FEDERATED U S GOVERNMENT SECURITIES FUND 2-5 YEARS, 485APOS, 1999-01-29

FEDERATED U S GOVERNMENT SECURITIES FUND 2-5 YEARS
485APOS, 1999-01-29

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1933 Act File No. 2-75769
1940 Act File No. 811-3387

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. 30 .......................... X
------ ------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 24 .........................................X
------- ------

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

(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
1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
_ on __________________pursuant to paragraph (b)

60 days after filing pursuant to paragraph (a) (i)
X on March 31, 1999 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.

Copy to: Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP

2101 L Street, N.W.
Washington, D.C. 20037

PROSPECTUS

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

INSTITUTIONAL SHARES

A mutual fund seeking current income by investing in government securities
with remaining maturities of five years or less.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

CONTENTS

Risk/Return Summary
What are the Fund's Fees and Expenses?
What are the Fund's Investment Strategies?
What are the Principal Securities in Which the Fund Invests?
What are the Specific Risks of Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem and Exchange Shares
Account and Share Information
Who Manages the Fund?
Financial Information

March 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to provide current income. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the strategies and policies described in this
prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in the Fund. The primary factor that may reduce the Fund's
returns is changes in prevailing interest rates.

<PAGE>

RISK/RETURN BAR CHART AND TABLE

The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Federated U.S. Government Securities
Fund: 2-5 Years (Institutional Shares) as of the calendar year-end for each of
ten years.

The `y' axis reflects the "% Total Return" beginning with "-2.00%" and
increasing in increments of 2% up to 14%. The `x' axis represents calculation
periods for the last ten calendar years of the Fund, beginning with the earliest
year. The light gray shaded chart features ten distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years 1989 through 1998. The
percentages noted are: 12.06%, 9.40%, 13.45%, 6.66%, 7.10%, -1.91%, 13.57%,
3.58%, 7.14%, and 8.11%. The total returns displayed for the Fund do not reflect
the payment of any sales charges