMATION
   
This Statement of Additional Information should be read with the prospectus for
Class A Shares, Class B Shares, and Class C Shares and the prospectus for Class
F Shares of Federated Government Income Securities, Inc. (the "Fund") each dated
April 30, 1998. This Statement is not a prospectus itself. You may request a
copy of either prospectus or a paper copy of this Statement, if you have
received it electronically, free of charge by calling 1-800-341-7400.

FEDERATED GOVERNMENT INCOME SECURITIES, INC.

FEDERATED INVESTORS FUNDS

5800 CORPORATE DRIVE

PITTSBURGH, PENNSYLVANIA 15237-7000

Statement dated April 30, 1998
    
[Graphic]
FEDERATED INVESTORS
Federated Securities Corp., Distributor

Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

1-800-341-7400

www.federatedinvestors.com

Cusip 313912206 Cusip 313912305 Cusip 313912404 Cusip 313912107    
8040406B(4/98)      [Graphic]

TABLE OF CONTENTS
   
 GENERAL INFORMATION ABOUT THE FUND                                       1
 INVESTMENT OBJECTIVE AND POLICIES                                        1
 Types of Investments                                                     1
 When-Issued and Delayed Delivery Transactions                            2
 Futures and Options Transactions                                         2
 Lending of Portfolio Securities                                          4
 Repurchase Agreements                                                    4
 Reverse Repurchase Agreements                                            4
 Investing in Securities of Other Investment Companies                    4
 Portfolio Turnover                                                       4
 Investment Limitations                                                   5
 Criteria for Liquidity of Restricted Securities                          6
 FEDERATED GOVERNMENT INCOME SECURITIES, INC. MANAGEMENT                  7
 Fund Ownership                                                          10
 Directors' Compensation                                                 11
 INVESTMENT ADVISORY SERVICES                                            11
 Adviser to the Fund                                                     11
 Advisory Fees                                                           11
 BROKERAGE TRANSACTIONS                                                  12
 OTHER SERVICES                                                          12
 Fund Administration                                                     12
 Custodian and Portfolio Accountant                                      12
 Transfer Agent                                                          12
 Independent Auditors                                                    12
 PURCHASING SHARES                                                       13
 Quantity Discounts and Accumulated Purchases                            13
 Concurrent Purchases                                                    13
 Letter of Intent                                                        13
 Reinvestment Privilege                                                  13
 Conversion of Class B Shares                                            14
 Distribution Plan (Class A Shares,
 Class B Shares, and Class C Shares
 only) and Shareholder Services                                          14
 Purchases by Sales Representatives, Fund Directors, and Employees       15
 Exchanging Securities for Fund Shares                                   15
 DETERMINING NET ASSET VALUE                                             15
 Determining Market Value of Securities                                  16
 REDEEMING SHARES                                                        16
 Redemption in Kind                                                      16
 Contingent Deferred Sales Charge                                        16
 TAX STATUS                                                              17
 The Fund's Tax Status                                                   17
 Shareholders' Tax Status                                                17
 TOTAL RETURN                                                            17
 YIELD                                                                   17
 PERFORMANCE COMPARISONS                                                 18
 Economic and Market Information                                         19
 ABOUT FEDERATED INVESTORS                                               19
 Mutual Fund Market                                                      19
 Institutional Clients                                                   19
 Bank Marketing                                                          19
 Broker/Dealers and Bank Broker/Dealer Subsidiaries                      20
 FINANCIAL STATEMENTS                                                    20
    
GENERAL INFORMATION ABOUT THE FUND
   
The Fund was incorporated under the laws of the State of Maryland on February 4,
1986. At a meeting of the Board of Directors ("Directors") held on February 26,
1996, the Directors approved an amendment to the Articles of Incorporation to
change the name of Government Income Securities, Inc. to Federated Government
Income Securities, Inc.

Shares of the Fund are offered in four classes, known as Class A Shares, Class B
Shares, Class C Shares, and Class F Shares (individually and collectively
referred to as "Shares" as the context may require.) This Statement of
Additional Information relates to all four of the above-mentioned classes of
Shares.      INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide current income. Current income
includes, in general, discount earned on U.S. Treasury bills and agency discount
notes, interest earned on all other U.S. government securities and
mortgage-related securities, and short-term capital gains. The investment
objective cannot be changed without approval of shareholders.

TYPES OF INVESTMENTS

The Fund invests primarily in securities which are guaranteed as to payment of
principal and interest by the U.S.government or its instrumentalities.

U.S. GOVERNMENT SECURITIES

The types of U.S. government securities in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
   
   * the full faith and credit of the U.S. Treasury (such as Farmers Home
     Administration ("FHA") and Government National Mortgage Association);
   * the issuer's right to borrow from the U.S. Treasury (such as FHA);
   * the discretionary authority of the U.S. government to purchase certain
     obligations of agencies or instrumentalities (such as Federal Home Loan
     Banks and FHA); or
   * the credit of the agency or instrumentality issuing the obligations (such
     as Federal Home Loan Banks, FHA, Farm Credit Banks, Federal National
     Mortgage Association, and Federal Home Loan Mortgage Corporation).
    
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")

The Fund does not intend to set a specific percentage limitation on the amount
of CMOs in the portfolio, including inverse floaters and stripped
mortgage-related securities.

STRIPPED MORTGAGE-RELATED SECURITIES

Some of the mortgage-related securities purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest payments
on mortgage-backed securities (stripped mortgage-backed securities or "SMBSs").
Due to the possibility of prepayments on the underlying mortgages, SMBSs may be
more interest-rate sensitive than other securities purchased by the Fund. If
prevailing interest rates fall below the level at which SMBSs were issued, there
may be substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in the
amount of payments made to holders of interest-only SMBSs. It is possible that
the Fund might not recover its original investment on interest-only SMBSs if
there are substantial prepayments on the underlying mortgages. Therefore,
interest-only SMBSs generally increase in value as interest rates rise and
decrease in value as interest rates fall, counter to changes in value
experienced by most fixed income securities. The Fund's adviser intends to use
this characteristic of interest-only SMBSs to reduce the effects of interest
rate changes on the value of the Fund's portfolio, while continuing to pursue
current income.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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 assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
set a specific percentage limitation on these types of transactions.

FUTURES AND OPTIONS TRANSACTIONS

The Fund may attempt to hedge all or a portion of its portfolio by buying and
selling financial futures contracts and options on financial futures contracts.
Additionally, the Fund may buy and sell call and put options on U.S. government
securities.

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties, the seller who agrees to
make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future. Financial futures contracts call
for the delivery of particular debt securities issued or guaranteed by the U.S.
Treasury or by specified agencies or instrumentalities of the U.S. government.

In the fixed income securities market, price moves inversely to interest rates.
A rise in rates means a drop in price. Conversely, a drop in rates means a rise
in price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself against
the possibility that the prices of its fixed income securities may decline
during the Fund's anticipated holding period. The Fund would "go long" (agree to
purchase securities in the future at a predetermined price) to hedge against a
decline in market interest rates.

PURCHASING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase listed put options on financial futures contracts for U.S.
government securities. Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set date at a
specified price, the purchase of a put option on a futures contract entitles
(but does not obligate) its purchaser to decide on or before a future date
whether to assume a short position at the specified price.

The Fund would purchase put options on futures to protect portfolio securities
against decreases in value resulting from an anticipated increase in market
interest rates. Generally, if the hedged portfolio securities decrease in value
during the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, the Fund will
normally close out its option by selling an identical option. If the hedge is
successful, the proceeds received by the Fund upon the sale of the second option
will be large enough to offset both the premium paid by the Fund for the
original option plus the realized decrease in value of the hedged securities.

Alternatively, the Fund may exercise its put option. To do so, it would
simultaneously enter into a futures contract of the type underlying the option
(for a price less than the strike price of the option) and exercise the option.
The Fund would then deliver the futures contract in return for payment of the
strike price. If the Fund neither closes out nor exercises an option, the option
will expire on the date provided in the option contract, and the premium paid
for the contract will be lost.

WRITING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

In addition to purchasing put options on futures, the Fund may write listed call
options on futures contracts for U.S. government securities to hedge its
portfolio against an increase in market interest rates. When the Fund writes a
call option on a futures contract, it is undertaking the obligation of assuming
a short futures position (selling a futures contract) at the fixed strike price
at any time during the life of the option if the option is exercised. As market
interest rates rise, causing the prices of futures to go down, the Fund's
obligation under a call option on a future (to sell a futures contract) costs
less to fulfill, causing the value of the Fund's call option position to
increase.

In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can offset the drop
in value of the Fund's fixed income portfolio which is occurring as interest
rates rise.

Prior to the expiration of a call written by the Fund, or exercise of it by the
buyer, the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by the Fund for the initial option. The net premium income of the Fund
will then offset the decrease in value of the hedged securities.

WRITING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may write listed put options on financial futures contracts for U.S.
government securities to hedge its portfolio against a decrease in market
interest rates. When the Fund writes a put option on a futures contract, it
receives a premium for undertaking the obligation to assume a long futures
position (buying a futures contract) at a fixed price at any time during the
life of the option. As market interest rates decrease, the market price of the
underlying futures contract normally increases.

As the market value of the underlying futures contract increases, the buyer of
the put option has less reason to exercise the put because the buyer can sell
the same futures contract at a higher price in the market. The premium received
by the Fund can then be used to offset the higher prices of portfolio securities
to be purchased in the future due to the decrease in market interest rates.

Prior to the expiration of the put option, or its exercise by the buyer, the
Fund may close out the option by buying an identical option. If the hedge is
successful, the cost of buying the second option will be less than the premium
received by the Fund for the initial option.

PURCHASING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

An additional way in which the Fund may hedge against decreases in market
interest rates is to buy a listed call option on a financial futures contract
for U.S. government securities. When the Fund purchases a call option on a
futures contract, it is purchasing the right (not the obligation) to assume a
long futures position (buy a futures contract) at a fixed price at any time
during the life of the option. As market interest rates fall, the value of the
underlying futures contract will normally increase, resulting in an increase in
value of the Fund's option position. When the market price of the underlying
futures contract increases above the strike price plus premium paid, the Fund
could exercise its option and buy the futures contract below market price.

Prior to the exercise or expiration of the call option, the Fund could sell an
identical call option and close out its position. If the premium received upon
selling the offsetting call is greater than the premium originally paid, the
Fund has completed a successful hedge.

LIMITATION ON OPEN FUTURES POSITIONS

The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the value
of the open positions (marked to market) exceeds the current market value of its
securities portfolio plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.

"MARGIN" IN FUTURES TRANSACTIONS

Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that futures contract initial margin does not involve the
borrowing of funds by the Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good-faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.

A futures contract held by the Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day the Fund pays or receives
cash, called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation margin
does not represent a borrowing or loan by the Fund but is instead settlement
between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the Fund will
mark to market its open futures positions.

The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.

PURCHASING PUT AND CALL OPTIONS ON U.S. GOVERNMENT SECURITIES

The Fund may purchase put and call options on U.S. government securities to
protect against price movements in particular securities. A put option gives the
Fund, in return for a premium, the right to sell the underlying security to the
writer (seller) at a specified price during the term of the option. A call
option gives the Fund, in return for a premium, the right to buy the underlying
security from the seller.

WRITING COVERED PUT AND CALL OPTIONS ON U.S. GOVERNMENT SECURITIES

The Fund may write covered put and call options to generate income. As writer of
a call option, the Fund has the obligation upon exercise of the option during
the option period to deliver the underlying security upon payment of the
exercise price. As a writer of a put option, the Fund has the obligation to
purchase a security from the purchaser of the option upon the exercise of the
option.

The Fund may only write call options either on securities held in its portfolio
or on securities which it has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any additional
consideration). In the case of put options, the Fund will segregate cash or U.S.
Treasury obligations with a value equal to or greater than the exercise price of
the underlying securities.

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.

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 such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such 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 Directors.

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement the Fund transfers
possession of a portfolio instrument to another person, such as a financial
institution, broker, or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
   
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
    
PORTFOLIO TURNOVER
   
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. For the fiscal years ended February 28, 1998
and February 28, 1997, the portfolio turnover rates were 264% and 97%,
respectively. The elevated portfolio turnover rate is a result of the Fund's
acquisition of securities that were more in line with current market conditions
relating to pre-payments and coupon rates. This had no significant impact on the
tax liability of the Fund and its shareholders, and Fund expenses were not a
factor as the Fund incurred no brokerage commissions.      INVESTMENT
LIMITATIONS

BUYING ON MARGIN
   
The Fund will not purchase any securities on margin, other then in connection
with the purchase of put options on financial futures contracts, 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
and engage in reverse repurchase agreements in amounts up to one-third of the
value of its net assets, including the amounts borrowed.
   
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather 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 any such borrowings are outstanding. During the period any reverse
repurchase agreements are outstanding, but only to the extent necessary to
assure completion of the reverse repurchase agreements, the Fund will restrict
the purchase of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements.      PLEDGING
ASSETS

The Fund will not pledge, mortgage, 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 10% of the value of
total assets at the time of the borrowing. Neither the deposit of underlying
securities and other assets in escrow in connection with the writing of put or
call options on U.S. government securities nor margin deposits for the purchase
and sale of financial futures contracts and related options are deemed to be a
pledge.

INVESTING IN REAL ESTATE

The Fund will not buy or sell real estate, although it may invest in 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. However, the Fund may purchase
put options on financial futures contracts. The Fund may also enter into futures
contracts in order to exercise put options on financial futures contracts in its
portfolio. In addition, the Fund reserves the right to hedge the portfolio by
entering into financial futures contracts and to sell calls on financial futures
contracts. The Fund will notify shareholders before such a change in its
operating policies is implemented.
    
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 in accordance with its investment objective, policies, and
limitations.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets except portfolio securities. (This
shall not prevent the purchase or holding of U.S. government securities,
repurchase agreements covering U.S. government securities, or other transactions
which are permitted by the Fund's investment objective and policies.)

SELLING SHORT

The Fund will not sell securities short.

RESTRICTED SECURITIES

The Fund will not invest more than 10% of its total assets in securities subject
to restrictions on resale under the Securities Act of 1933, except for certain
restricted securities which meet the criteria for liquidity as established by
the Directors.     The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by the
Directors without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.      INVESTING IN
ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its total assets in
securities which are not readily marketable or which are otherwise considered
illiquid, including over-the-counter options and repurchase agreements providing
for settlement in more than seven days after notice.
   
WRITING COVERED PUT AND CALL OPTIONS AND PURCHASING PUT OPTIONS      The Fund
will not write call options on securities unless the securities are held in the
Fund's portfolio or unless the Fund is entitled to them in deliverable form
without further payment or after segregating cash in the amount of any further
payment. The Fund will not purchase put options on securities unless the
securities are held in the Fund's portfolio.

CRITERIA FOR LIQUIDITY OF RESTRICTED SECURITIES
   
The ability of the Directors 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 the Rule. The Fund
believes that the Staff of the SEC has left the question of determining the
liquidity of all restricted securities to the Directors. The Directors may
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.

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 did not engage in reverse repurchase agreements or borrow money in
excess of 5% of the value of its total assets during the last fiscal year, and
has no present intent to do so in the coming fiscal year.

For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items."

Cash items may include short-term obligations such as:

   * obligations of the U.S. government or its agencies or
     instrumentalities; and
   * repurchase agreements.

FEDERATED GOVERNMENT INCOME SECURITIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates, present
positions with Federated Government Income Securities, Inc., and principal
occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Director
   
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.
    
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Director
   
Director, Member of Executive Committee, Children's Hospital of Pittsburgh;
formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh; Director
or Trustee of the Funds.
    
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL

Birthdate: June 23, 1937

Director

President, Investment Properties Corporation; Senior Vice President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
   
Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA

Birthdate: September 3, 1939

Director

Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.
    
William J. Copeland
One PNC Plaza--23rd Floor
Pittsburgh, PA

Birthdate: July 4, 1918

Director
   
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A. and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
    
James E. Dowd
571 Hayward Mill Road
Concord, MA

Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA

Birthdate: October 11, 1932

Director

Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
   
Richard B. Fisher
    
Federated Investors Tower
Pittsburgh, PA

Birthdate: May 17, 1923

President and Director

Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA

Birthdate: June 18, 1924

Director

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942

Director

Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
   
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA

Birthdate: December 20, 1932

Director

President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
    
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA

Birthdate: September 14, 1925

Director
   
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University, and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board, and Czech Management Center, Prague; Director or
Trustee of the Funds.
    
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Director
   
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
    
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President
   
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Director of the Company.
    
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 22, 1930

Executive Vice President
   
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp., and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of some
of the Funds; President, Executive Vice President, and Treasurer of some of
the Funds.
    
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary, and Treasurer
   
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp., and Federated Global Research Corp.; Trustee,
Federated Shareholder Services Company; Director, Federated Services Company;
President and Trustee, Federated Shareholder Services; Director, Federated
Securities Corp.; Executive Vice President, and Secretary of the Funds;
Treasurer of some of the Funds.
    
* This Director is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
   
@ Member of the Executive Committee. The Executive Committee of the Board of
Directors handles the responsibilities of the Board between meetings of the
Board.

As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II;
Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated High
Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds;
Fixed Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc.1999; Liberty U.S. Government Money Market
Trust; Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Obligations Trust II; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO Monument Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The
Virtus Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; WesMark Funds; WCT Funds; and World Investment Series,
Inc.      FUND OWNERSHIP

Officers and Directors own less than 1% of the Fund's outstanding shares.     As
of April 8, 1998, the following shareholder of record owned 5% or more of the
outstanding Class A Shares of the Fund: Merrill Lynch, Pierce, Fenner & Smith,
Jacksonville, Florida (as record owner holding Class A Shares for its clients),
owned approximately 15,982,289 shares (98.85%).

As of April 8, 1998, the following shareholders of record owned 5% or more of
the outstanding Class B Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith, Jacksonville, Florida, owned approximately 115,301 shares (8.58%).

As of April 8, 1998, the following shareholders of record owned 5% or more of
the outstanding Class C Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith, Jacksonville, Florida, (as record owner holding Class C Shares for its
clients), owned approximately 178,892 shares (49.38%); Dean Witter Reynolds
(Trustee acting for Pioneer French Banking 401k Union), New York, New York,
owned approximately 37,064 shares (10.23%); First Union Brokerage Services, Fort
Lauderdale, Florida, owned approximately 25,409 shares (7.01%); and Federated
Bank & Trust (custodian for Dr. James E. Roderick), Pittsburgh, Pennsylvania,
owned approximately 18,680 shares (5.16%).

As of April 8, 1998, the following shareholder of record owned 5% or more of the
outstanding Class F Shares of the Fund: Merrill Lynch, Pierce, Fenner & Smith
(as record owner holding Class F Shares for its clients), owned approximately
65,470,560 shares (41.17%).      DIRECTORS' COMPENSATION

                               AGGREGATE

            NAME,             COMPENSATION     TOTAL COMPENSATION PAID

        POSITION WITH             FROM            TO DIRECTORS FROM

         CORPORATION         CORPORATION*#  CORPORATION AND FUND COMPLEX +


  John F. Donahue            $0             $0 for the Fund and
  Chairman and Director                     56 other investment companies
                                            in the Fund Complex

  Richard B. Fisher          $0             $0 for the Fund and
  President and Director                    6 other investment companies
                                            in the Fund Complex
   
  Thomas G. Bigley           $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  John T. Conroy, Jr.        $2,520.07      $122,362 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Nicholas P. Constantakis** $531.83        $0 for the Fund and
  Director                                  34 other investment companies
                                            in the Fund Complex

  William J. Copeland        $2,520.07      $122,362 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  James E. Dowd              $2,520.07      $122,362 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Lawrence D. Ellis, M.D.    $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Edward L. Flaherty, Jr.    $2,520.07      $122,362 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Peter E. Madden            $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  John E. Murray, Jr.        $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Wesley W. Posvar           $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

  Marjorie P. Smuts          $2,290.63      $111,222 for the Fund and
  Director                                  56 other investment companies
                                            in the Fund Complex

* Information is furnished for the fiscal year ended February 28, 1998.

** Mr. Constantakis became a member of the Board of Directors on February
23, 1998.

# The aggregate compensation is provided for the Fund which is comprised of
one portfolio.
    
+ The information is provided for the last calendar year.

INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND

The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All of the voting securities of Federated Investors are
owned by a trust, the Trustees of which are John F. Donahue, his wife, and
his son, J. Christopher Donahue.

The adviser shall not be liable to the Fund or any shareholder 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 Fund.

ADVISORY FEES
   
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the respective prospectuses. During the fiscal
years ended February 28, 1998 and 1997 and February 29, 1996, the Fund's adviser
earned $12,503,435, $14,913,257, and $18,231,613, respectively, of which
$4,007,152, $5,195,862, and $6,060,604, respectively, were voluntarily waived.
     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 Directors.      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 or by
affiliates of Federated Investors in advising Federated funds 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.     For the fiscal years ended February 28, 1998 and 1997
and February 29, 1996, the Fund paid no brokerage commissions on brokerage
transactions.      OTHER SERVICES

FUND ADMINISTRATION
   
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services necessary to the Fund for a fee as
described in the respective prospectuses. From March 1, 1994 to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated Investors, served
as the Fund's Administrator. For purposes of this Statement of Additional
Information, Federated Services Company and Federated Administrative Services
may hereinafter collectively be referred to as the "Administrators." For the
fiscal years ended February 28, 1998 and 1997 and February 29, 1996, the
Administrators earned $1,258,281, $1,502,736, and $1,839,595, respectively.     
CUSTODIAN AND PORTFOLIO ACCOUNTANT

State Street Bank and Trust Company, Boston, MA, is custodian for securities and
cash of the Fund. Federated Services Company, Pittsburgh, PA, provides certain
accounting and recordkeeping services with respect to the Fund's portfolio
investments. The fee paid for this service is based upon the level of the Fund's
average net assets for the period plus out-of-pocket expenses.

TRANSFER AGENT
   
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records.
For its services, the transfer agent receives a fee based on the size, type,
and number of transactions made by shareholders.
    
INDEPENDENT AUDITORS

The independent auditors for the Fund are Deloitte & Touche LLP, Pittsburgh, PA.

PURCHASING SHARES
   
Except under certain circumstances described in the respective prospectuses,
Shares are sold at their net asset value (plus a sales charge, if applicable) on
days the New York Stock Exchange is open for business. The procedure for
purchasing Shares is explained in the respective prospectuses under "Investing
in the Fund" and "Purchasing Shares." For further information on any of the
programs listed below, please contact your financial intermediary or Federated
Securities Corp.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES

As described in the prospectuses, larger purchases of the same Share class
reduce or eliminate the sales charge paid. For example, the Fund will combine
all Class A Share purchases made on the same day by the investor, the investor's
spouse, and the investor's children under age 21 when it calculates the sales
charge. This combined purchase option is available within Class F Shares as
well. In addition, the sales charge, if applicable, is reduced for purchases
made at one time by a trustee or fiduciary for a single trust estate or a single
fiduciary account.

If an additional purchase into the same Share class is made, the Fund will
consider the previous purchases still invested in the Fund. For example, if a
shareholder already owns Class A Shares having a current value at the public
offering price of $90,000 and he 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 3.75%, not 4.50%.

In addition, the Fund will also combine purchases for the purpose of reducing
the contingent deferred sales charge imposed on Class F Share redemptions. For
example, if a shareholder already owns Class F Shares having current value at
the public offering price of $1 million and purchases an additional $1 million
at the current public offering price, the applicable contingent deferred sales
charge would be reduced to 0.50% of those additional Class F Shares.

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

CONCURRENT PURCHASES

Shareholders have the privilege of combining concurrent purchases of the same
Share class of two or more funds in the Federated Complex in calculating the
applicable sales charge.

To receive a sales charge reduction or elimination, Federated Securities Corp.
must be notified by the shareholder in writing or by his financial intermediary
at the time the concurrent purchases are made. The Fund will reduce or eliminate
the sales charge after it confirms the purchases.

LETTER OF INTENT

A shareholder can sign a letter of intent committing to purchase a certain
amount of the same Share class within a 13-month period in order to combine such
purchases in calculating the applicable sales charge. The Fund's custodian will
hold Shares in escrow equal to the maximum applicable sales charge. If the
shareholder completes the commitment, the escrowed Shares will be released to
their account. If the commitment is not completed within 13 months, the
custodian will redeem an appropriate number of escrowed Shares to pay for the
applicable sales charge.

The letter of intent for Class F Shares also includes a provision for reductions
in the contingent deferred sales charge and holding period depending on the
amount actually purchased within the 13-month period.

While this letter of intent will not obligate the shareholder to purchase Class
A Shares or Class F Shares, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. At the time a
letter of intent is established, current balances in accounts in any Class A
Shares or Class F Shares of any Federated funds, excluding money market
accounts, will be aggregated to provide a purchase credit towards fulfillment of
the letter of intent. The letter may be dated as of a prior date to include any
purchase made within the past 90 days. Prior trade prices will not be adjusted.

REINVESTMENT PRIVILEGE

The reinvestment privilege is available for all Shares of the Fund within the
same Share class.

Class A and Class F shareholders who redeem from the Fund may reinvest the
redemption proceeds back into the same Share class at the next determined net
asset value without any sales charge. The original Shares must have been subject
to a sales charge and the reinvestment must be within 120 days.

Similarly, Class C and Class F shareholders who redeem may reinvest their
redemption proceeds in the same Share class within 120 days. Class B Shares also
may be reinvested within 120 days of redemption, although such reinvestment will
be made into Class A Shares. Shareholders would not be entitled to a
reimbursement of the contingent deferred sales charge if paid at the time of
redemption on any Share class. However, reinvested Shares would not be subject
to a contingent deferred sales charge, if otherwise applicable, upon later
redemption.

In addition, if Shares were reinvested through a financial intermediary, the
financial intermediary would not be entitled to an advanced payment from
Federated Securities Corp. on the reinvested Shares, if otherwise applicable.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial intermediary of the reinvestment in order to eliminate a sales
charge or a contingent deferred sales charge. If the shareholder redeems Shares
in the Fund, there may be tax consequences.

CONVERSION OF CLASS B SHARES

Class B Shares will automatically convert into Class A Shares on or around the
15th of the month eight full years from the purchase date and will no longer be
subject to a fee under the distribution plan. For purposes of conversion to
Class A Shares, Shares purchased through the reinvestment of dividends and
distributions paid on Class B Shares will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's account (other
than those in the sub-account) convert to Class A Shares, an equal pro rata
portion of the Class B Shares in the sub-account will also convert to Class A
Shares. The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that such conversions will not constitute taxable events for
federal tax purposes. There can be no assurance that such ruling or opinion will
be available, and the conversion of Class B Shares to Class A Shares will not
occur if such a ruling or opinion is not available. In such event, Class B
Shares would continue to be subject to higher expenses than Class A Shares for
an indefinite period.
    
DISTRIBUTION PLAN (CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES ONLY)
AND SHAREHOLDER SERVICES

These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel 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; and assisting
clients in changing dividend options, account designations, and addresses.    
By adopting the Distribution Plan, (Class A Shares, Class B Shares, and Class C
Shares only) the Directors expect that the Fund will be able to achieve a more
predictable flow of cash for investment purposes and to meet redemptions. This
will facilitate more efficient portfolio management and assist the Fund in
pursuing its investment objective. By identifying potential investors whose
needs are served by the Fund's objective, and properly servicing these accounts,
it may be possible to curb sharp fluctuations in rates of redemptions and sales.
For the fiscal year ended February 28, 1998, payments in the amount of $238,761,
$43,640, and $16,743 were made pursuant to the Distribution Plan for Class A
Shares, Class B Shares, and Class C Shares, respectively, of which Class A
Shares waived $238,761.      Other benefits, which may be realized under either
arrangement, may include: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.     For the
fiscal year ended February 28, 1998, payments in the amount of $238,761,
$14,547, $5,581, and $3,908,923 were made pursuant to the Shareholder Services
Plan for Class A Shares, Class B Shares, Class C Shares, and Class F Shares,
respectively, of which Class F Shares waived $31,271.

Federated Investors and its subsidiaries may benefit from arrangements where the
Rule 12b-1 Plan fees related to Class B Shares may be paid to third-party
financial providers who have advanced commissions to financial intermediaries.
     PURCHASES BY SALES REPRESENTATIVES, FUND DIRECTORS, AND EMPLOYEES     The
following individuals and their immediate family members may buy Class A Shares
and Class F Shares at net asset value without a sales charge:

   * Directors, employees, and sales representatives of the Fund, Federated
     Advisers, and Federated Securities Corp. and its affiliates;
   * Federated Life Members (Class A Shares only);
   * any associated person of an investment dealer who has a sales agreement
     with Federated Securities Corp.; and
   * trusts, pensions, or profit-sharing plans for these individuals.

These sales are made with the purchaser's written assurance that the
purchase is for investment purposes and that the securities will not be
resold except through redemption by the Fund.
    
EXCHANGING SECURITIES FOR FUND SHARES

Investors may exchange qualifying securities they already own for Shares, or
they may exchange a combination of qualifying securities and cash for Shares.
Any qualifying securities to be exchanged must meet the investment objective and
policies of the Fund, must have readily ascertainable market value, must be
liquid, and must not be subject to restrictions on resale.

The Fund will prepare a list of securities which are eligible for acceptance and
furnish this list to brokers upon request. The Fund reserves the right to reject
any security, even though it appears on the list, and the right to amend the
list of acceptable securities at any time without notice to brokers or
investors.

An investment broker acting for an investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. Federated Securities Corp. will determine that transmittal papers are in
good order and forward to the Fund's custodian, State Street Bank and Trust
Company. The Fund will notify the broker of its acceptance and valuation of the
securities within five business days of their receipt by State Street Bank.

The Fund values such securities in the same manner as the Fund values its
portfolio securities. The basis of the exchange will depend upon the net asset
value of Shares on the day the securities are valued. One Share will be issued
for each equivalent amount of securities accepted.

Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, 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 treated as a sale for federal income tax
purposes. Depending upon the cost basis of the securities exchanged for Shares,
a gain or loss may be realized by the investor.

DETERMINING NET ASSET VALUE
   
The Fund's net asset value per Share fluctuates and is based on the market value
of all securities and other assets of the Fund. The net asset value for each
class of Shares may differ due to the variance in daily net income realized by
each class.

Net asset value is not determined 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 Jr., Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.      DETERMINING MARKET VALUE OF SECURITIES

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

   * as provided by an independent pricing service;
   * for short-term obligations, according to the mean between the bid and asked
     prices, as furnished by an independent pricing service, or for short-term
     obligations with remaining maturities of 60 days or less at the time of
     purchase, at amortized cost unless the Board of Directors determines this
     is not fair value; or
   * at fair value as determined in good faith by the Fund's Directors.

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.

Over-the-counter put options will be valued at the mean between the bid and the
asked prices. Covered call options will be valued at the last sale price on the
national exchange on which such option is traded. Unlisted call options will be
valued at the latest bid price as provided by brokers.
   
REDEEMING SHARES

The Fund redeems Shares at the next computed net asset value after the Fund
receives the redemption request. Shareholder redemptions may be subject to a
contingent deferred sales charge. Redemption procedures are explained in the
respective prospectuses under "Redeeming and Exchanging Shares." Although the
transfer agent does not charge for telephone redemptions, it reserves the right
to charge a fee for the cost of wire-transferred redemptions of less than
$5,000.      REDEMPTION IN KIND

Although the Fund 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 Fund's portfolio.
   
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Directors determine to be fair and
equitable.      The Fund has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Fund is obligated to redeem
Shares for any shareholder in cash up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
   
CONTINGENT DEFERRED SALES CHARGE

In computing the amount of the applicable Contingent Deferred Sales Charge,
redemptions are deemed to have occurred in the following order: (1) Shares
acquired through the reinvestment of dividends and long-term capital gains; (2)
Shares held for more than six full years from the date of purchase with respect
to Class B Shares and one full year from the date of purchase with respect to
Class C Shares; (3) Shares held for fewer than six years with respect to Class B
Shares and for less than one full year from the date of purchase with respect to
Class C Shares on a first-in, first-out basis.
    
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;
   
   * 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. The Fund's dividends, and any short-term
capital gains, are taxable as ordinary income.
    
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 Fund's average annual total returns based on offering price for the
following periods ended February 28, 1998, were:

              DATE OF INITIAL
                   PUBLIC
SHARE CLASS       OFFERING   ONE-YEAR  FIVE-YEARS    TEN-YEARS  SINCE INCEPTION
Class A            8/5/96     5.20%       --           --           5.40%
Class B            8/5/96     3.55%       --           --           4.66%
Class C            8/5/96     8.18%       --           --           7.83%
Class F*           4/4/86     7.94%      5.64%        7.51%         7.45%

*Date of Initial Public Investment

The average annual total return for all classes of Shares 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 offering price 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
charge, adjusted over the period by any additional Shares, assuming a
reinvestment of all dividends and distributions. Any applicable contingent
deferred sales charge is deducted from the ending value of the investments based
on the lesser of the original purchase price or the offering price of Shares
redeemed.      YIELD     The Fund's yields for the thirty-day period ended
February 28, 1998, were:

SHARE CLASS      YIELD
Class A          4.88%
Class B          4.35%
Class C          4.35%
Class F          5.06%

The yield for all classes of Shares of the Fund is determined by dividing the
net investment income per Share (as defined by the SEC) earned by any class of
Shares over a thirty-day period by the maximum offering price per Share of any
class of Shares on the last day of the period. This value 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
twelve-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by any class of Shares because of
certain adjustments required by the SEC 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 any class
of Shares, the performance will be reduced for those shareholders paying those
fees.

PERFORMANCE COMPARISONS
    
The Fund's performance of each class of 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 or a class of Shares' 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.

Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:

   * 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
     "U.S. government funds" category in advertising and sales literature.
   
   * LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is a universe of fixed
     rate securities backed by mortgage pools of Government National Mortgage
     Association, Federal Home Loan Mortgage Corporation, and
     Federal National Mortgage Association.
    
   * THE MERRILL LYNCH TAXABLE BOND INDICES include U.S. Treasury and agency
     issues and were designed to keep pace with structural changes in the fixed
     income market. The performance indicators capture all rating changes, new
     issues, and any structural changes of the entire market.
   * MORNINGSTAR, INC., an independent rating service, is the publisher of the
     bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
     NASDAQ-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.

Advertisements and other sales literature for all four classes of Shares may
quote total returns, which are calculated on non-standardized base periods.
These total returns also represent the historic change in the value of an
investment in each class of Shares based on monthly reinvestment of dividends
over a specified period of time.     From time to time, as it deems appropriate,
the Fund may advertise the performance of a class of Shares, using charts,
graphs, and descriptions, compared to federally insured bank products, including
certificates of deposits and time deposits, and to money market funds using the
Lipper Analytical Services money market instruments average.      Advertisements
may quote performance information which does not reflect the effect of various
sales charges on Class A Shares, Class B Shares, Class C Shares, and Class F
Shares.

Advertising and other promotional literature may include charts, graphs, and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION
   
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by Fund portfolio managers and their views and analysis on how such
developments could affect the Funds. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute.      ABOUT FEDERATED INVESTORS

Federated Investors is dedicated to meeting investor needs which is reflected in
its investment decision making--structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands of
clients and their customers.

The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment decisions
are made and executed by teams of portfolio managers, analysts, and traders
dedicated to specific market sectors. These traders handle trillions of dollars
in annual trading volume.     In the government sector, as of December 31, 1997,
Federated Investors managed 9 mortgage-backed, 6 government/ agency, and 18
government money market mutual funds, with assets approximating $5.9 billion,
$1.5 billion, and $35 billion, respectively. Federated trades approximately $400
million in U.S. government and mortgage-backed securities daily and places
approximately $23 billion in repurchase agreements each day. Federated
introduced the first U.S. government fund to invest in U.S. government bond
securities in 1969. Federated has been a major force in the short- and
intermediate-term government markets since 1982 and currently manages nearly $36
billion in government funds within these maturity ranges.

J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management. Henry
A. Frantzen, Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.
    
MUTUAL FUND MARKET
   
Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $4.4 trillion to the more than 6,700 funds available.*     
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:

INSTITUTIONAL CLIENTS
   
Federated Investors meets the needs of approximately 900 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional clients
include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division.
    
BANK MARKETING
   
Other institutional clients include close relationships with more than 1,600
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios. The
marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice
President, Bank Marketing & Sales.
    
* Source: Investment Company Institute

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated funds are available to consumers through major brokerage firms
nationwidewe have over 2,200 broker/dealer and bank broker/dealer relationships
across the countrysupported by more wholesalers than any other mutual fund
distributor. Federated's service to financial professionals and institutions has
earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement. The
marketing effort to these firms is headed by James F. Getz, President, Federated
Securities Corp.

FINANCIAL STATEMENTS

The Financial Statements for the fiscal year ended February 28, 1998, are
incorporated herein by reference to the Annual Report for the Fund dated
February 28, 1998 (File Nos. 2-74191 and 811-3266). A copy of the Report may be
obtained without charge by contacting the Fund.


PART C.    OTHER INFORMATION.

Item 24.    Financial Statements and Exhibits:
            (a)Financial Statements. (1-4) The Financial Statements for the 
               fiscal year ended February 28, 1998, are incorporated herein by
               reference to the Fund's Annual Report dated February 28, 1998. 
               (File Nos. 2-74191 and 811-3266)
            (b)   Exhibits:
                   (1) Conformed copy of Amended and Restated Articles of
                   Incorporation of the Registrant (13); (2) (i) Copy of By-Laws
                   of the Registrant (13);
                         (ii) Copy of By-Laws Amendment of 2/87 (6); (iii) Copy
                        of By-Laws Amendment of 8/87 (6);
                   (3)  Not applicable;
                   (4)    (i)  Copy of Specimen Certificates for Shares of    
                               Capital Stock for Class A, Class B, and Class C 
                               Shares of the Registrant (15);
                         (ii) Copy of Speciman Certificate for Shares of Capital
                   Stock for Class F Shares of the Registrant (15); (5)
                   Conformed copy of Investment Advisory Contract of the
                   Registrant (8); (6) (i) Conformed copy of Distributor's
                   Contract of the Registrant including Exhibit A (15);
                         (ii) Conformed copy of Exhibit B to the Distributor's
                        Contract (15); (iii) Conformed copy of Exhibit C to the
                        Distributor's Contract (15);
                         (iv)  Conformed copy of Exhibit D to the Distributor's 
                               Contract (15);
                           (v) Conformed copy of Distributor's Contract (Class B
Shares) including Exhibit 1 and Schedule A;+
- ---------------------
+     All exhibits have been filed electronically.

6.   Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment No. 16 on Form N-1A filed April 22, 1988.  (File Nos. 2-74191 and
     811-3266)

8.   Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment No. 19 on Form N-1A filed February 26, 1990.  (File Nos.  2-74191
     and 811-3266)

12.  Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment No. 30 on Form N-1A filed April 20, 1995.  (File Nos. 2-74191 and
     811-3266)

13.  Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment  No. 32 on Form N-1A filed May 1, 1996.  (File Nos.  2-74191  and
     811-3266)

15.  Response  is  incorporated  by  reference  to  Registrant's  Port-Effective
     Amendment No. 34 on Form N-1A filed April 29, 1997.  (File Nos. 2-74191 and
     811-3266)


<PAGE>


                         (vi)  The Registrant hereby incorporates the conformed
                               copy of the specimen Mutual Funds Sales and
                               Service Agreement; Mutual Funds Service Agreement
                               and Plan Trustee/Mutual Funds Service Agreement
                               from Item 24(b)6 of the Cash Trust Series II
                               Registration Statement on Form N-1A, filed with
                               the Commission on July 24, 1995.
                               (File Nos. 33-38550 and 811-6269)
                  (7)   Not applicable;
                  (8)    (i) Conformed copy of Custodian Agreement of the
                         Registrant (12); (ii) Conformed copy of Domestic
                         Custody Fee Schedule; +
                  (9)     (i)  Conformed copy of Principal Shareholder 
                               Servicer's Agreement (Class B Shares) including 
                               Exhibit 1 and Schedule A;+
                         (ii) Conformed copy of Shareholder Services Agreement
                        (Class B Shares) including Exhibit 1 and Schedule A;+
                        (iii) Conformed copy of Amended and Restated Shareholder
                        Services Agreement;+
                         (iv)  Conformed copy of Agreement for Fund Accounting 
                               Services, Administrative Services, Transfer 
                               Agency Services,
                               and Custody Services Procurement (13);
                          (v)  The responses described in Item 24(b)6 are hereby
                               incorporated by reference.
                  (10)  Conformed copy of Opinion and Consent of Counsel as to 
                        Legality of  Shares Being Registered (12);
                  (11)  Conformed copy of Consent of Independent Auditors; +
                  (12)  Not applicable;
                  (13)  Conformed copy of Initial Capital Understanding (12);
                  (14)  Not applicable;
                  (15)     (i) Conformed copy of Rule 12b-1 Plan;+
                          (ii) Conformed copy of Exhibit 1 and Schedule A to   
                               the 12b-1 Distribution Plan (Class B Shares)    
                               of the Registrant:+
                  (16)  Copy of Schedule for Computation of Fund Performance 
                        Data (12);
                  (17)  Copy of Financial Data Schedules;+
                  (18)  The Registrant hereby incorporates by reference the
                        conformed copy of the specimen Multiple Class Plan from
                        Item 24(b)(18) of the World Investment Series, Inc.
                        Registration Statement on Form N-1A, filed with the
                        Commission on January 26, 1996. (File Nos. 33-52149 and
                        811-07141);
                  (19)  Conformed copy of Power of Attorney.+


+     All exhibits have been filed electronically.

12.  Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment No. 30 on Form N-1A filed April 20, 1995.  (File Nos. 2-74191 and
     811-3266)

13.  Response  is  incorporated  by  reference  to  Registrant's  Post-Effective
     Amendment  No. 32 on Form N-1A filed May 1, 1996.  (File Nos.  2-74191  and
     811-3266)


<PAGE>


Item 25.    Persons Controlled by or Under Common Control with Registrant:

            None

Item 26.  Number of Holders of Securities:

                                                Number of Record Holders
            Title of Class                        as of July 5, 1996
            --------------                      --------------------

            Shares of Capital Stock
            ($.001 per Share par value)
            Class A Shares                                  16,167,522
            Class B Shares                                   1,343,178
            Class C Shares                                     362,264
            Class F Shares                                 159,043,246

Item 27.    Indemnification:  (1.)

Item 28. Business and Other Connections of Investment Adviser:

(a)      For a description of the other business of the investment adviser, see
         the section entitled "Fund Information" in Part A. The affiliations
         with the Registrant of four of the Trustees and one of the Officers of
         the investment adviser are included in Part B of this Registration
         Statement "Federated Government Income Securities, Inc. Management."
         The remaining Trustee of the investment adviser, his position with the
         investment adviser, and, in parentheses, his principal occupation is:
         Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market
         Street, Georgetown, Delaware 19947.

         The remaining Officers of the investment adviser are:

         Executive Vice Presidents:          William D. Dawson, III
                                             Henry A. Frantzen
                                             J. Thomas Madden

         Senior Vice Presidents:             Joseph M. Balestrino
                                             Drew J. Collins
                                             Jonathan C. Conley
                                             Deborah A. Cunningham
                                             Mark E. Durbiano
                                             Sandra L. McInerney
                                             J. Alan Minteer
                                             Susan M. Nason
                                             Mary Jo Ochson
                                             Robert J. Ostrowski

         Vice Presidents:                    Todd A. Abraham
                                             J. Scott Albrecht
                                             Randall S. Bauer
                                             David A. Briggs
                                             Micheal W. Casey
                                             Kenneth J. Cody
                                             Alexandre de Bethmann
                                             Michael P. Donnelly
                                             Linda A. Duessel
                                             Donald T. Ellenberger
                                             Kathleen M. Foody-Malus
                                             Thomas M. Franks
                                             Edward C. Gonzales
                                             James E. Grefenstette
                                             Susan R. Hill
                                             Stephen A. Keen
                                             Robert K. Kinsey
                                             Robert M. Kowit
                                             Jeff A. Kozemchak
                                             Steven Lehman
                                             Marian R. Marinack
                                             Charles A. Ritter
                                             Scott B. Schermerhorn
                                             Frank Semack
                                             Aash M. Shah
                                             Christopher Smith
                                             William F. Stotz
                                             Tracy P. Stouffer
                                             Edward J. Tiedge
                                             Paige M. Wilhelm
                                             Jolanta M. Wysocka

         Assistant Vice Presidents:
                                             Stefanie L. Bachhuber
                                             Arthur J. Barry
                                             Robert E. Cauley
                                             Lee R. Cunningham, II
                                             Paul S. Drotch
                                             Salvatore A. Esposito
                                             Donna M. Fabiano
                                             John T. Gentry
                                             William R. Jamison
                                             Constantine Kartsonsas
                                             Natalie F. Metz
                                             Joseph M. Natoli
                                             Keith J. Sabol
                                             John Sheehy
                                             Michael W. Sirianni
                                             Gregg S. Tenser
                                             Leonardo A. Vila
                                             Lori A. Wolff

         Secretary:                          Stephen A. Keen

         Treasurer:                          Thomas R. Donahue

         Assistant Secretaries:              Thomas R. Donahue
                                             Richard B. Fisher
                                             Christine I. McGonigle

         Assistant Treasurer:                Richard B. Fisher

The       business address of each of the Officers of the investment adviser is
          Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. These
          individuals are also officers of a majority of the investment advisers
          to the Funds listed in Part B of this Registration Statement.



<PAGE>


Item 29.    Principal Underwriters:

(a)  Federated  Securities  Corp. the  Distributor for shares of the Registrant,
     acts  as  principal  underwriter  for  the  following  open-end  investment
     companies, including the Registrant:

111 Corcoran Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated
Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund,
Inc.; Federated ARMs Fund; Federated Core Trust; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Virtus
Funds; The Wachovia Funds; The Wachovia Municipal Funds; Tower Mutual Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Vision Group of Funds, Inc.; and World Investment Series, Inc.

Federated Securities Corp. also acts as principal  underwriter for the following
closed-end investment company: Liberty Term Trust, Inc.- 1999.



<PAGE>


            (b)

         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

Richard B. Fisher             Director, Chairman, Chief        President
Federated Investors Tower     Executive Officer, Chief
Pittsburgh, PA 15222-3779     Operating Officer, Asst.
                              Secretary and Asst.
                              Treasurer, Federated
                              Securities Corp.

Edward C. Gonzales            Director, Executive Vice         Executive Vice
Federated Investors Tower     President, Federated,            President
Pittsburgh, PA 15222-3779     Securities Corp.

Thomas R. Donahue             Director, Assistant Secretary        --
Federated Investors Tower     and Assistant Treasurer
Pittsburgh, PA 15222-3779     Federated Securities Corp

James F. Getz                 President-Broker/Dealer,             --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Fisher                President-Institutional Sales,       --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

David M. Taylor               Executive Vice President             --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark W. Bloss                 Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd               Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger                Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr.          Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher              Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives          Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton             Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

James M. Heaton               Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Keith Nixon                   Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV           Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion            Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ              Senior Vice President,               --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest G. Anderson            Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk            Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Byron F. Bowman               Vice President, Secretary,           --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis      Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

David J. Callahan             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs                 Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr.        Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr.        Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779



<PAGE>


         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

Kevin J. Crenny               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson          Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

G. Michael Cullen             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Marc C. Danile                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Doyle              Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John K. Goettlicher           Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Craig S. Gonzales             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales           Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Raymond Hanley                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bruce E. Hastings             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Beth A. Hetzel                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779



<PAGE>


         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

James E. Hickey               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charlene H. Jennings          Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian G. Kelly                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael W. Koenig             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael R. Manning            Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl                 Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Mihm               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Alec H. Neilly                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas A. Peters III          Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips            Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard A. Recker             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779



<PAGE>


         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

Paul V. Riordan               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John Rogers                   Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian S. Ronayne              Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck          Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward L. Smith               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John A. Staley                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Colin B. Starks               Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart            Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin             Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Miles J. Wallace              Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

John F. Wallin                Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts              Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779



<PAGE>


         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant

Edward J. Wojnarowski         Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. Wolff              Vice President,                      --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward R. Bozek               Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Terri E. Bush                 Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Beth C. Dell                  Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

David L. Immonen              Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Renee L. Martin               Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert M. Rossi               Assistant Vice President,            --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Denis McAuley                 Treasurer,                           --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

Leslie K. Platt               Assistant Secretary,                 --
Federated Investors Tower     Federated Securities Corp.
Pittsburgh, PA 15222-3779

    (c) Not applicable.



<PAGE>


Item 30.    Location of Accounts and Records:

All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:

Federated Government Income                  Federated Investors Tower
   Securities, Inc.                          Pittsburgh, Pennsylvania 15222-3779

Federated Shareholder Services Company       Federated Investors Tower
("Transfer Agent, Dividend                   Pittsburgh, Pennsylvania Disbursing
Recordkeeper")                               Agent and Portfolio  15222-3779


Federated Services Company                   Federated Investors Tower
("Administrator")                            Pittsburgh, Pennsylvania 15222-3779

Federated Advisers                           Federated Investors Tower
("Adviser")                                  Pittsburgh, Pennsylvania 15222-3779

State Street Bank and Trust Company          P.O. Box 8600
("Custodian")                                Boston, Massachusetts    02266-8600

Item 31.    Management Services:  Not applicable.

Item 32.    Undertakings:

        Registrant hereby undertakes to comply with the provisions of Section
        16(c) of the 1940 Act with respect to the removal of Directors and the
        calling of special shareholder meetings by shareholders.

        Registrant hereby undertakes to furnish each person to whom a prospectus
        is delivered with a copy of the Registrant's latest annual report to
        shareholders, upon request and without charge.



<PAGE>


                                   SIGNATURES
    Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED GOVERNMENT INCOME
SECURITIES, INC., 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,
thereto duly authorized, in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 28th day of April, 1998.
                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.

                  BY: /s/ Matthew S. Hardin
                  S. Elliott Cohan, Assistant Secretary
                  Attorney in Fact for John F. Donahue
                  April 28, 1998

    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/Matthew S. Hardin
    Matthew S. Hardin             Attorney In Fact          April 28, 1998
    ASSISTANT SECRETARY           For the Persons
                                  Listed Below

    NAME                            TITLE

John F. Donahue*                  Chairman and Director
                                  (Chief Executive Officer)

Richard B. Fisher*                President and Director

John W. McGonigle*                Executive Vice President, Secretary and 
                                  Treasurer (Principal Financial and Accounting 
                                  Officer)

Thomas G. Bigley*                 Director

John T. Conroy, Jr.*              Director

Nicholas P. Constantakis*         Director

William J. Copeland*              Director

James E. Dowd*                    Director

Lawrence D. Ellis, M.D.*          Director

Edward L. Flaherty, Jr.*          Director

Peter E. Madden*                  Director

John E. Murray, Jr.*              Director

Wesley W. Posvar*                 Director

Marjorie P. Smuts*                Director

* By Power of Attorney




                                                       Exhibit 1 under Form N-1A
                                            Exhibit 3(i) under Item 601/Reg. S-K


                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF

                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.

FEDERATED GOVERNMENT INCOME SECURITIES, INC., a Maryland corporation having post
office  addresses  in the  City of  Pittsburgh,  Pennsylvania  and  the  city of
Baltimore, Maryland (hereinafter called the "Corporation"),  hereby certifies to
the State Department of Assessments and Taxation of Maryland that:

WHEREAS,  the Corporation desires to restate its charter as currently in effect.
The Charter as restated is as follows:  FIRST:  The name of the  corporation  is
Federated Government Income Securities, Inc. ("Corporation").

SECOND:     The purpose for which the Corporation is formed is to act as an
            open-end investment company registered as such with the Securities
            and Exchange Commission pursuant to the Investment Company Act of
            1940 as amended (the "1940 Act") and to exercise and generally to
            enjoy all of the powers, rights and privileges granted to, or
            conferred upon, corporations by the Maryland General Corporation Law
            now or hereafter in force.

THIRD:      The post office address of the principal office of the Corporation
            in the State of Maryland is: c/o The Corporation Trust Incorporated,
            32 South Street, Baltimore, Maryland 21202. The resident agent of
            the Corporation in the State of Maryland is The Corporation Trust
            Incorporated, which is a corporation organized and existing under
            the laws of the State of Maryland, the address of which is 32 South
            Street, Baltimore, Maryland 21202.

FOURTH:           (a) The Corporation is authorized to issue shares of common
                  stock, par value $0.001 per share. The aggregate par value of
                  all shares which the Corporation is authorized to issue is
                  $2,000,000. Subject to the following paragraph, the authorized
                  shares are classified as $500,000,000 shares of the Class A
                  Shares, $500,000,000 shares of the Class B Shares,
                  $500,000,000 shares of the Class C Shares, and $500,000,000
                  shares of the Class F Shares.

            (b)   The Board of Directors is authorized to classify or to
                  reclassify (i.e., into series and classes within series), from
                  time to time, any unissued shares of stock of the Corporation,
                  whether now or hereafter authorized, by setting, changing or
                  eliminating the preferences, conversion or other rights,
                  voting powers, restrictions, limitations as to dividends,
                  qualifications or terms and conditions of or rights to require
                  redemption of the stock.

                  Unless otherwise provided by the Board of Directors prior to
                  the issuance of the stock, the shares of any and all classes
                  of stock shall be subject to the following:

                  (i)   The Board of Directors may redesignate a class of stock
                        whether or not shares of such class are issued and
                        outstanding, provided that such redesignation does not
                        affect the preferences, conversion or other rights,
                        voting powers, restrictions, limitations as to
                        dividends, qualifications or terms or conditions of
                        redemption of such class of stock.

                  (ii)  The assets attributable to each class may be invested in
                        a common investment portfolio. The assets and
                        liabilities of each series and the income and expenses
                        of each class of the Corporation's stock shall be
                        determined separately and, accordingly, the net asset
                        value of shares of the Corporation's stock may vary from
                        class to class. The income or gain and the expense or
                        liabilities of the Corporation shall be allocated to
                        each class of stock as determined by or under the
                        direction of the Board of Directors.

                  (iii) Shares of each class of stock shall be entitled to such
                        dividends or distributions, in stock or in cash or both,
                        as may be declared from time to time by the Board of
                        Directors with respect to such class. Dividends or
                        distributions shall be paid on shares of a class of
                        stock only out of the assets belonging to that series,
                        reflecting expenses attributable to such class.

                    (iv) In the event of the  liquidation  or dissolution of the
                         Corporation,  the  stockholders  of each  class  of the
                         Corporation's  stock shall be entitled to receive, as a
                         class,  out of the assets of the Corporation  available
                         for   distribution   to   stockholders,    the   assets
                         attributable  to that  class  less the  liabilities  or
                         expenses   allocated  to  that  class.  The  assets  so
                         distributable  to the  stockholders of a class shall be
                         distributed  among such  stockholders  in proportion to
                         the  number  of  shares  of  that  class  held  by them
                         multiplied  by the net  asset  value of a share of such
                         class on the date of determination  and recorded on the
                         books of the  Corporation.  In the event that there are
                         any  assets  available  for  distribution  that are not
                         attributable  to any  particular  class of stock,  such
                         assets shall be allocated to all classes in  proportion
                         to the net asset value of the respective classes.

                  (v)   All holders of shares of stock shall vote as a single
                        class except as may be otherwise required by law
                        pursuant to the 1940 Act or any applicable order, rule
                        or interpretation issued by the Securities and Exchange
                        Commission, or otherwise, and except with respect to any
                        matter which affects only one or more series or classes
                        of stock, in which case only the holders of shares of
                        the series or classes affected shall be entitled to
                        vote.

            (c)   The Corporation may issue fractional shares. Any fractional
                  share shall carry proportionately all the rights of a whole
                  share, excepting any right to receive a certificate evidencing
                  such fractional share, but including, without limitation, the
                  right to vote and the right to receive dividends.





FIFTH:      (a)   The number of Directors of the Corporation shall be thirteen.

                  The number may be changed by the Bylaws of the Corporation or
by the Board of Directors pursuant to the Bylaws.

            (b) The name of the Directors who shall act until their successors
are elected and qualify, are:

     Thomas G. Bigley  Edward L.  Flaherty,  Jr. John T.  Conroy,  Jr.  Peter E.
Madden William J. Copeland  Gregor F. Meyer John F. Donahue John E. Murray,  Jr.
James E. Dowd Wesley W. Posvar Lawrence D. Ellis, M.D. Marjorie P. Smuts Richard
B. Fisher

SIXTH:            (a) To the extent the Corporation has funds or property
                  legally available therefor, each shareholder shall have the
                  right at such times as may be permitted by the Corporation,
                  but no less frequently than as required under the 1940 Act, to
                  require the Corporation to redeem all or any part of its
                  shares at a redemption price equal to the net asset value per
                  share next determined after the shares are tendered for
                  redemption, less any applicable redemption fee or deferred
                  and/or contingent deferred sales charge as determined by the
                  Board of Directors. The Board of Directors may adopt
                  requirements and procedures for redemption of shares.

                  Notwithstanding the foregoing, the Corporation may postpone
                  payment or deposit of the redemption price and may suspend the
                  right of the shareholders to require the Corporation to redeem
                  shares of any series or class pursuant to the applicable rules
                  and regulations, or any order, of the Securities and Exchange
                  Commission.

            (b)   The Corporation shall have the right, exercisable at the
                  discretion of the Board of Directors, to redeem any
                  shareholder's shares of any series or class for their then
                  current net asset value per share if at such time the
                  shareholder owns shares having an aggregate net asset value of
                  less than $500 or such lesser or greater amount for such
                  series or class set forth in the current registration
                  statement of the Corporation filed with the Securities and
                  Exchange Commission, or regardless of the amount, if a
                  shareholder fails to supply a valid taxpayer identification
                  number.

            (c)   Each share is subject to redemption by the Corporation at the
                  redemption price computed in the manner set forth in
                  subparagraph (a) of Article SIXTH of these Amended and
                  Restated Articles of Incorporation at any time if the Board of
                  Directors, in its sole discretion, determines that failure to
                  so redeem may result in a material adverse impact on the
                  Corporation or its shareholders.

     SEVENTH: The  following  provisions  are hereby  adopted for the purpose of
          defining,  limiting,  and regulating the powers of the Corporation and
          of the Directors and shareholders:

            (a)   No shareholder shall have any pre-emptive or preferential
                  right of subscription to any shares of any series or class
                  whether now or hereafter authorized.

            (b) Without the vote of the shares of any class of stock of the
Corporation then outstanding (unless stockholder approval is otherwise required
by applicable law) the Corporation may, if approved by the Board of Directors:

                    (i)  Sell and convey the assets belonging or attributed to a
                         class or  series  of stock to  another  corporation  or
                         trust  that  is a  management  investment  company  (as
                         defined  in the  Investment  Company  Act of  1940,  as
                         amended) and is  organized  under the laws of any state
                         of  the  United  States  for  consideration  which  may
                         include the assumption of all outstanding  obligations,
                         taxes and other  liabilities,  accrued  or  contingent,
                         belonging  or  attributed  to such  class and which may
                         include securities issued by such corporation or trust.
                         Following  such sale and  conveyance,  and after making
                         provision for the payment of any liabilities  belonging
                         to attributed to such class that are not assumed by the
                         purchaser of the assets belonging or attributed to such
                         class, the Corporation  may, at its option,  redeem all
                         outstanding shares of such class at the net asset value
                         thereof  as  determined  by the Board of  Directors  in
                         accordance  with the provisions of applicable law, less
                         such redemption fee or other charge,  if any, as may be
                         fixed  by   resolution   of  the  Board  of  Directors.
                         Notwithstanding  any other  provision of the Charter of
                         the Corporation to the contrary,  the redemption  price
                         may be paid in any  combination of cash or other assets
                         belonging to attributed to the class, including but not
                         limited to, the distribution of the securities or other
                         consideration  received  by  the  Corporation  for  the
                         assets  belonging or attributed to such class upon such
                         conditions as the Board of Directors deems, in its sole
                         discretion,   to   be   appropriate   consistent   with
                         applicable law and the Charter of the Corporation.


                        (ii) Sell and convert the assets belonging or attributed
                        to a class or series of stock into money and, after
                        making provision for the payment of all obligations,
                        taxes and other liabilities, accrued or contingent,
                        belonging or attributed to such class, the Corporation
                        may, at its option (a) redeem all outstanding shares of
                        such class at the net asset value thereof as determined
                        by the Board of Directors in accordance with the
                        provisions of applicable law, less such redemption fee
                        or other charge, if any, as may be fixed by resolution
                        of the Board of Directors that the Board of Directors
                        deems, in its sole discretion, to be appropriate
                        consistent with applicable law and the Charter of the
                        Corporation, or (b) combine the assets belonging or
                        attributed to such class following such sale and
                        conversion with the assets belonging or attributed or
                        more other classes of stock; or



                        (iii) Combine the assets belonging or attributed to a
                        class or series of stock with the assets belonging or
                        attributed to any one or more classes or series of stock
                        of the Corporation if the Board of Directors reasonably
                        determines that such combination will not have a
                        material adverse effect on the stockholders of any class
                        or series of stock of the Corporation participating in
                        such combination. In connection with any such
                        combination of assets, the shares of any class or series
                        of stock of the Corporation then outstanding may, if so
                        determined by the Board of Directors, be converted into
                        shares of any other class or classes or series of stock
                        of the Corporation with respect to which conversion is
                        permitted by applicable law, or may be redeemed, at the
                        option of the Corporation, at the net asset value
                        thereof as determined by the Board of Directors, less
                        such redemption fee or charge, if any, as may be fixed
                        by resolution of the Board of Directors, upon such
                        conditions as the Board of Directors deems, in its sole
                        discretion, to be appropriate consistent with applicable
                        laws and the Charter of the Corporation. Notwithstanding
                        any other provision of this Charter to the contrary, any
                        redemption price, or part thereof, may be paid in shares
                        of any other existing or future class or classes of
                        stock of the Corporation.



                        (iv) Any redemption made pursuant to this section shall
                        be made and be effective upon terms, at the time and in
                        accordance with procedures specified by the Board of
                        Directors. At such time as the redemption is effective,
                        all rights of the holders of such shares shall cease and
                        terminate, except the right to receive the redemption
                        payment, and the shares so redeemed shall no longer be
                        outstanding for any purpose."



               (c)  In addition to its other  powers  explicitly  or  implicitly
                    granted  under  these  Amended  and  Restated   Articles  of
                    Incorporation,  by law or otherwise,  the Board of Directors
                    of the  Corporation  (i) is  expressly  authorized  to make,
                    alter,  amend or repeal the Bylaws of the Corporation,  (ii)
                    may from time to time determine whether,  to what extent, at
                    what  times  and  places,  and  under  what  conditions  and
                    regulations  the accounts and books of the  Corporation,  or
                    any  of  them,  shall  be  open  to  the  inspection  of the
                    shareholders,  and no  shareholder  shall  have any right to
                    inspect any  account,  book or  document of the  Corporation
                    except as conferred by statute or as authorized by the Board
                    of  Directors  of the  Corporation,  (iii) is  empowered  to
                    authorize,  without shareholder  approval,  the issuance and
                    sale from time to time of shares of stock of the Corporation
                    whether now or  hereafter  authorized  on such terms and for
                    such  consideration as the Board of Directors may determine,
                    and (iv) is authorized to adopt procedures for determination
                    of and,  to the  extent  deemed  desirable  by the  Board of
                    Directors,  to maintain  the constant the net asset value of
                    shares of the Corporation's stock.

            (d)   Notwithstanding any provision of the laws of the State of
                  Maryland requiring a greater proportion than a majority of the
                  votes of any or all series or classes of shares entitled to be
                  cast to take or authorize any action, the Corporation shall,
                  except to the extent otherwise required by the 1940 Act, take
                  or authorize any such action that otherwise requires a greater
                  proportion of votes upon the concurrence of a majority of the
                  aggregate number of the votes entitled to be cast thereon.

            (e)   The Corporation shall take or authorize any action permitted
                  by the laws of the State of Maryland to be taken upon the
                  concurrence of a majority of shareholders present and voting
                  thereon.

            (f)   The Corporation reserves the right from time to time to make
                  any amendment of its Charter now or hereafter authorized by
                  law, including any amendment which alters the contract rights,
                  as expressly set forth in its Charter, of any outstanding
                  shares or any series or class.

          (g)  The Board of Directors is expressly authorized to declare and pay
               dividends and distributions in cash, securities or other property
               from surplus or any funds  legally  available  therefor,  at such
               intervals  (which may be as frequently as daily) or on such other
               periodic basis, as it shall determine, for any series or class of
               stock  of  the   Corporation;   to  declare  such   dividends  or
               distributions for any series or class of stock of the Corporation
               by means  of a  formula  or other  method  of  determination,  at
               meetings  held  less   frequently   than  the  frequency  of  the
               effectiveness of such  declarations;  to establish  payment dates
               for dividends or any other  distributions for any series or class
               of  stock  of the  Corporation  on  any  basis,  including  dates
               occurring less frequently than the  effectiveness of declarations
               thereof;  and to provide for the payment of declared dividends on
               a date  earlier or later than the  specified  payment date in the
               case of  shareholders  of such series or class of stock redeeming
               their entire ownership of shares.

          (h)  Any  determination  made  in good  faith  by or  pursuant  to the
               direction  of the  Board of  Directors  as to the  amount  of the
               assets, debts, obligations or liabilities of the Corporation,  as
               to the amount of any reserves or charges set up and the propriety
               thereof,  as to the time of or purpose for creating such reserves
               or charges,  as to the use,  alteration  or  cancellation  of any
               reserves  or  charges  (whether  or not any debt,  obligation  or
               liability  for which such  reserves  or  charges  shall have been
               created  shall have been paid or  discharged  or shall be then or
               thereafter required to be paid or discharged), as to the value of
               or the method of valuing any  investment  or other asset owned or
               held by the Corporation,  as to the number of shares of any class
               of stock  outstanding,  as to the income of the Corporation or as
               to any other matter  relating to the  determination  of net asset
               value,   the  declaration  of  dividends  or  the  issue,   sale,
               redemption  or other  acquisition  of shares of the  Corporation,
               shall be final  and  conclusive  and  shall be  binding  upon the
               Corporation  and all  holders of its  shares,  past,  present and
               future,  and shares of the Corporation are issued and sold on the
               condition and understanding that any and all such  determinations
               shall be binding as aforesaid.

EIGHTH:           (a) To the fullest extent that limitations on the liability of
                  directors and officers are permitted by the Maryland General
                  Corporation Law, no director or officer of the Corporation
                  shall have any liability to the Corporation or its
                  shareholders for damages. This limitation on liability applies
                  to events occurring at the time a person serves as a director
                  or officer of the Corporation whether or not such person is a
                  director or officer at the time of any proceeding in which
                  liability is asserted.

            (b)   The Corporation shall indemnify and advance expenses to its
                  currently acting and its former directors to the fullest
                  extent that indemnification of directors is permitted by the
                  Maryland General Corporation Law. The Corporation shall
                  indemnify and advance expenses to its officers to the same
                  extent as its directors and may do so to such further extent
                  as is consistent with law. The Board of Directors may by
                  bylaw, resolution or agreement make further provision for
                  indemnification of directors, officers, employees and agents
                  to the fullest extent permitted by the Maryland General
                  Corporation Law.

            (c)   No provision of this Article shall be effective to protect or
                  purport to protect any director or officer of the Corporation
                  against any liability to the Corporation or its security
                  holders to which he would otherwise be subject by reason of
                  willful misfeasance, bad faith, gross negligence, or reckless
                  disregard of the duties involved in the conduct of his office.

            (d)   References to the Maryland General Corporation Law in these
                  Amended and Restated Articles of Incorporation are to that law
                  as from time to time amended. No amendment to the Charter of
                  the Corporation shall affect any right of any person under
                  this Article based on any event, omission or proceeding prior
                  to the amendment.


The foregoing restatement to the charter of the Corporation was approved by a
majority of the entire Board of Directors of the Corporation as well as a
majority of the stockholders; and the Corporation is registered as an open-end
company under the Investment Company Act of 1940, as amended.

      The provisions set forth in these Articles of Restatement are all the
      provisions of the Charter currently in effect. The current address of the
      principal office of the Corporation, the name and address of the
      Corporation's resident agent and the number of Directors of the
      Corporation and the names of those currently in office are stated above.

<PAGE>



      IN WITNESS WHEREOF, Federated Government Income Securities, Inc. has
caused these presents to be signed in its name and on its behalf by its
Executive Vice President and witnessed by its Assistant Secretary on July 17,
1996.

      The undersigned, John W. McGonigle, Executive Vice President and Secretary
of the Corporation, hereby acknowledges in the name and on behalf of the
Corporation the foregoing Articles of Amendment to be its corporate act and
further certifies to the best of his knowledge, information and belief, that the
matters and facts set forth herein with respect to the authorization and
approval hereof are true in all material respects and that this statement is
made under the penalties of perjury.

ATTEST:                             FEDERATED GOVERNMENT INCOME SECURITIES, INC.



/s/S. Elliott Cohan                  /s/John W. McGonigle
S. Elliott Cohan                     John W. McGonigle
Assistant Secretary                  Executive Vice President and Secretary





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


                             DISTRIBUTOR'S CONTRACT

         AGREEMENT made this 24th day of October, 1997, by and between those
      Investment Companies on behalf of the Portfolios and Classes of Shares
      listed on Schedule A to Exhibit 1, as may be amended from time to time,
      having their principal place of business at Federated Investors Tower,
      Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of
      Agreement, and FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania
      Corporation. Each of the Exhibits hereto is incorporated herein in its
      entirety and made a part hereof. In the event of any inconsistency between
      the terms of this Agreement and the terms of any applicable Exhibit, the
      terms of the applicable Exhibit shall govern.

         In consideration of the mutual covenants hereinafter contained, it is
      hereby agreed by and between the parties hereto as follows:

1.          Each of the Investment Companies hereby appoint FSC as agent to sell
            and distribute shares of the Investment Companies which may be
            offered in one or more series (the "Funds") consisting of one or
            more classes (the "Classes") of shares (the "Shares"), as described
            and set forth on one or more exhibits to this Agreement, at the
            current offering price thereof as described and set forth in the
            current Prospectuses of the Funds. FSC hereby accepts such
            appointment and agrees to provide such other services for the
            Investment Companies, if any, and accept such compensation from the
            Investment Companies, if any, as set forth in the applicable
            exhibits to this Agreement.

2.          The sale of any Shares may be suspended without prior notice
            whenever in the judgment of the applicable Investment Company it is
            in its best interest to do so.

3.   Neither FSC nor any other person is authorized by the Investment  Companies
     to give any  information  or to make  any  representation  relative  to any
     Shares  other  than  those   contained  in  the   Registration   Statement,
     Prospectuses,  or Statements of Additional  Information ("SAIs") filed with
     the  Securities  and Exchange  Commission,  as the same may be amended from
     time to time, or in any  supplemental  information to said  Prospectuses or
     SAIs  approved  by the  Investment  Companies.  FSC  agrees  that any other
     information or representations other than those specified above which it or
     any dealer or other  person who  purchases  Shares  through FSC may make in
     connection with the offer or sale of Shares, shall be made entirely without
     liability  on the part of the  Investment  Companies.  No person or dealer,
     other than FSC, is authorized to act as agent for the Investment  Companies
     for any purpose.  FSC agrees that in offering or selling Shares as agent of
     the  Investment  Companies,  it will, in all respects,  duly conform to all
     applicable  state and  federal  laws and the rules and  regulations  of the
     National  Association of Securities Dealers,  Inc.,  including its Rules of
     Fair Practice.  FSC will submit to the Investment  Companies  copies of all
     sales  literature  before  using  the same  and  will  not use  such  sales
     literature if disapproved by the Investment Companies.

4.   This  Agreement is  effective  with respect to each Class as of the date of
     execution  of the  applicable  exhibit  and shall  continue  in effect with
     respect to each Class  presently set forth on an exhibit and any subsequent
     Classes  added  pursuant  to an  exhibit  during the  initial  term of this
     Agreement for one year from the date set forth above,  and  thereafter  for
     successive  periods of one year if such  continuance  is  approved at least
     annually by the  Trustees/Directors of the Investment Companies including a
     majority  of  the  members  of  the  Board  of  Trustees/Directors  of  the
     Investment  Companies  who are not  interested  persons  of the  Investment
     Companies  and  have  no  direct  or  indirect  financial  interest  in the
     operation of any Distribution Plan relating to the Investment  Companies or
     in any related documents to such Plan ("Disinterested  Trustees/Directors")
     cast in person at a meeting  called for that  purpose.  If a Class is added
     after the first  annual  approval by the  Trustees/Directors  as  described
     above,  this Agreement will be effective as to that Class upon execution of
     the  applicable  exhibit and will  continue in effect until the next annual
     approval of this  Agreement by the  Trustees/Directors  and  thereafter for
     successive periods of one year, subject to approval as described above.

5.          This Agreement may be terminated with regard to a particular Fund or
            Class at any time, without the payment of any penalty, by the vote
            of a majority of the Disinterested Trustees/Directors or by a
            majority of the outstanding voting securities of the particular Fund
            or Class on not more than sixty (60) days' written notice to any
            other party to this Agreement.

6.          This Agreement may not be assigned by FSC and shall automatically
            terminate in the event of an assignment by FSC as defined in the
            Investment Company Act of 1940, as amended, provided, however, that
            FSC may employ such other person, persons, corporation or
            corporations as it shall determine in order to assist it in carrying
            out its duties under this Agreement.

7.          FSC shall not be liable to the Investment Companies 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 by this Agreement.

8.          This Agreement may be amended at any time by mutual agreement in
            writing of all the parties hereto, provided that such amendment is
            approved by the Trustees/Directors of the Investment Companies
            including a majority of the Disinterested Trustees/Directors of the
            Investment Companies cast in person at a meeting called for that
            purpose.

9.   This  Agreement  shall be construed in accordance  with and governed by the
     laws of the Commonwealth of Pennsylvania.

     10.  (a)  Subject  to  the  conditions  set  forth  below,  the  Investment
          Companies agree to indemnify and hold harmless FSC and each person, if
          any,  who  controls  FSC  within  the  meaning  of  Section  15 of the
          Securities  Act of 1933 and Section 20 of the  Securities Act of 1934,
          as amended,  against any and all loss,  liability,  claim,  damage and
          expense whatsoever  (including but not limited to any and all expenses
          whatsoever   reasonably   incurred  in  investigating,   preparing  or
          defending  against any  litigation,  commenced or  threatened,  or any
          claim whatsoever) arising out of or based upon any untrue statement or
          alleged  untrue   statement  of  a  material  fact  contained  in  the
          Registration Statement, any Prospectuses or SAIs (as from time to time
          amended  and   supplemented)  or  the  omission  or  alleged  omission
          therefrom  of a  material  fact  required  to  be  stated  therein  or
          necessary to make the statements  therein not misleading,  unless such
          statement or omission was made in reliance upon and in conformity with
          written information furnished to the Investment Companies about FSC by
          or on behalf of FSC expressly for use in the  Registration  Statement,
          any Prospectuses and SAIs or any amendment or supplement thereof.

              If any action is brought against FSC or any controlling person
              thereof with respect to which indemnity may be sought against any
              Investment Company pursuant to the foregoing paragraph, FSC shall
              promptly notify the Investment Company in writing of the
              institution of such action and the Investment Company shall assume
              the defense of such action, including the employment of counsel
              selected by the Investment Company and payment of expenses. FSC or
              any such controlling person thereof shall have the right to employ
              separate counsel in any such case, but the fees and expenses of
              such counsel shall be at the expense of FSC or such controlling
              person unless the employment of such counsel shall have been
              authorized in writing by the Investment Company in connection with
              the defense of such action or the Investment Company shall not
              have employed counsel to have charge of the defense of such
              action, in any of which events such fees and expenses shall be
              borne by the Investment Company. Anything in this paragraph to the
              contrary notwithstanding, the Investment Companies shall not be
              liable for any settlement of any such claim of action effected
              without their written consent. The Investment Companies agree
              promptly to notify FSC of the commencement of any litigation or
              proceedings against the Investment Companies or any of their
              officers or Trustees/Directors or controlling persons in
              connection with the issue and sale of Shares or in connection with
              the Registration Statement, Prospectuses, or SAIs.

          (b)  FSC  agrees  to  indemnify  and  hold  harmless  the   Investment
               Companies,  each of its Trustees/Directors,  each of its officers
               who have signed the Registration Statement and each other person,
               if any, who controls the Investment  Companies within the meaning
               of  Section  15 of the  Securities  Act of 1933,  but  only  with
               respect  to  statements  or  omissions,   if  any,  made  in  the
               Registration  Statement or any Prospectus,  SAI, or any amendment
               or supplement  thereof in reliance upon, and in conformity  with,
               information furnished to the Investment Companies about FSC by or
               on behalf of FSC expressly for use in the Registration  Statement
               or any Prospectus,  SAI, or any amendment or supplement  thereof.
               In case  any  action  shall be  brought  against  any  Investment
               Company  or  any  other  person  so  indemnified   based  on  the
               Registration  Statement or any Prospectus,  SAI, or any amendment
               or supplement thereof, and with respect to which indemnity may be
               sought against FSC, FSC shall have the rights and duties given to
               the Investment  Companies,  and the Investment Companies and each
               other  person so  indemnified  shall  have the  rights and duties
               given to FSC by the provisions of subsection (a) above.

            (c)   Nothing herein contained shall be deemed to protect any person
                  against liability to the Investment Companies or their
                  shareholders to which such person would otherwise be subject
                  by reason of willful misfeasance, bad faith or gross
                  negligence in the performance of the duties of such person or
                  by reason of the reckless disregard by such person of the
                  obligations and duties of such person under this Agreement.

          (d)  Insofar  as  indemnification  for  liabilities  may be  permitted
               pursuant to Section 17 of the Investment  Company Act of 1940, as
               amended, for  Trustees/Directors,  officers,  FSC and controlling
               persons of the  Investment  Companies  by the  Trustees/Directors
               pursuant to this Agreement, the Investment Companies are aware of
               the position of the  Securities  and Exchange  Commission  as set
               forth  in  the  Investment  Company  Act  Release  No.  IC-11330.
               Therefore,  the Investment  Companies undertakes that in addition
               to complying with the applicable provisions of this Agreement, in
               the absence of a final decision on the merits by a court or other
               body  before  which  the   proceeding   was   brought,   that  an
               indemnification payment will not be made unless in the absence of
               such a decision,  a reasonable  determination  based upon factual
               review  has been  made  (i) by a  majority  vote of a  quorum  of
               non-party   Disinterested   Trustees/Directors,    or   (ii)   by
               independent   legal  counsel  in  a  written   opinion  that  the
               indemnitee was not liable for an act of willful misfeasance,  bad
               faith,  gross  negligence  or reckless  disregard of duties.  The
               Investment  Companies  further  undertakes  that  advancement  of
               expenses   incurred  in  the  defense  of  a   proceeding   (upon
               undertaking for repayment unless it is ultimately determined that
               indemnification    is    appropriate)    against   an    officer,
               Trustees/Directors,  FSC or controlling  person of the Investment
               Companies will not be made absent the fulfillment of at least one
               of the following conditions: (i) the indemnitee provides security
               for his  undertaking;  (ii) the  Investment  Companies is insured
               against losses arising by reason of any lawful advances; or (iii)
               a   majority   of   a   quorum   of    non-party    Disinterested
               Trustees/Directors  or  independent  legal  counsel  in a written
               opinion  makes a factual  determination  that  there is reason to
               believe the indemnitee will be entitled to indemnification.

FSC is hereby  expressly  put on notice of the  limitation  of  liability as set
forth in the Declaration of Trust and agrees that the obligations assumed by the
Trust pursuant to this Agreement shall be limited "

11.         If at any time the Shares of any Fund are offered in two or more
            Classes, FSC agrees to adopt compliance standards as to when a class
            of shares may be sold to particular investors.

12. This Agreement will become binding on the parties hereto upon the execution
of the attached exhibits to the Agreement.





<PAGE>


                                    Exhibit 1
                                     to the
                             Distributor's Contract

      The following provisions are hereby incorporated and made part of the
Distributor's Contract (the "Distributor's Contract") dated October 24, 1997,
between the Investment Companies and Federated Securities Corp. as principal
distributor (the "Principal Distributor") with respect to the Class B Shares of
the portfolios (the "Funds") set forth on the attached Schedule A. References
herein to this Distributor's Contract refer to the Distributor's Contract as
supplemented hereby and made applicable hereby to the Class B Shares of the
Funds. In the event of any inconsistency between the terms of this Exhibit and
the terms of the Distributor's Contract, the terms of this Exhibit will govern.
Once effective in respect of the Class of Shares of any Fund set forth above,
the Distributors Contract as amended by this Exhibit shall be effective in
respect of all shares of such class outstanding whether issued prior to or after
such effectiveness.

   1. The Investment Companies hereby appoints the Principal Distributor to
      engage in activities principally intended to result in the sale of Class B
      Shares ("Class B Shares") of each Fund. Pursuant to this appointment, the
      Principal Distributor is authorized to select a group of financial
      institutions ("Financial Institutions") to sell Class B Shares of a Fund
      at the current offering price thereof as described and set forth in the
      respective prospectuses of the Fund.

   2.    (a) In consideration of the Principal Distributor's services under this
         Distributor's Contract in respect of each Fund the Investment Companies
         on behalf of the Fund agree: (I) to pay the Principal Distributor or at
         its direction its "Allocable Portion" (as hereinafter defined) of a fee
         (the "Distribution Fee") equal to 0.75 of 1% per annum of the average
         daily net asset value of the Class B Shares of the Fund outstanding
         from time to time, and (II) to withhold from redemption proceeds in
         respect of Class B Shares of the Fund such Principal Distributor's
         Allocable Portion of the Contingent Deferred Sales Charges ("CDSCs")
         payable in respect of such redemption as provided in the Prospectus for
         the Fund and to pay the same over to such Principal Distributor or at
         its direction at the time the redemption proceeds in respect of such
         redemption are payable to the holder of the Class B Shares redeemed.

      (b)The Principal Distributor will be deemed to have performed all
         services required to be performed in order to be entitled to receive
         its Allocable Portion of the Distribution Fee payable in respect of the
         Class B Shares of a Fund upon the settlement of each sale of a
         "Commission Share" (as defined in the Allocation Schedule attached
         hereto as Schedule B) of the Fund taken into account in determining
         such Principal Distributor's Allocable Portion of such Distribution
         Fees.

      (c)Notwithstanding anything to the contrary set forth in this Exhibit,
         the Distributor's Contract or (to the extent waiver thereof is
         permitted thereby) applicable law, the Investment Companies' obligation
         to pay the Principal Distributor's Allocable Portion of the
         Distribution Fees payable in respect of the Class B Shares of a Fund
         shall not be terminated or modified for any reason (including a
         termination of this Distributor's Contract as it relates to Class B
         Shares of a Fund) except to the extent required by a change in the
         Investment Company Act of 1940 (the "Act") or the Conduct Rules of the
         National Association of Securities Dealers, Inc., in either case
         enacted or promulgated after May 1, 1997, or in connection with a
         "Complete Termination" (as hereinafter defined) of the Distribution
         Plan in respect of the Class B Shares of a Fund.

      (d)The Investment Companies will not take any action to waive or change
         any CDSC in respect of the Class B Shares of a Fund, except as provided
         in the Investment Companies' prospectus or statement of additional
         information as in effect as of the date hereof without the consent of
         the Principal Distributor and the permitted assigns of all or any
         portion of its right to its Allocable Portion of the CDSCs.

      (e)Notwithstanding anything to the contrary set forth in this Exhibit,
         the Distributor's Contract, or (to the extent waiver thereof is
         permitted thereby) applicable law, neither the termination of the
         Principal Distributor's role as principal distributor of the Class B
         Shares of a Fund, nor the termination of this Distributor's Contract
         nor the termination of the Distribution Plan will terminate such
         Principal Distributor's right to its Allocable Portion of the CDSCs in
         respect of the Class B Shares of a Fund.

      (f)Notwithstanding anything to the contrary in this Exhibit, the
         Distributor's Contract, or (to the extent waiver thereof is permitted
         thereby) applicable law, the Principal Distributor may assign, sell or
         pledge (collectively, a "Transfer") its rights to its Allocable Portion
         of the Distribution Fees and CDSCs earned by it (but not its
         obligations to the Investment Companies under this Distributor's
         Contract) in respect of the Class B Shares of a Fund to raise funds to
         make the expenditures related to the distribution of Class B Shares of
         the Fund and in connection therewith upon receipt of notice of such
         Transfer, the Investment Companies shall pay, or cause to be paid to
         the assignee, purchaser or pledgee (collectively with their subsequent
         transferees, "Transferees") such portion of the Principal Distributor's
         Allocable Portion of the Distribution Fees and CDSCs in respect of the
         Class B Shares of the Fund so Transferred. Except as provided in (c)
         above and notwithstanding anything to the contrary set forth elsewhere
         in this Exhibit, the Distributor's Contract, or (to the extent waiver
         thereof is permitted thereby) applicable law, to the extent the
         Principal Distributor has Transferred its rights thereto to raise funds
         as aforesaid, the Investment Companies' obligation to pay to the
         Principal Distributor's Transferees the Principal Distributor's
         Allocable Portion of the Distribution Fees payable in respect of the
         Class B Shares of each Fund shall be absolute and unconditional and
         shall not be subject to dispute, offset, counterclaim or any defense
         whatsoever, including without limitation, any of the foregoing based on
         the insolvency or bankruptcy of the Principal Distributor (it being
         understood that such provision is not a waiver of the Investment
         Companies' right to pursue such Principal Distributor and enforce such
         claims against the assets of such Principal Distributor other than the
         Distributor's right to the Distribution Fees, CDSCs and servicing fees,
         in respect of the Class B Shares of any Fund which have been so
         transferred in connection with such Transfer). The Fund agrees that
         each such Transferee is a third party beneficiary of the provisions of
         this clause (f) but only insofar as those provisions relate to
         Distribution Fees and CDSCs transferred to such Transferee.

      (g)For purposes of this Distributor's Contract, the term Allocable
         Portion of Distribution Fees payable in respect of the Class B Shares
         of any Fund shall mean the portion of such Distribution Fees allocated
         to such Principal Distributor in accordance with the Allocation
         Schedule attached hereto as Schedule B.

      (h)For purposes of this Distributor's Contract, the term "Complete
         Termination" of the Plan in respect of any Fund means a termination of
         the Plan involving the complete cessation of the payment of
         Distribution Fees in respect of all Class B Shares of such Fund, and
         the termination of the distribution plans and the complete cessation of
         the payment of distribution fees pursuant to every other Distribution
         Plan pursuant to rule 12b-1 of the Investment Companies in respect of
         such Fund and any successor Fund or any Fund acquiring a substantial
         portion of the assets of such Fund and for every future class of shares
         which has substantially similar characteristics to the Class B Shares
         of such Fund including the manner of payment and amount of sales
         charge, contingent deferred sales charge or other similar charges borne
         directly or indirectly by the holders of such shares.

   3. The Principal Distributor may enter into separate written agreements with
      various firms to provide certain of the services set forth in Paragraph 1
      herein. The Principal Distributor, in its sole discretion, may pay
      Financial Institutions a lump sum fee on the settlement date for the sale
      of each Class B Share of the Fund to their clients or customers for
      distribution of such share. The schedules of fees to be paid such firms or
      Financial Institutions and the basis upon which such fees will be paid
      shall be determined from time to time by the Principal Distributor in its
      sole discretion.

   4. The Principal Distributor will prepare reports to the Board of
      Trustees/Directors of the Investment Companies on a quarterly basis
      showing amounts expended hereunder including amounts paid to Financial
      Institutions and the purpose for such expenditures.

      In consideration of the mutual covenants set forth in the Distributor's
Contract between the Investment Companies and the Principal Distributor, the
Principal Distributor and the Investment Companies hereby execute and deliver
this Exhibit with respect to the Class B Shares of the Fund.

      Witness the due execution hereof this 24th day of October, 1997.


ATTEST:                          INVESTMENT COMPANIES (listed on Schedule A)

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


ATTEST:                          FEDERATED SECURITIES CORP.


By:  /s/ Leslie K. Platt         By: /s/ Byron F. Bowman
Title: Assistant Secretary       Title: Vice President


<PAGE>


                                                               Schedule A

Date:  10/24/97      DISTRIBUTOR'S CONTRACT



                     Federated American Leaders Fund, Inc.
                        Class B Shares

                     Federated Equity Funds
                        Federated Aggressive Growth Fund
                        Class B Shares

                        Federated Growth Strategies Fund
                        Class B Shares

                        Federated Small Cap Strategies Fund
                        Class B Shares

                        Federated Capital Appreciation Fund
                        Class B Shares

                     Federated Equity Income Fund, Inc.
                        Class B Shares

                     Federated Fund for U.S. Government Securities, Inc.
                        Class B Shares

                     Federated Government Income Securities, Inc.
                        Class B Shares

                     Federated High Income Bond Fund, Inc.
                        Class B Shares

                     Federated Municipal Opportunities Fund, Inc.
                        Class B Shares

                     Federated Municipal Securities Fund, Inc.
                        Class B Shares

                     Federated Stock and Bond Fund, Inc.
                        Class B Shares

                     Federated Utility Fund, Inc.
                        Class B Shares

                     Fixed Income Securities, Inc.
                        Federated Strategic Income Fund
                        Class B Shares

                     International Series, Inc.
                        Federated International Equity Fund
                        Class B Shares

                        Federated International Income Fund
                        Class B Shares



<PAGE>


                     Investment Series Funds, Inc.
                        Federated Bond Fund
                        Class B Shares

                     Liberty U.S. Government Money Market Trust
                        Class B Shares

                     Municipal Securities Income Trust
                        Federated Pennsylvania Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated World Utility Fund
                        Class B Shares

                        Federated Asia Pacific Growth Fund
                        Class B Shares

                        Federated Emerging Markets Fund
                        Class B Shares

                        Federated European Growth Fund
                        Class B Shares

                        Federated International Small Company Fund
                        Class B Shares

                        Federated Latin American Growth Fund
                        Class B Shares

                        Federated International High Income Fund
                        Class B Shares

                        Federated International Growth Fund
                        Class B Shares


The following Funds were added as of December 1, 1997:

                     Municipal Securities Income Trust
                        Federated California Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated Global Equity Income Fund
                        Class B shares






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


                                  STATE STREET
                                DOMESTIC CUSTODY

                                  FEE SCHEDULE

                                 Federated Funds

I.    Custody Services

      Maintain custody of fund assets. Settle portfolio purchases and sales.
      Report buy and sell fails. Determine and collect portfolio income. Make
      cash disbursements and report cash transactions. Monitor corporate
      actions.

                                   ANNUAL FEES

      ASSET

     Per Fund                                                 .25 Basis Points

     Wire Fees                                                  $3.00 per wire

      Settlements:

     o   Each DTC Transaction                                         $5.00
     o   Each Federal Reserve Book Entry Transaction                  $3.75
     o   Each Repo Transaction (All Repo)                             $3.75
     o   Each Physical Transaction (NY/Boston, Private Placement)    $15.00
     o   Each Option Written/Exercised/Expired                       $18.75
         Each Book Entry Muni (Sub-custody) Transaction              $15.00
     o   Government Paydowns                                          $5.00
     o   Maturity Collections                                         $8.00
     o   PTC Transactions                                             $6.00


II.   Special Services

      Fees for activities of a non-recurring nature such as fund consolidation
      or reorganization, extraordinary security shipments and the preparation of
      special reports will be subject to negotiation.



III.  Balance Credit

      Municipal Funds
      A balance credit equal to 75% of the average demand deposit account
      balance in the custodian account for the month billed times the 30 day
      T-Bill Rate on the last Monday of the month billed, will be applied
      against the month's custodian bill.

      Transfer Agent
      A balance credit equal to 100% of the average balance in the transfer
      agent demand deposit accounts, less the reserve requirement and applicable
      related expenses, times 75% of the 30 average Fed Funds Rate.

IV.   Payment

     The above  fees will be  charged  against  the  funds'  custodian  checking
account thirty (30) days after the invoice is mailed to the funds' offices.

V. Term of Contract

      The parties agree that this fee schedule shall become effective January 1,
1997.

FEDERATED SERVICES COMPANY                    STATE STREET

BY:    /s/ Douglas L. Hein                    BY:     /s/ Michael E. Hagerty

TITLE: Senior Vice President                  TITLE:  Vice President

DATE:  April 15, 1997                         DATE:   April 8, 1997
       -----------------------------------            -------------






                                                       Exhibit 9 under Form N-1A
                                              Exhibit 10 under Item 601/Reg. S-K


                   PRINCIPAL SHAREHOLDER SERVICER'S AGREEMENT


     THIS AGREEMENT, is made as of the 24th day of October, 1997, by and between
those Investment Companies on behalf of the Portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") and Classes of Shares
("Classes") listed on Schedule A to Exhibit 1, as may be amended from time to
time, having their principal office and place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of
Agreement and Federated Securities Corp. as the principal shareholder servicer
(the "Principal Servicer"). Each of the Exhibits hereto is incorporated herein
in its entirety and made a part hereof. In the event of any inconsistency
between the terms of this Agreement and the terms of any applicable Exhibit, the
terms of the applicable Exhibit shall govern.

     In consideration of the mutual covenants hereinafter contained it is hereby
agreed by and between the parties hereto as follows.

1.   The Investment  Companies  hereby  appoint the Principal  Servicer as their
     agent to select,  negotiate and contract for the performance of and arrange
     for  the  rendition  of  personal  services  to  shareholders   and/or  the
     maintenance  of accounts of  shareholders  of each Class of the Funds as to
     which this Agreement is made  applicable (The Principal  Servicer's  duties
     hereunder are referred to as  "Services").  The Principal  Servicer  hereby
     accepts such appointment and agrees to perform or cause to be performed the
     Services in respect of the Classes of the Funds to which this Agreement has
     been made applicable by an Exhibit.  The Principal Servicer agrees to cause
     to be provided shareholder services which, in its best judgment (subject to
     supervision and control of the Investment  Companies' Boards of Trustees or
     Directors,  as applicable),  are necessary or desirable for shareholders of
     the Funds. The Principal  Servicer further agrees to provide the Investment
     Companies,  upon request, a written description of the shareholder services
     for which the Principal Servicer is arranging hereunder.

2.    During the term of this Agreement, each Investment Company will pay the
      Principal Servicer and the Principal Servicer agrees to accept as full
      compensation for its services rendered hereunder a fee as set forth on the
      Exhibit applicable to the Class of each Fund subject to this Agreement.

      For the payment period in which this Agreement becomes effective or
      terminates with respect to any Class of a Fund, there shall be an
      appropriate proration of the monthly fee on the basis of the number of
      days that this Agreement is in effect with respect to such Class of the
      Fund during the month.

3.    This Agreement is effective with respect to each Class of a Fund as of the
      date of execution of the applicable Exhibit and shall continue in effect
      for one year from the date of its execution, and thereafter for successive
      periods of one year only if the form of this Agreement is approved at
      least annually by the Board of each Investment Company, including a
      majority of the members of the Board of the Investment Company who are not
      interested persons of the Investment Company ("Independent Board Members")
      cast in person at a meeting called for that purpose.

4. Notwithstanding paragraph 3, this Agreement may be terminated with regard to
a particular Class of a Fund as follows:

(a)        at any time, without the payment of any penalty, by the vote of a
           majority of the Independent Board Members of any Investment Company
           or by a vote of a majority of the outstanding voting securities of
           any Fund as defined in the Investment Company Act of 1940 on sixty
           (60) days' written notice to the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment as defined in the
Investment Company Act of 1940; and

5.    The Principal Servicer agrees to arrange to obtain any taxpayer
      identification number certification from each shareholder of the Funds to
      which it provides Services that is required under Section 3406 of the
      Internal Revenue Code, and any applicable Treasury regulations, and to
      provide each Fund or its designee with timely written notice of any
      failure to obtain such taxpayer identification number certification in
      order to enable the implementation of any required backup withholding.

6.   The  Principal  Servicer  shall not be liable for any error of  judgment or
     mistake  of law or for any  loss  suffered  by any  Investment  Company  in
     connection with the matters to which this Agreement relates,  except a loss
     resulting from willful  misfeasance,  bad faith or gross  negligence on its
     part in the  performance of its duties or from reckless  disregard by it of
     its  obligations and duties under this  Agreement.  the Principal  Servicer
     shall be entitled to rely on and may act upon advice of counsel (who may be
     counsel for such Investment  Company) on all matters,  and shall be without
     liability  for any  action  reasonably  taken or omitted  pursuant  to such
     advice. Any person, even though also an officer, trustee, partner, employee
     or agent of the Principal  Servicer,  who may be or become a member of such
     Investment Company's Board,  officer,  employee or agent of any Fund, shall
     be deemed,  when rendering  services to such Fund or acting on any business
     of such Fund (other than services or business in connection with the duties
     of the Principal  Servicer  hereunder) to be rendering  such services to or
     acting  solely  for such  Fund  and not as an  officer,  trustee,  partner,
     employee or agent or one under the control or  direction  of the  Principal
     Servicer even though paid by the Principal Servicer.

      This Section 6 shall survive termination of this Agreement.

7.    No provision of this Agreement may be changed, waived, discharged or
      terminated orally, but only by an instrument in writing signed by the
      party against which an enforcement of the change, waiver, discharge or
      termination is sought.

8.    The Principal Servicer is expressly put on notice of the limitation of
      liability as set forth in the Declaration of Trust of each Investment
      Company that is a Massachusetts business trust and agrees that the
      obligations assumed by each such Investment Company pursuant to this
      Agreement shall be limited in any case to such Investment Company and its
      assets and that the Principal Servicer shall not seek satisfaction of any
      such obligations from the shareholders of such Investment Company, the
      Trustees, Officers, Employees or Agents of such Investment Company, or any
      of them.

9.    The execution and delivery of this Agreement have been authorized by the
      Directors of the Principal Servicer and signed by an authorized officer of
      the Principal Servicer, acting as such, and neither such authorization by
      such Directors 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 Directors or shareholders of the Principal
      Servicer, but bind only the property of the Principal Servicer as provided
      in the Articles of Incorporation of the Principal Servicer.

10.   Notices of any kind to be given hereunder shall be in writing (including
      facsimile communication) and shall be duly given if delivered to any
      Investment Company at the following address: Federated Investors Tower,
      Pittsburgh, PA 15222-3779, Attention: President and if delivered to the
      Principal Servicer at Federated Investors Tower, Pittsburgh, PA
      15222-3779, Attention: President.

11.   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. If any provision of this Agreement shall be held
      or made invalid by a court or regulatory agency decision, statute, rule or
      otherwise, the remainder of this Agreement shall not be affected thereby.
      Subject to the provisions of Sections 3 and 4, hereof, this Agreement
      shall be binding upon and shall inure to the benefit of the parties hereto
      and their respective successors and shall be governed by Pennsylvania law;
      provided, however, that nothing herein shall be construed in a manner
      inconsistent with the Investment Company Act of 1940 or any rule or
      regulation promulgated by the Securities and Exchange Commission
      thereunder.

12.   This Agreement may be executed by different parties on separate
      counterparts, each of which, when so executed and delivered, shall be an
      original, and all such counterparts shall together constitute one and the
      same instrument.

13.   This Agreement shall not be assigned by any party without the prior
      written consent of the Principal Servicer in the case of assignment by any
      Investment Company, or of the Investment Companies in the case of
      assignment by the Principal Servicer, except that any party may assign to
      a successor all of or a substantial portion of its business to a party
      controlling, controlled by, or under common control with such party.
      Nothing in this Section 13 shall prevent the Principal Servicer from
      delegating its responsibilities to another entity to the extent provided
      herein.

      IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.



                                      Investment Companies (listed on Schedule
A)


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


                                      Federated Securities Corp.


Attest:         /s/ Leslie K. Platt         By: /s/ Byron F. Bowman
Title:          Assistant Secretary         Title:  Vice President



<PAGE>


                                    Exhibit 1
                                     to the
                   Principal Shareholder Servicer's Agreement
                          Related to Class B Shares of
                                    the Funds

      The following provisions are hereby incorporated and made part of the
Principal Shareholder Servicer's Agreement (the "Principal Shareholder
Servicer's Agreement") as of the 24th day of October, 1997, by and between those
Investment Companies on behalf of the Portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") and Classes of Shares
("Classes") listed on Schedule A to Exhibit 1, as may be amended from time to
time, having their principal office and place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of
Agreement and Federated Securities Corp. as the principal shareholder servicer
(the "Principal Servicer"). Each of the Exhibits hereto is incorporated herein
in its entirety and made a part hereof. In the event of any inconsistency
between the terms of this Exhibit and the terms of the Principal Shareholder
Servicer's Agreement, the terms of this Exhibit shall govern.

   1. Each Investment Company hereby appoints the Principal Servicer to arrange
      for the rendition of the shareholder services in respect of Class B Shares
      ("Class B Shares") of each Fund. Pursuant to this appointment, the
      Principal Servicer is authorized to select various companies including but
      not limited to Federated Shareholder Services ("Companies or a Company ")
      to provide such services.

   2.    (a) In consideration of the Principal Servicer's Services under this
         Agreement in respect of the Class B Shares each Fund agrees to pay the
         Principal Servicer or at its direction its "Allocable Portion" (as
         hereinafter defined) of a fee (the "Servicing Fee") equal to 0.25 of 1%
         per annum of the average daily net asset value of the Class B Shares of
         the Fund outstanding from time to time, provided however, that in the
         event the Fund operates as a fund of funds (a "FOF Fund") by investing
         the proceeds of the issuance of its Class B Shares in Class A Shares of
         another fund (the "Other Fund") and the Principal Shareholder Servicer
         receives a servicing fee in respect of the Class A Shares of the Other
         Fund so acquired by the FOF Fund, the Servicing Fee payable in respect
         of such Class B Shares of the FOF Fund will be reduced by the amount of
         the servicing fee actually received by the Principal Shareholder
         Servicer or its assign from the Other Fund in respect of the Class A
         Shares of the Other Fund acquired with the proceeds of such Class B
         Shares of the FOF Fund.

      (b)(i) The Principal Servicer will be deemed to have fully earned its
         Allocable Portion (computed as of any date) of the Servicing Fee
         payable in respect of the Class B Shares of a Fund (and to have
         satisfied its obligation to arrange for shareholder services in respect
         of such Class B Shares) on the date it has arranged for shareholder
         services to be performed by Federated Shareholder Services by payment
         of the lump sum contemplated by Alternative A to Exhibit 1 to the
         Shareholder Services Agreement among the Principal Servicer, Federated
         Shareholder Services and the Fund dated as of the date hereof (the
         "Shareholder Services Agreement") to Federated Shareholder Services
         (whose obligations are fully supported by its parent company) in
         respect of each "Commission Share" (as defined in the Allocation
         Schedule attached hereto in Schedule B) of the Fund, taken into account
         in determining such Principal Servicer's Allocable Portion of such
         Servicing Fees as of such date. The Principal Servicer shall not be
         deemed to have any other duties in respect of the Shares and its
         Allocable Portion of the Servicing Fees to which the preceding sentence
         applies and such arrangements shall be deemed a separate and distinct
         contractual arrangement from that described in clause (ii).

         (ii) The Principal Servicer will be deemed to have fully earned any
         Servicing Fees not included in its Allocable Portion (i.e., those
         attributable to Shares in respect of which Alternative A under Exhibit
         1 to the Shareholder Services Agreement is not applicable) as such
         services are performed in respect of such Shares.

      (c)Notwithstanding anything to the contrary set forth in this Exhibit,
         the Principal Shareholder Agreement, or (to the extent waiver thereof
         is permitted thereby) applicable law, each Investment Company's
         obligation to pay the Principal Servicer's Allocable Portion of the
         Servicing Fees payable in respect of the Class B Shares of a Fund shall
         not be terminated or modified for any reason (including a termination
         of this Principal Shareholder Servicer's Agreement as it relates to the
         Fund) except to the extent required by a change in the Investment
         Company Act of 1940 (the "Act") or the Conduct Rules of the National
         Association of Securities Dealers, Inc., in either case enacted or
         promulgated after May 1, 1997, or in connection with a "Complete
         Termination" (as hereinafter defined) in respect of the Class B Shares
         of such Fund.

      (d)Notwithstanding anything to the contrary in this Exhibit, the
         Principal Shareholder Agreement, or (to the extent waiver thereof is
         permitted thereby) applicable law, the Principal Servicer may assign,
         sell or pledge (collectively, "Transfer") its rights to its Allocable
         Portion of the Servicing Fees (but not its obligations to the
         Investment Companies under this Principal Shareholder Servicer's
         Agreement) in respect of the Class B Shares of a Fund to raise funds to
         make the expenditures related to the Services and in connection
         therewith upon receipt of notice of such Transfer, the Investment
         Company shall pay to the assignee, purchaser or pledgee (collectively
         with their subsequent transferees, "Transferees") such portion of the
         Principal Servicer's Allocable Portion of the Servicing Fees in respect
         of the Class B Shares of the Fund so Transferred. Except as provided in
         (c) above and notwithstanding anything to the contrary set forth
         elsewhere in this Exhibit, the Principal Shareholder Agreement, or (to
         the extent waiver thereof is permitted thereby) applicable law, to the
         extent the Principal Servicer has Transferred its rights thereto to
         raise funds as aforesaid, the Investment Companies' obligation to pay
         to the Principal Servicer's Transferees the Principal Servicer's
         Allocable Portion of the Servicing Fees payable in respect of the Class
         B Shares of each Fund shall be absolute and unconditional and shall not
         be subject to dispute, offset, counterclaim or any defense whatsoever,
         including without limitation, any of the foregoing based on the
         insolvency or bankruptcy of the Principal Servicer, Federated
         Shareholder Services (or its parent) or the failure of Federated
         Shareholder Services (or its parent) to perform its Irrevocable Service
         Commitment (it being understood that such provision is not a waiver of
         the Investment Companies' right to pursue such Principal Servicer and
         enforce such claims against the assets of such Principal Servicer other
         than the Principal Servicer's right to the Distribution Fees, Servicing
         Fees and CDSCs in respect of the Class B Shares of the Fund which have
         been so transferred in connection with such Transfer). The Fund agrees
         that each such Transferee is a third party beneficiary of the
         provisions of this clause (d) but only insofar as those provisions
         relate to Servicing Fees transferred to such Transferee.

      (e)For purposes of this Principal Shareholder Servicer's Agreement, the
         term Allocable Portion of Servicing Fees payable in respect of the
         Class B Shares of any Fund shall mean the portion of such Servicing
         Fees allocated to such Principal Servicer in accordance with the
         Allocation Schedule attached hereto as Schedule B.

      (f)For purposes of this Principal Shareholder Servicer's Contract, the
         term "Complete Termination" of shareholder servicing arrangements in
         respect of Class B Shares of a Fund means a termination of shareholder
         servicing arrangements involving the complete cessation of payments of
         Servicing Fees in respect of all Class B Shares, and the complete
         cessation of payments of servicing fees for every existing and future
         class of shares of the Fund and any successor Fund or any Fund
         acquiring a substantial portion of the assets of the Fund ,which has
         substantially similar characteristics to the Class B Shares taking into
         account the manner and amount of sales charge, servicing fee,
         contingent deferred sales charge or other similar charge borne directly
         or indirectly by the holders of such shares.

   3. The Principal Servicer may enter into separate written agreements with
      Companies to provide the services set forth in Paragraph 1 herein. The
      schedules of fees to be paid such Companies and the basis upon which such
      fees will be paid shall be determined from time to time by the Principal
      Servicer in its sole discretion.

   4. The Principal Servicer will prepare reports to the Board of
      Trustees/Directors of the Investment Companies on a quarterly basis
      showing amounts expended hereunder including amounts paid to Companies and
      the purpose for such expenditures.

      In consideration of the mutual covenants set forth in the Principal
Shareholder Servicer's Contract, the Principal Servicer and the Investment
Companies hereby execute and deliver this Exhibit with respect to the Class B
Shares of each Fund.

      Witness the due execution hereof this 24th day of October, 1997.


ATTEST:                          INVESTMENT COMPANIES (listed on Schedule A)

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


ATTEST:                          FEDERATED SECURITIES CORP.


By:  /s/ Leslie K. Platt         By: /s/ Byron F. Bowman
Title: Assistant Secretary       Title: Vice President


<PAGE>


                                                               Schedule A

Date: 10/24/97       PRINCIPAL SHAREHOLDER SERVICER'S AGREEMENT



                     Federated American Leaders Fund, Inc.
                        Class B Shares

                     Federated Equity Funds
                        Federated Aggressive Growth Fund
                        Class B Shares

                        Federated Growth Strategies Fund
                        Class B Shares

                        Federated Small Cap Strategies Fund
                        Class B Shares

                        Federated Capital Appreciation Fund
                        Class B Shares

                     Federated Equity Income Fund, Inc.
                        Class B Shares

                     Federated Fund for U.S. Government Securities, Inc.
                        Class B Shares

                     Federated Government Income Securities, Inc.
                        Class B Shares

                     Federated High Income Bond Fund, Inc.
                        Class B Shares

                     Federated Municipal Opportunities Fund, Inc.
                        Class B Shares

                     Federated Municipal Securities Fund, Inc.
                        Class B Shares

                     Federated Stock and Bond Fund, Inc.
                        Class B Shares

                     Federated Utility Fund, Inc.
                        Class B Shares

                     Fixed Income Securities, Inc.
                        Federated Strategic Income Fund
                        Class B Shares

                     International Series, Inc.
                        Federated International Equity Fund
                        Class B Shares

                        Federated International Income Fund
                        Class B Shares



<PAGE>


                     Investment Series Funds, Inc.
                        Federated Bond Fund
                        Class B Shares

                     Liberty U.S. Government Money Market Trust
                        Class B Shares

                     Municipal Securities Income Trust
                        Federated Pennsylvania Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated World Utility Fund
                        Class B Shares

                        Federated Asia Pacific Growth Fund
                        Class B Shares

                        Federated Emerging Markets Fund
                        Class B Shares

                        Federated European Growth Fund
                        Class B Shares

                        Federated International Small Company Fund
                        Class B Shares

                        Federated Latin American Growth Fund
                        Class B Shares

                        Federated International High Income Fund
                        Class B Shares

                        Federated International Growth Fund
                        Class B Shares


The following Funds were added as of December 1, 1997:

                     Municipal Securities Income Trust
                        Federated California Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated Global Equity Income Fund
                        Class B Shares







                                                       Exhibit 9 under Form N-1A
                                              Exhibit 10 under Item 601/Reg. S-K


                         SHAREHOLDER SERVICES AGREEMENT


     THIS AGREEMENT, is made as of the 24th day of October, 1997, by and between
those Investment Companies on behalf of the Portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") and Classes of Shares
("Classes") listed on Schedule A to Exhibit 1, as it may be amended from time to
time, having their principal office and place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779 and who have approved this form of Agreement
and Federated Securities Corp.("FSC"), a Pennsylvania Corporation, having its
principal office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 and Federated Shareholder Services, a Delaware business
trust, having its principal office and place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS"). Each of the Exhibits hereto
is incorporated herein in its entirety and made a part hereof. In the event of
any inconsistency between the terms of this Agreement and the terms of any
applicable Exhibit, the terms of the applicable Exhibit shall govern.

1.   FSC as Principal Servicer  (Principal  Servicer") hereby contracts with FSS
     to render or cause to be rendered personal services to shareholders  and/or
     the  maintenance of accounts of  shareholders of each Class of the Funds to
     which this Agreement is made applicable by an Exhibit hereto  ("Services").
     In addition to providing  Services  directly to  shareholders of the Funds,
     FSS  is  hereby  appointed  the  Investment  Companies'  agent  to  select,
     negotiate  and  subcontract  for the  performance  of Services.  FSS hereby
     accepts  such  appointment.  FSS agrees to provide or cause to be  provided
     Services which, in its best judgment (subject to supervision and control of
     the Investment Companies' Boards of Trustees or Directors,  as applicable),
     are  necessary  or desirable  for  shareholders  of the Funds.  FSS further
     agrees  to  provide  the  Investment  Companies,  upon  request,  a written
     description  of  the  Services  which  FSS  is  providing  hereunder.   The
     Investment Companies,  on behalf of the Funds and each Class subject hereto
     consents to the  appointment  of FSS to act in its  capacity  as  described
     herein and agrees to look solely to FSS for performance of the Services.

2.    The term of the undertaking of FSS to render services hereunder in respect
      of any Class of any Fund and the manner and amount of compensation to be
      paid in respect thereof shall be specified in respect of each Class of the
      Funds to which this Agreement is made applicable by an Exhibit hereto. FSS
      agrees to look solely to the Principal Servicer for its compensation
      hereunder.

3.    This Agreement shall become effective in respect of any Class of Shares of
      a Fund upon execution of an Exhibit relating to such Class of the Fund.
      Once effective in respect of any Class of shares, this Agreement shall
      continue in effect for one year from the date of its execution, and
      thereafter for successive periods of one year only if the form of this
      Agreement is approved at least annually by the Board of each Investment
      Company, including a majority of the members of the Board of the
      Investment Company who are not interested persons of the Investment
      Company ("Independent Board Members") cast in person at a meeting called
      for that purpose.

4. Notwithstanding paragraph 3, this Agreement may be terminated as follows:

(a)        By any Investment Company as to any Fund at any time, without the
           payment of any penalty, by the vote of a majority of the Independent
           Board Members of any Investment Company or by a vote of a majority of
           the outstanding voting securities of any Fund as defined in the
           Investment Company Act of 1940 on sixty (60) days' written notice to
           the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment as defined in the
Investment Company Act of 1940; and

5.    FSS agrees to obtain any taxpayer identification number certification from
      each shareholder of the Funds to which it provides Services that is
      required under Section 3406 of the Internal Revenue Code, and any
      applicable Treasury regulations, and to provide each Investment Company or
      its designee with timely written notice of any failure to obtain such
      taxpayer identification number certification in order to enable the
      implementation of any required backup withholding.

6.   FSS shall not be liable for any error of  judgment or mistake of law or for
     any loss suffered by any Investment  Company in connection with the matters
     to which this  Agreement  relates,  except a loss  resulting  from  willful
     misfeasance,  bad faith or gross  negligence on its part in the performance
     of its  duties or from  reckless  disregard  by it of its  obligations  and
     duties under this  Agreement.  FSS shall be entitled to rely on and may act
     upon advice of counsel (who may be counsel for such Investment  Company) on
     all matters, and shall be without liability for any action reasonably taken
     or omitted  pursuant  to such  advice.  Any  person,  even  though  also an
     officer, trustee, partner, employee or agent of FSS, who may be or become a
     member of such Investment  Company's Board,  officer,  employee or agent of
     any Investment  Company,  shall be deemed,  when rendering services to such
     Investment  Company or acting on any  business of such  Investment  Company
     (other  than  services or  business  in  connection  with the duties of FSS
     hereunder)  to be  rendering  such  services  to or acting  solely for such
     Investment  Company and not as an officer,  trustee,  partner,  employee or
     agent or one under the control or direction of FSS even though paid by FSS.

      This Section 6 shall survive termination of this Agreement.

7.    No provision of this Agreement may be changed, waived, discharged or
      terminated orally, but only by an instrument in writing signed by the
      party against which an enforcement of the change, waiver, discharge or
      termination is sought.

8.    FSS is expressly put on notice of the limitation of liability as set forth
      in the Declaration of Trust of each Investment Company that is a
      Massachusetts business trust and agrees that the obligations assumed by
      each such Investment Company pursuant to this Agreement shall be limited
      in any case to such Investment Company and its assets and that FSS shall
      not seek satisfaction of any such obligations from the shareholders of
      such Investment Company, the Trustees, Officers, Employees or Agents of
      such Investment Company, or any of them.

9.    The execution and delivery of this Agreement have been authorized by the
      Trustees of FSS and signed by an authorized officer of FSS, 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 FSS, but bind only the trust property of FSS
      as provided in the Declaration of Trust of FSS.



<PAGE>


10.   Notices of any kind to be given hereunder shall be in writing (including
      facsimile communication) and shall be duly given if delivered to any
      Investment Company at the following address: Federated Investors Tower,
      Pittsburgh, PA 15222-3779, Attention: President and if delivered to FSS at
      Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
      President.

11.   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. If any provision of this Agreement shall be held
      or made invalid by a court or regulatory agency decision, statute, rule or
      otherwise, the remainder of this Agreement shall not be affected thereby.
      Subject to the provisions of Sections 3 and 4, hereof, this Agreement
      shall be binding upon and shall inure to the benefit of the parties hereto
      and their respective successors and shall be governed by Pennsylvania law;
      provided, however, that nothing herein shall be construed in a manner
      inconsistent with the Investment Company Act of 1940 or any rule or
      regulation promulgated by the Securities and Exchange Commission
      thereunder.

12.   This Agreement may be executed by different parties on separate
      counterparts, each of which, when so executed and delivered, shall be an
      original, and all such counterparts shall together constitute one and the
      same instrument.

13.   This Agreement shall not be assigned by any party without the prior
      written consent of the parties hereto. Nothing in this Section 13 shall
      prevent FSS from delegating its responsibilities to another entity to the
      extent provided herein.

      IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.



                                      Investment Companies (listed on Schedule
A)


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


                                      Federated Shareholder Services


Attest:/s/ Leslie K. Platt            By:   /s/ Byron F. Bowman
Title:   Assistant Secretary          Title:             Vice President


                                      Federated Securities Corp.


Attest: /s/ Leslie K. Platt           By:  /s/ Byron F. Bowman
Title:   Assistant Secretary          Title:             Vice President


<PAGE>


                                    EXHIBIT 1
                        TO SHAREHOLDER SERVICES AGREEMENT
                              FOR CLASS B SHARES OF
                            THE INVESTMENT COMPANIES

      1. The Shareholder Services Agreement for Shares of the Investment
Companies on behalf of the portfolios (individually referred to as a "Fund" and
collectively as "Funds") and the classes of shares ("Classes") listed on the
attached Schedule A dated October 24, 1997 among Federated Securities Corp.
("Principal Servicer"), Federated Shareholder Services ("Class Servicer") and
the Investment Companies is hereby made applicable on the terms set forth herein
to the Class B Shares of the above-referenced Funds. In the event of any
inconsistency between the terms of this Exhibit and the Shareholder Services
Agreement, the terms of this Exhibit shall govern.

      2. In connection with the Services to be rendered to holders of Class B
Shares of each Fund, the Principal Servicer and Class Servicer agree that the
Principal Servicer shall retain and compensate the Class Servicer for its
Services in respect of the Class B Shares of the Fund on one of the following
alternative basis as the Principal Servicer shall elect:

            ALTERNATIVE A3: The Principal Servicer shall pay the Class Servicer
      a dollar amount as set forth on Schedule A per Class B Commission Share
      (as defined in the Principal Shareholder Servicer's Agreement) of the
      Fund. Class Servicer agrees that upon receipt of such payment (which shall
      be deemed to be full and adequate consideration for an irrevocable service
      commitment (the "Irrevocable Service Commitment") of Class Servicer
      hereunder), Class Servicer shall be unconditionally bound and obligated to
      either: (1) provide the Services in respect of such Commission Share and
      all other Shares derived therefrom via reinvestment of dividends, free
      exchanges or otherwise for so long as the same is outstanding or (2) in
      the event the Class Servicer for the Class B Shares is terminated by the
      Investment Company, to arrange for a replacement Class Servicer
      satisfactory to the Investment Company to perform such services, at no
      additional cost to the Fund.

            ALTERNATIVE B4: If Alternative A is not elected, the Principal
      Servicer shall pay the Class Servicer twenty five basis points (0.25%) per
      annum on the average daily net asset value of each Class B Share of the
      Fund monthly in arrears. The Class Servicer agrees that such payment is
      full and adequate consideration for the Services to be rendered by it to
      the holder of such Class B Share.

      3. In the event pursuant to paragraph 2 above, Alternative A has been
elected and the Class Servicer is terminated as Class Servicer for the Class B
Shares of the Fund, the Class Servicer agrees to pay to any successor Class
Servicer for the Class B Shares of the Fund any portion of the excess, if any,
of (A) the Servicing Fees received by it hereunder in respect of Class B Shares
of the Fund plus interest thereon at the percent as set forth on Schedule A per
annum minus (B) the costs it incurred hereunder in respect of the Class B Shares
of the Fund prior to such termination.

            IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.


Attest:                               FEDERATED SECURITIES CORP.


By: /s/ Leslie K. Platt               By:  /s/ Byron F. Bowman
Title:   Assistant Secretary          Title:             Vice President

Attest:                               FEDERATED SHAREHOLDER SERVICES


By:/s/ Leslie K. Platt                By:   /s/ Byron F. Bowman
Title:   Assistant Secretary          Title:             Vice President

Attest:                               INVESTMENT COMPANIES
                                      (listed on Schedule A)


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



<PAGE>


                                                               Schedule A

Date:   10/24/97     SHAREHOLDER SERVICES AGREEMENT



                     Federated American Leaders Fund, Inc.
                        Class B Shares

                     Federated Equity Funds
                        Federated Aggressive Growth Fund
                        Class B Shares

                        Federated Growth Strategies Fund
                        Class B Shares

                        Federated Small Cap Strategies Fund
                        Class B Shares

                        Federated Capital Appreciation Fund
                        Class B Shares

                     Federated Equity Income Fund, Inc.
                        Class B Shares

                     Federated Fund for U.S. Government Securities, Inc.
                        Class B Shares

                     Federated Government Income Securities, Inc.
                        Class B Shares

                     Federated High Income Bond Fund, Inc.
                        Class B Shares

                     Federated Municipal Opportunities Fund, Inc.
                        Class B Shares

                     Federated Municipal Securities Fund, Inc.
                        Class B Shares

                     Federated Stock and Bond Fund, Inc.
                        Class B Shares

                     Federated Utility Fund, Inc.
                        Class B Shares

                     Fixed Income Securities, Inc.
                        Federated Strategic Income Fund
                        Class B Shares

                     International Series, Inc.
                        Federated International Equity Fund
                        Class B Shares

                        Federated International Income Fund
                        Class B Shares



<PAGE>


                     Investment Series Funds, Inc.
                        Federated Bond Fund
                        Class B Shares

                     Liberty U.S. Government Money Market Trust
                        Class B Shares

                     Municipal Securities Income Trust
                        Federated Pennsylvania Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated World Utility Fund
                        Class B Shares

                        Federated Asia Pacific Growth Fund
                        Class B Shares

                        Federated Emerging Markets Fund
                        Class B Shares

                        Federated European Growth Fund
                        Class B Shares

                        Federated International Small Company Fund
                        Class B Shares

                        Federated Latin American Growth Fund
                        Class B Shares

                        Federated International High Income Fund
                        Class B Shares

                        Federated International Growth Fund
                        Class B Shares




The following Funds were added as of December 1, 1997:

                     Municipal Securities Income Trust
                        Federated California Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated Global Equity Income Fund
                        Class B Shares





                                                       Exhibit 9 under Form N-1A
                                              Exhibit 10 under Item 601/Reg. S-K

                              Amended and Restated
                         SHAREHOLDER SERVICES AGREEMENT


     THIS AGREEMENT, amended and restated as of the first day of September,
1995, (originally made and enterered into as of the first day of March, 1994),
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 and who have approved this
form of Agreement (individually referred to herein as a "Fund" and collectively
as "Funds") and Federated Shareholder Services, a Delaware business trust,
having its principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 ("FSS").

1.    The Funds hereby appoint FSS to render or cause to be rendered personal
      services to shareholders of the Funds and/or the maintenance of accounts
      of shareholders of the Funds ("Services"). In addition to providing
      Services directly to shareholders of the Funds, FSS is hereby appointed
      the Funds' agent to select, negotiate and subcontract for the performance
      of Services. FSS hereby accepts such appointments. FSS agrees to provide
      or cause to be provided Services which, in its best judgment (subject to
      supervision and control of the Funds' Boards of Trustees or Directors, as
      applicable), are necessary or desirable for shareholders of the Funds. FSS
      further agrees to provide the Funds, upon request, a written description
      of the Services which FSS is providing hereunder.

2.    During the term of this Agreement, each Fund will pay FSS and FSS agrees
      to accept as full compensation for its services rendered hereunder a fee
      at an annual rate, calculated daily and payable monthly, up to 0.25% of 1%
      of average net assets of each Fund.

      For the payment period in which this Agreement becomes effective or
      terminates with respect to any Fund, there shall be an appropriate
      proration of the monthly fee on the basis of the number of days that this
      Agreement is in effect with respect to such Fund during the month.

3.    This Agreement shall continue in effect for one year from the date of its
      execution, and thereafter for successive periods of one year only if the
      form of this Agreement is approved at least annually by the Board of each
      Fund, including a majority of the members of the Board of the Fund who are
      not interested persons of the Fund ("Independent Board Members") cast in
      person at a meeting called for that purpose.

4. Notwithstanding paragraph 3, this Agreement may be terminated as follows:

(a)        at any time, without the payment of any penalty, by the vote of a
           majority of the Independent Board Members of any Fund or by a vote of
           a majority of the outstanding voting securities of any Fund as
           defined in the Investment Company Act of 1940 on sixty (60) days'
           written notice to the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment as defined in the
Investment Company Act of 1940; and

(c)  by any party to the  Agreement  without  cause by giving the other party at
     least sixty (60) days' written notice of its intention to terminate.

5.    FSS agrees to obtain any taxpayer identification number certification from
      each shareholder of the Funds to which it provides Services that is
      required under Section 3406 of the Internal Revenue Code, and any
      applicable Treasury regulations, and to provide each Fund or its designee
      with timely written notice of any failure to obtain such taxpayer
      identification number certification in order to enable the implementation
      of any required backup withholding.

6.   FSS shall not be liable for any error of  judgment or mistake of law or for
     any loss suffered by any Fund in connection  with the matters to which this
     Agreement relates,  except a loss resulting from willful  misfeasance,  bad
     faith or gross  negligence on its part in the  performance of its duties or
     from  reckless  disregard  by it of its  obligations  and duties under this
     Agreement.  FSS  shall be  entitled  to rely on and may act upon  advice of
     counsel  (who may be counsel  for such Fund) on all  matters,  and shall be
     without  liability for any action  reasonably  taken or omitted pursuant to
     such advice.  Any person,  even though also an officer,  trustee,  partner,
     employee  or agent of FSS,  who may be or  become a member  of such  Fund's
     Board,  officer,  employee  or agent of any  Fund,  shall be  deemed,  when
     rendering  services  to such Fund or acting  on any  business  of such Fund
     (other  than  services or  business  in  connection  with the duties of FSS
     hereunder) to be rendering  such services to or acting solely for such Fund
     and not as an officer, trustee, partner, employee or agent or one under the
     control or direction of FSS even though paid by FSS.

      This Section 6 shall survive termination of this Agreement.

7.    No provision of this Agreement may be changed, waived, discharged or
      terminated orally, but only by an instrument in writing signed by the
      party against which an enforcement of the change, waiver, discharge or
      termination is sought.

8.    FSS is expressly put on notice of the limitation of liability as set forth
      in the Declaration of Trust of each Fund that is a Massachusetts business
      trust and agrees that the obligations assumed by each such Fund pursuant
      to this Agreement shall be limited in any case to such Fund and its assets
      and that FSS shall not seek satisfaction of any such obligations from the
      shareholders of such Fund, the Trustees, Officers, Employees or Agents of
      such Fund, or any of them.

9.    The execution and delivery of this Agreement have been authorized by the
      Trustees of FSS and signed by an authorized officer of FSS, 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 FSS, but bind only the trust property of FSS
      as provided in the Declaration of Trust of FSS.

10.   Notices of any kind to be given hereunder shall be in writing (including
      facsimile communication) and shall be duly given if delivered to any Fund
      and to such Fund at the following address: Federated Investors Tower,
      Pittsburgh, PA 15222-3779, Attention: President and if delivered to FSS at
      Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
      President.

11.   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. If any provision of this Agreement shall be held
      or made invalid by a court or regulatory agency decision, statute, rule or
      otherwise, the remainder of this Agreement shall not be affected thereby.
      Subject to the provisions of Sections 3 and 4, hereof, this Agreement
      shall be binding upon and shall inure to the benefit of the parties hereto
      and their respective successors and shall be governed by Pennsylvania law;
      provided, however, that nothing herein shall be construed in a manner
      inconsistent with the Investment Company Act of 1940 or any rule or
      regulation promulgated by the Securities and Exchange Commission
      thereunder.

12.   This Agreement may be executed by different parties on separate
      counterparts, each of which, when so executed and delivered, shall be an
      original, and all such counterparts shall together constitute one and the
      same instrument.

13.   This Agreement shall not be assigned by any party without the prior
      written consent of FSS in the case of assignment by any Fund, or of the
      Funds in the case of assignment by FSS, except that any party may assign
      to a successor all of or a substantial portion of its business to a party
      controlling, controlled by, or under common control with such party.
      Nothing in this Section 14 shall prevent FSS from delegating its
      responsibilities to another entity to the extent provided herein.

      IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below 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 Shareholder Services


/s/ Joseph M. Huber                 By: /s/ John W. McGonigle
      Joseph M. Huber                     John W. McGonigle
      Secretary                           President





<PAGE>



                                    Exhibit 1

               AMENDED AND RESTATED SHAREHOLDER SERVICES AGREEMENT

                        Automated Government Money Trust
                            Cash Trust Series, Inc.:
                             Government Cash Series
                              Municipal Cash Series
                                Prime Cash Series
                              Treasury Cash Series
              Federated Adjustable Rate U.S. Government Fund, Inc.
                      Federated American Leaders Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                               Federated ARMs Fund
                          Institutional Service Shares
                              Institutional Shares
                              Federated Core Trust:
                            High Yield Bond Portfolio
                             Federated Equity Funds:
                        Federated Aggressive Growth Fund
                                 Class A Shares
                                 Class C Shares
                       Federated Capital Appreciation Fund
                                 Class A Shares
                                 Class C Shares
                        Federated Growth Strategies Fund
                                 Class A Shares
                                 Class C Shares
                       Federated Small Cap Strategies Fund
                                 Class A Shares
                                 Class C Shares
                       Federated Equity Income Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
               Federated Fund for U.S. Government Securities, Inc.
                                 Class A Shares
                                 Class C Shares
                              Federated GNMA Trust
                          Institutional Service Shares
                              Institutional Shares
                  Federated Government Income Securities, Inc.
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                           Federated Government Trust"
                       Automated Government Cash Reserves
                        Automated Treasury Cash Reserves
                           U.S. Treasury Cash Reserves
                          Institutional Service Shares
                              Institutional Shares
                      Federated High Income Bond Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                           Federated High Yield Trust
                       Federated Income Securities Trust:
                        Federated Short-Term Income Fund
                          Institutional Service Shares
                              Institutional Shares
                       Federated Intermediate Income Fund
                          Institutional Service Shares
                              Institutional Shares
                             Federated Income Trust
                          Institutional Service Shares
                              Institutional Shares
                             Federated Index Trust:
                             Federated Max-Cap Fund
                                 Class C Shares
                          Institutional Service Shares
                              Institutional Shares
                             Federated Mid-Cap Fund
                             Federated Mini-Cap Fund
                                 Class C Shares
                              Institutional Shares
                         Federated Institutional Trust:
               Federated Institutional Short-Term Government Fund
                           Federated Investment Trust:
                            Federated Bond Index Fund
                              Institutional Shares
                          Institutional Service Shares
                             Federated Master Trust
                  Federated Municipal Opportunities Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                    Federated Municipal Securities Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                           Federated Municipal Trust:
                          Alabama Municipal Cash Trust
                         California Municipal Cash Trust
                          Institutional Service Shares
                              Institutional Shares
                        Connecticut Municipal Cash Trust
                          Institutional Service Shares
                          Florida Municipal Cash Trust
                                 Cash II Shares
                              Institutional Shares
                          Georgia Municipal Cash Trust
                          Maryland Municipal Cash Trust
                       Massachusetts Municipal Cash Trust
                          Institutional Service Shares
                            Boston 1784 Funds Shares
                          Michigan Municipal Cash Trust
                          Institutional Service Shares
                              Institutional Shares
                         Minnesota Municipal Cash Trust
                               Cash Series Shares
                              Institutional Shares
                         New Jersey Municipal Cash Trust
                          Institutional Service Shares
                              Institutional Shares
                          New York Municipal Cash Trust
                                 Cash II Shares
                          Institutional Service Shares
                       North Carolina Municipal Cash Trust
                            Ohio Municipal Cash Trust
                                 Cash II Shares
                              Institutional Shares
                          Institutional Service Shares
                        Pennsylvania Municipal Cash Trust
                               Cash Series Shares
                          Institutional Service Shares
                              Institutional Shares
                         Tennessee Municipal Cash Trust
                              Institutional Shares
                          Institutional Service Shares
                          Virginia Municipal Cash Trust
                          Institutional Service Shares
                              Institutional Shares
                      Federated Short-Term Municipal Trust
                          Institutional Service Shares
                              Institutional Shares
                   Federated Short-Term U.S. Government Trust
                       Federated Stock and Bond Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                              Federated Stock Trust
                            Federated Tax-Free Trust
                       Federated U.S. Government Bond Fund
              Federated U.S. Government Securities Fund: 1-3 Years
                          Institutional Service Shares
                              Institutional Shares
              Federated U.S. Government Securities Fund: 2-5 Years
                          Institutional Service Shares
                              Institutional Shares
             Federated U. S. Government Securities Fund: 5-10 Years
                          Institutional Service Shares
                              Institutional Shares
                         Fixed Income Securities, Inc.:
                           Federated Limited Term Fund
                                 Class A Shares
                                 Class F Shares
                      Federated Limited Term Municipal Fund
                                 Class A Shares
                                 Class F Shares


                                     <PAGE>


                         Federated Strategic Income Fund
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                      Federated Total Return Series, Inc.:
                   Federated Limited Duration Government Fund
                              Institutional Shares
                          Institutional Service Shares
                        Federated Total Return Bond Fund
                              Institutional Shares
                          Institutional Service Shares
                     Federated Total Return Government Fund
                              Institutional Shares
                          Institutional Service Shares
                  Federated Total Return Limited Duration Fund
                              Institutional Shares
                          Institutional Service Shares
                          Federated Utility Fund, Inc.
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                          Intermediate Municipal Trust:
                     Federated Intermediate Municipal Trust
               Federated Pennsylvania Intermediate Municipal Trust
                           International Series, Inc.:
                       Federated International Equity Fund
                                 Class A Shares
                                 Class C Shares
                       Federated International Income Fund
                                 Class A Shares
                                 Class C Shares
                         Investment Series Funds, Inc.:
                               Federated Bond Fund
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares
                 Edward D. Jones & Co. Daily Passport Cash Trust
                        Liberty Term Trust, Inc. -- 1999
                   Liberty U.S. Government Money Market Trust
                                 Class A Shares
                                Liquid Cash Trust
                              Managed Series Trust:
                        Federated Aggressive Growth Fund
                              Institutional Shares
                                  Select Shares
                    Federated Managed Growth and Income Fund
                              Institutional Shares
                                  Select Shares
                          Federated Managed Growth Fund
                              Institutional Shares
                                  Select Shares


                                     <PAGE>


                          Federated Managed Income Fund
                              Institutional Shares
                                  Select Shares
                          Money Market Management, Inc.
                         Money Market Obligations Trust:
                         Automated Cash Management Trust
                                 Cash II Shares
                              Institutional Shares
                           Government Obligations Fund
                              Institutional Shares
                          Institutional Service Shares
                     Government Obligations Tax-Managed Fund
                              Institutional Shares
                          Institutional Service Shares
                             Prime Obligations Fund
                              Institutional Shares
                          Institutional Service Shares
                            Tax-Free Obligations Fund
                              Institutional Shares
                          Institutional Service Shares
                            Treasury Obligations Fund
                          Institutional Capital Shares
                              Institutional Shares
                          Institutional Service Shares
                       Money Market Obligations Trust II:
                           Municipal Obligations Fund
                          Institutional Capital Shares
                          Institutional Service Shares
                              Institutional Shares
                           Prime Cash Obligations Fund
                          Institutional Capital Shares
                          Institutional Service Shares
                              Institutional Shares
                          Prime Value Obligations Fund
                          Institutional Capital Shares
                          Institutional Service Shares
                              Institutional Shares
                               Money Market Trust
                       Municipal Securities Income Trust:
                   Federated California Municipal Income Fund
                                 Class F Shares
                 Federated Michigan IntermediateMunicipal Trust
                    Federated New York Municipal Income Fund
                                 Class F Shares
                      Federated Ohio Municipal Income Fund
                                 Class F Shares
                  Federated Pennsylvania Municipal Income Fund
                                 Class A Shares


                                     <PAGE>


                           Tax-Free Instruments Trust
                          Institutional Service Shares
                                Investment Shares
                       Trust for Government Cash Reserves
                 Trust for Short-Term U.S. Government Securities
                       Trust for U.S. Treasury Obligations
                         World Investment Series, Inc.:
                       Federated Asia Pacific Growth Fund
                                 Class A Shares
                                 Class C Shares
                         Federated Emerging Markets Fund
                                 Class A Shares
                                 Class C Shares
                         Federated European Growth Fund
                                 Class A Shares
                                 Class C Shares
                       Federated Global Equity Income Fund
                                 Class A Shares
                                 Class C Shares
                       Federated International Growth Fund
                                 Class A Shares
                                 Class C Shares
                    Federated International High Income Fund
                                 Class A Shares
                                 Class C Shares
                   Federated International Small Company Fund
                                 Class A Shares
                                 Class C Shares
                      Federated Latin American Growth Fund
                                 Class A Shares
                                 Class C Shares
                          Federated World Utility Fund
                                 Class A Shares
                                 Class C Shares
                                 Class F Shares






                                                      Exhibit 11 under Form N-1A
                                              Exhibit 23 under Item 601/Reg. S-K


INDEPENDENT AUDITORS' CONSENT


To the Board of Directors and Shareholders of FEDERATED GOVERNMENT INCOME
   SECURITIES, INC.

We consent to the use in Post-Effective Amendment No. 37 to the Registration
Statement 2-74191 of Federated Government Income Securities, Inc. of our report
dated April 23, 1998 appearing in the Annual Report, which is incorporated by
reference in such Registration Statement, and to the reference to us under the
heading "Financial Highlights" in such Prospectuses.



By: /s/ Deloitte & Touche LLP
    DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
April 28, 1998





                                                      Exhibit 15 under Form N-1A
                                               Exhibit 1 under Item 601/Reg. S-K

                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.
                                DISTRIBUTION PLAN

         This Distribution Plan ("Plan") is adopted as of July 17, 1996, by the
      Board of Directors of FEDERATED GOVERNMENT INCOME SECURITIES, INC. (the
      "Corporation"), a Maryland Corporation with respect to certain classes of
      shares ("Classes") of the portfolios of the Corporation (the "Funds") set
      forth in exhibits hereto.

1.          This Plan is adopted pursuant to Rule 12b-1 under the Investment
            Company Act of 1940, as amended ("Act"), so as to allow the
            Corporation to make payments as contemplated herein, in conjunction
            with the distribution of Classes of the Funds ("Shares").

2.          This Plan is designed to finance activities of Federated Securities
            Corp. ("FSC") principally intended to result in the sale of Shares
            to include: (a) providing incentives to financial institutions
            ("Financial Institutions") to sell Shares; (b) advertising and
            marketing of Shares to include preparing, printing and distributing
            prospectuses and sales literature to prospective shareholders and
            with Financial Institutions; and (c) implementing and operating the
            Plan. In compensation for services provided pursuant to this Plan,
            FSC will be paid a fee in respect of the following Classes set forth
            on the applicable exhibit.

3.          Any payment to FSC in accordance with this Plan will be made
            pursuant to the "Distributor's Contract" entered into by the
            Corporation and FSC. Any payments made by FSC to Financial
            Institutions with funds received as compensation under this Plan
            will be made pursuant to the "Financial Institution Agreement"
            entered into by FSC and the Institution.

4.          FSC has the right (i) to select, in its sole discretion, the
            Financial Institutions to participate in the Plan and (ii) to
            terminate without cause and in its sole discretion any Financial
            Institution Agreement.

5.          Quarterly in each year that this Plan remains in effect, FSC shall
            prepare and furnish to the Board of Directors of the Corporation,
            and the Board of Directors shall review, a written report of the
            amounts expended under the Plan and the purpose for which such
            expenditures were made.



<PAGE>


6.          This Plan shall become effective with respect to each Class (i)
            after approval by majority votes of: (a) the Corporation's Board of
            Directors; (b) the members of the Board of the Corporation who are
            not interested persons of the Corporation and have no direct or
            indirect financial interest in the operation of the Corporation's
            Plan or in any related documents to the Plan ("Disinterested
            Directors"), cast in person at a meeting called for the purpose of
            voting on the Plan; and (c) the outstanding voting securities of the
            particular Class, as defined in Section 2(a)(42) of the Act and (ii)
            upon execution of an exhibit adopting this Plan with respect to such
            Class.

7.   This Plan shall remain in effect with respect to each Class  presently  set
     forth on an exhibit and any subsequent Classes added pursuant to an exhibit
     during  the  initial  year of this Plan for the period of one year from the
     date set  forth  above  and may be  continued  thereafter  if this  Plan is
     approved with respect to each Class at least  annually by a majority of the
     Corporation's  Board  of  Directors  and a  majority  of the  Disinterested
     Directors,  cast in person at a meeting called for the purpose of voting on
     such Plan.  If this Plan is adopted with respect to a Class after the first
     annual  approval by the  Directors  as described  above,  this Plan will be
     effective  as to  that  Class  upon  execution  of the  applicable  exhibit
     pursuant to the  provisions  of paragraph  6(ii) above and will continue in
     effect  until the next annual  approval of this Plan by the  Directors  and
     thereafter  for  successive  periods  of one year  subject to  approval  as
     described above.

8.          All material amendments to this Plan must be approved by a vote of
            the Board of Directors of the Corporation and of the Disinterested
            Directors, cast in person at a meeting called for the purpose of
            voting on it.

9.          This Plan may not be amended in order to increase materially the
            costs which the Classes may bear for distribution pursuant to the
            Plan without being approved by a majority vote of the outstanding
            voting securities of the Classes as defined in Section 2(a)(42) of
            the Act.

10.         This Plan may be terminated with respect to a particular Class at
            any time by: (a) a majority vote of the Disinterested Directors; or
            (b) a vote of a majority of the outstanding voting securities of the
            particular Class as defined in Section 2(a)(42) of the Act; or (c)
            by FSC on 60 days' notice to the Corporation.

11.         While this Plan shall be in effect, the selection and nomination of
            Disinterested Directors of the Corporation shall be committed to the
            discretion of the Disinterested Directors then in office.



<PAGE>


12.         All agreements with any person relating to the implementation of
            this Plan shall be in writing and any agreement related to this Plan
            shall be subject to termination, without penalty, pursuant to the
            provisions of Paragraph 10 herein.

13. This Plan shall be construed in accordance with and governed by the laws of
the Commonwealth of Pennsylvania.



<PAGE>


                                    EXHIBIT A
                                     to the
                                Distribution Plan
                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.
                                 Class A Shares

         This Distribution Plan is adopted by FEDERATED GOVERNMENT INCOME
      SECURITIES, INC. with respect to the Class of Shares of the portfolio of
      the Corporation 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 0.25% of the
      average aggregate net asset value of the Class A Shares of Federated
      Government Income Securities, Inc. held during the month.

         Witness the due execution hereof this 17th day of July, 1996.



                                    FEDERATED GOVERNMENT INCOME SECURITIES, INC.


                                    By:  /s/ Richard B. Fisher
                                    President




<PAGE>


                                    EXHIBIT B
                                     to the
                                Distribution Plan
                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.
                                 Class B Shares

         This Distribution Plan is adopted by FEDERATED GOVERNMENT INCOME
      SECURITIES, INC. with respect to the Class of Shares of the portfolio of
      the Corporation 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 0.75% of the
      average aggregate net asset value of the Class B Shares of Federated
      Government Income Securities, Inc. held during the month.

         Witness the due execution hereof this 17th day of July, 1996.



                                    FEDERATED GOVERNMENT INCOME SECURITIES, INC.


                                    By:  /s/ Richard B. Fisher
                                    President



<PAGE>


                                    EXHIBIT C
                                     to the
                                Distribution Plan
                  FEDERATED GOVERNMENT INCOME SECURITIES, INC.
                                 Class C Shares


         This Distribution Plan is adopted by FEDERATED GOVERNMENT INCOME
      SECURITIES, INC. with respect to the Class of Shares of the portfolio of
      the Corporation 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 0.75% of the
      average aggregate net asset value of the Class C Shares of Federated
      Government Income Securities, Inc. held during the month.

         Witness the due execution hereof this 17th of July, 1996.


                                    FEDERATED GOVERNMENT INCOME SECURITIES, INC.

                                    By:  /s/ Richard B. Fisher
                                    President




                                                      Exhibit 15 under Form N-1A
                                               Exhibit 1 under Item 601/Reg. S-K

                                    Exhibit 1
                                Amendment to the
                              Distribution Plan for
                            the Investment Companies
                                 Class B Shares


      1. This amendment to the Distribution Plan, ("Plan") is adopted by the
Board of Trustees/Directors of the Investment Companies with respect to the
Class of Shares of the portfolios ("Funds") of the Investment Companies set
forth on the attached Schedule A as to which the Plan has been adopted. This
Exhibit is hereby incorporated into the Plan in its entirety and made a part
thereof. In the event of any inconsistency between the terms of this Exhibit and
the terms of the Plan, the terms of this Exhibit shall govern. References herein
to the Plan shall mean the Plan as amended by this Exhibit. The terms of the
Plan as amended when effective in respect of the Class of Shares set forth above
shall apply to all amounts payable to the Principal Distributor in respect of
such Class of Shares whether arising out of sales of such Class of Shares before
or after such effective date.

      2. In compensation for the services provided pursuant to this Plan, the
Investment Companies on behalf of the Fund shall pay the Principal Distributor
its "Allocable Portion" (as defined in its Distributor's Contract as it relates
to the Class B Shares of the Fund) of a fee (the "Distribution Fee") computed at
the annual rate of 0.75 of 1% per annum on the average daily aggregate net asset
value of the Class B Shares of those Funds listed on Schedule A outstanding,
which fee shall be paid monthly in arrears.

      3. The Distributor's Contract in respect of the Class B Shares of each
Fund set forth above shall provide that: (I) the Principal Distributor in
respect of such Distributor's Contract will be deemed to have performed all
services required to be performed in order to be entitled to receive its
Allocable Portion of the Distribution Fees payable in respect of the Class B
Shares of such Fund upon the settlement date of each sale of a "Commission
Share" (as defined below) of such Fund taken into account in determining such
Principal Distributor's Allocable Portion of such Distribution Fees; (II) the
Investment Companies' obligation to pay such Principal Distributor its Allocable
Portion of the Distribution Fees payable in respect of the Class B Shares of
such Fund shall not be terminated or modified for any reason (including a
termination of the Distributor's Contract between such Principal Distributor and
such Fund) except to the extent required by a change in the Act or the Conduct
Rules of the National Association of Securities Dealers, Inc., in each case
enacted or promulgated after May 1, 1997, or in connection with a "Complete
Termination" (as hereinafter defined) of this Plan in respect of the Class B
Shares of such Fund; (III) the Investment Companies will not take any action to
waive or change any CDSC in respect of the Class B Shares of such Fund, except
as provided in the Funds' prospectus or statement of additional information
without the consent of the Principal Distributor and its assigns; (IV) neither
the termination of such Principal Distributor's role as Principal Distributor of
the Class B Shares of such Fund, nor the termination of such Distributor's
Contract nor the termination of this Plan will terminate such Principal
Distributor's right to its Allocable Portion of the CDSCs; and (V) such
Principal Distributor may assign, sell or pledge (collectively, "Transfer") its
rights to its Allocable Portion of the Distribution Fees and CDSCs (but not such
Principal Distributor's obligations to the Investment Companies under the
Distributor's Contract) to raise funds to make the expenditures related to the
distribution of Class B Shares of such Fund and in connection therewith, upon
receipt of notice of such Transfer, the Investment Companies shall pay to the
assignee, purchaser or pledgee (collectively with their subsequent transferees,
"Transferees") or third party beneficiaries such portion of the Principal
Distributor's Allocable Portion of the Distribution Fees or CDSCs in respect of
the Class B Shares of such Fund so sold or pledged and except as provided in
(II) above and notwithstanding anything of the contrary set forth in this
Exhibit or the Plan or in the Distributor's Contract, to the extent the
Principal Distributor has Transferred its right thereto as aforesaid, the
Investment Companies' obligation to pay to the Principal Distributor's
Transferee such Principal Distributor's Allocable Portion of the Distribution
Fees and CDSCs payable in respect of the Class B Shares of such Fund shall be
absolute and unconditional and shall not be subject to dispute, offset,
counterclaim or any defense whatsoever, including without limitation, any of the
foregoing based on the insolvency or bankruptcy of the Principal Distributor (it
being understood that such provision is not a waiver of the Investment
Companies' right to pursue such Principal Distributor and enforce such claims
against the assets of such Principal Distributor other than its right to the
Distribution Fees, CDSCs and servicing fees, in respect of the Class B Shares of
any Fund transferred in connection with such Transfer. For purposes of this
Plan, the term Allocable Portion of Distribution Fees or CDSCs payable in
respect of the Class B Shares of any Fund as applied to any Principal
Distributor shall mean the portion of such Distribution Fees or CDSCs payable in
respect of such Fund allocated to such Principal Underwriter in accordance with
the Allocation Schedule (as defined in the Distributor's Contract as it relates
to the Class B Shares of the Fund)). For purposes of this Plan, the term
"Complete Termination" of this Plan in respect of any Fund means a termination
of this Plan involving the complete cessation of the payment of Distribution
Fees in respect of all Class B Shares of such Fund, and the termination of the
distribution plans and the complete cessation of the payment of distribution
fees pursuant to every other Distribution Plan pursuant to rule 12b-1 of the
Investment Companies in respect of such Fund and any successor Fund or any Fund
acquiring a substantial portion of the assets of such Fund and for every future
class of shares which has substantially similar characteristics to the Class B
Shares of such Fund taking into account the manner of payment and amount of
sales charge, contingent deferred sales charge or other similar charges borne
directly or indirectly by the holders of such shares.


            Witness the due execution hereof this execution date.

                                    Investment Companies (listed on Schedule A)


                                    By: /s/ John W. McGonigle
                                    Title:  Executive Vice President
                                    Date: October 24,1997




<PAGE>


                                                               Schedule A

Date:  10/24/97      DISTRIBUTION PLAN



                     Federated American Leaders Fund, Inc.
                        Class B Shares

                     Federated Equity Funds
                        Federated Aggressive Growth Fund
                        Class B Shares

                        Federated Growth Strategies Fund
                        Class B Shares

                        Federated Small Cap Strategies Fund
                        Class B Shares

                        Federated Capital Appreciation Fund
                        Class B Shares

                     Federated Equity Income Fund, Inc.
                        Class B Shares

                     Federated Fund for U.S. Government Securities, Inc.
                        Class B Shares

                     Federated Government Income Securities, Inc.
                        Class B Shares

                     Federated High Income Bond Fund, Inc.
                        Class B Shares

                     Federated Municipal Opportunities Fund, Inc.
                        Class B Shares

                     Federated Municipal Securities Fund, Inc.
                        Class B Shares

                     Federated Stock and Bond Fund, Inc.
                        Class B Shares

                     Federated Utility Fund, Inc.
                        Class B Shares

                     Fixed Income Securities, Inc.
                        Federated Strategic Income Fund
                        Class B Shares

                     International Series, Inc.
                        Federated International Equity Fund
                        Class B Shares

                        Federated International Income Fund
                        Class B Shares



<PAGE>


                     Investment Series Funds, Inc.
                        Federated Bond Fund
                        Class B Shares

                     Liberty U.S. Government Money Market Trust
                        Class B Shares

                     Municipal Securities Income Trust
                        Federated Pennsylvania Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated World Utility Fund
                        Class B Shares

                        Federated Asia Pacific Growth Fund
                        Class B Shares

                        Federated Emerging Markets Fund
                        Class B Shares

                        Federated European Growth Fund
                        Class B Shares

                        Federated International Small Company Fund
                        Class B Shares

                        Federated Latin American Growth Fund
                        Class B Shares

                        Federated International High Income Fund
                        Class B Shares

                        Federated International Growth Fund
                        Class B Shares



The following Funds were added as of December 1, 1997:

                     Municipal Securities Income Trust
                        Federated California Municipal Income Fund
                        Class B Shares

                     World Investment Series, Inc.
                        Federated Global Equity Income Fund
                        Class B Shares






                                                      Exhibit 19 under Form N-1A
                                              Exhibit 24 under Item 601/Reg. S-K



                                POWER OF ATTORNEY


      Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of FEDERATED GOVERNMENT INCOME SECURITIES,
INC. and the Deputy General Counsel of Federated Services Company, and each of
them, their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.


SIGNATURES                 TITLE                            DATE

/s/John F. Donahue          Chairman and Director        March 31, 1998
- ------------------
John F. Donahue             (Chief Executive Officer)


/s/Richard B. Fisher        President and Director       March 31, 1998
Richard B. Fisher

/s/John W. McGonigle        Treasurer, Executive Vice    March 31, 1998
John W. McGonigle           President and Secretary
                            (Principal Financial and
                            Accounting Officer)

/s/Thomas G. Bigley         Director                     March 31, 1998
Thomas G. Bigley

/s/Nicholas P. Constantakis Director                     March 31, 1998
- ---------------------------
Nicholas P. Constantakis

/s/John T. Conroy, Jr.      Director                     March 31, 1998
- ----------------------
John T. Conroy, Jr.

/s/William J. Copeland      Director                     March 31, 1998
William J. Copeland

/s/James E. Dowd            Director                     March 31, 1998
James E. Dowd

/s/Lawrence D. Ellis, M.D.  Director                     March 31, 1998
Lawrence D. Ellis, M.D.

/s/Edward L. Flaherty, Jr.  Director                     March 31, 1998
- --------------------------
Edward L. Flaherty Jr.

/s/Peter E. Madden          Director                     March 31, 1998
Peter E. Madden

/s/John E. Murray, Jr.      Director                     March 31, 1998
- ----------------------
John E. Murray, Jr.

/s/Wesley W. Posvar         Director                     March 31, 1998
Wesley W. Posvar

/s/Marjorie B. Smuts        Director                     March 31, 1998
Marjorie B. Smuts






Sworn to and subscribed before me this 31 day of March, 1998.



/s/ Cheri S. Good______
Cheri S. Good
Notary Public



<TABLE> <S> <C>



       
<S>                                     <C>

<ARTICLE>                               6
<SERIES>
     <NUMBER>                           001
     <NAME>                             Federated Government Income
                                        Securities, Inc.
                                        Class A

<PERIOD-TYPE>                           6-mos
<FISCAL-YEAR-END>                       Feb-28-1998
<PERIOD-END>                            Feb-28-1998
<INVESTMENTS-AT-COST>                   1,829,107,825
<INVESTMENTS-AT-VALUE>                  1,845,844,199
<RECEIVABLES>                           190,215,029
<ASSETS-OTHER>                          0
<OTHER-ITEMS-ASSETS>                    0
<TOTAL-ASSETS>                          2,036,059,228
<PAYABLE-FOR-SECURITIES>                182,840,504
<SENIOR-LONG-TERM-DEBT>                 0
<OTHER-ITEMS-LIABILITIES>               272,418,544
<TOTAL-LIABILITIES>                     455,259,048
<SENIOR-EQUITY>                         0
<PAID-IN-CAPITAL-COMMON>                1,877,184,045
<SHARES-COMMON-STOCK>                   15,666,375
<SHARES-COMMON-PRIOR>                   11,467,974
<ACCUMULATED-NII-CURRENT>               912,530
<OVERDISTRIBUTION-NII>                  0
<ACCUMULATED-NET-GAINS>                 (314,032,769)
<OVERDISTRIBUTION-GAINS>                0
<ACCUM-APPREC-OR-DEPREC>                16,736,374
<NET-ASSETS>                            138,554,219
<DIVIDEND-INCOME>                       0
<INTEREST-INCOME>                       131,266,819
<OTHER-INCOME>                          0
<EXPENSES-NET>                          16,106,864
<NET-INVESTMENT-INCOME>                 115,159,955
<REALIZED-GAINS-CURRENT>                29,943,557
<APPREC-INCREASE-CURRENT>               15,565,744
<NET-CHANGE-FROM-OPS>                   159,669,256
<EQUALIZATION>                          0
<DISTRIBUTIONS-OF-INCOME>               6,962,087
<DISTRIBUTIONS-OF-GAINS>                0
<DISTRIBUTIONS-OTHER>                   0
<NUMBER-OF-SHARES-SOLD>                 17,863,053
<NUMBER-OF-SHARES-REDEEMED>             2,916,697
<SHARES-REINVESTED>                     686,406
<NET-CHANGE-IN-ASSETS>                  (197,157,363)
<ACCUMULATED-NII-PRIOR>                 0
<ACCUMULATED-GAINS-PRIOR>               (348,069,212)
<OVERDISTRIB-NII-PRIOR>                 1,616,805
<OVERDIST-NET-GAINS-PRIOR>              0
<GROSS-ADVISORY-FEES>                   12,503,435
<INTEREST-EXPENSE>                      0
<GROSS-EXPENSE>                         20,384,048
<AVERAGE-NET-ASSETS>                    1,661,745,672
<PER-SHARE-NAV-BEGIN>                   8.590
<PER-SHARE-NII>                         0.620
<PER-SHARE-GAIN-APPREC>                 0.220
<PER-SHARE-DIVIDEND>                    0.590
<PER-SHARE-DISTRIBUTIONS>               0.000
<RETURNS-OF-CAPITAL>                    0.000
<PER-SHARE-NAV-END>                     8.840
<EXPENSE-RATIO>                         0.96
<AVG-DEBT-OUTSTANDING>                  0
<AVG-DEBT-PER-SHARE>                    0.000
        



</TABLE>

<TABLE> <S> <C>



       
<S>                              <C>

<ARTICLE>                        6
<SERIES>
     <NUMBER>                    002
     <NAME>                      Federated Government Income
                                 Securities, Inc.
                                 Class B

<PERIOD-TYPE>                    6-mos
<FISCAL-YEAR-END>                Feb-28-1998
<PERIOD-END>                     Feb-28-1998
<INVESTMENTS-AT-COST>            1,829,107,825
<INVESTMENTS-AT-VALUE>           1,845,844,199
<RECEIVABLES>                    190,215,029
<ASSETS-OTHER>                   0
<OTHER-ITEMS-ASSETS>             0
<TOTAL-ASSETS>                   2,036,059,228
<PAYABLE-FOR-SECURITIES>         182,840,504
<SENIOR-LONG-TERM-DEBT>          0
<OTHER-ITEMS-LIABILITIES>        272,418,544
<TOTAL-LIABILITIES>              455,259,048
<SENIOR-EQUITY>                  0
<PAID-IN-CAPITAL-COMMON>         1,877,184,045
<SHARES-COMMON-STOCK>            1,223,793
<SHARES-COMMON-PRIOR>            607,859
<ACCUMULATED-NII-CURRENT>        912,530
<OVERDISTRIBUTION-NII>           0
<ACCUMULATED-NET-GAINS>          (314,032,769)
<OVERDISTRIBUTION-GAINS>         0
<ACCUM-APPREC-OR-DEPREC>         16,736,374
<NET-ASSETS>                     10,818,544
<DIVIDEND-INCOME>                0
<INTEREST-INCOME>                131,266,819
<OTHER-INCOME>                   0
<EXPENSES-NET>                   16,106,864
<NET-INVESTMENT-INCOME>          115,159,955
<REALIZED-GAINS-CURRENT>         29,943,557
<APPREC-INCREASE-CURRENT>        15,565,744
<NET-CHANGE-FROM-OPS>            159,669,256
<EQUALIZATION>                   0
<DISTRIBUTIONS-OF-INCOME>        388,908
<DISTRIBUTIONS-OF-GAINS>         0
<DISTRIBUTIONS-OTHER>            0
<NUMBER-OF-SHARES-SOLD>          1,033,325
<NUMBER-OF-SHARES-REDEEMED>      115,339
<SHARES-REINVESTED>              24,091
<NET-CHANGE-IN-ASSETS>           (197,157,363)
<ACCUMULATED-NII-PRIOR>          0
<ACCUMULATED-GAINS-PRIOR>        (348,069,212)
<OVERDISTRIB-NII-PRIOR>          1,616,805
<OVERDIST-NET-GAINS-PRIOR>       0
<GROSS-ADVISORY-FEES>            12,503,435
<INTEREST-EXPENSE>               0
<GROSS-EXPENSE>                  20,384,048
<AVERAGE-NET-ASSETS>             1,661,745,672
<PER-SHARE-NAV-BEGIN>            8.590
<PER-SHARE-NII>                  0.580
<PER-SHARE-GAIN-APPREC>          0.200
<PER-SHARE-DIVIDEND>             0.530
<PER-SHARE-DISTRIBUTIONS>        0.000
<RETURNS-OF-CAPITAL>             0.000
<PER-SHARE-NAV-END>              8.840
<EXPENSE-RATIO>                  1.71
<AVG-DEBT-OUTSTANDING>           0
<AVG-DEBT-PER-SHARE>             0.000
        


</TABLE>

<TABLE> <S> <C>



       
<S>                                  <C>

<ARTICLE>                            6
<SERIES>
     <NUMBER>                        003
     <NAME>                          Federated Government Income
                                     Securities, Inc.
                                     Class C

<PERIOD-TYPE>                        6-mos
<FISCAL-YEAR-END>                    Feb-28-1998
<PERIOD-END>                         Feb-28-1998
<INVESTMENTS-AT-COST>                1,829,107,825
<INVESTMENTS-AT-VALUE>               1,845,844,199
<RECEIVABLES>                        190,215,029
<ASSETS-OTHER>                       0
<OTHER-ITEMS-ASSETS>                 0
<TOTAL-ASSETS>                       2,036,059,228
<PAYABLE-FOR-SECURITIES>             182,840,504
<SENIOR-LONG-TERM-DEBT>              0
<OTHER-ITEMS-LIABILITIES>            272,418,544
<TOTAL-LIABILITIES>                  455,259,048
<SENIOR-EQUITY>                      0
<PAID-IN-CAPITAL-COMMON>             1,877,184,045
<SHARES-COMMON-STOCK>                320,772
<SHARES-COMMON-PRIOR>                238,413
<ACCUMULATED-NII-CURRENT>            912,530
<OVERDISTRIBUTION-NII>               0
<ACCUMULATED-NET-GAINS>              (314,032,769)
<OVERDISTRIBUTION-GAINS>             0
<ACCUM-APPREC-OR-DEPREC>             16,736,374
<NET-ASSETS>                         2,836,371
<DIVIDEND-INCOME>                    0
<INTEREST-INCOME>                    131,266,819
<OTHER-INCOME>                       0
<EXPENSES-NET>                       16,106,864
<NET-INVESTMENT-INCOME>              115,159,955
<REALIZED-GAINS-CURRENT>             29,943,557
<APPREC-INCREASE-CURRENT>            15,565,744
<NET-CHANGE-FROM-OPS>                159,669,256
<EQUALIZATION>                       0
<DISTRIBUTIONS-OF-INCOME>            139,249
<DISTRIBUTIONS-OF-GAINS>             0
<DISTRIBUTIONS-OTHER>                0
<NUMBER-OF-SHARES-SOLD>              370,357
<NUMBER-OF-SHARES-REDEEMED>          215,020
<SHARES-REINVESTED>                  9,162
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</TABLE>

<TABLE> <S> <C>



       
<S>                                  <C>

<ARTICLE>                            6
<SERIES>
     <NUMBER>                        004
     <NAME>                          Federated Government Income
                                     Securities, Inc.
                                     Class F

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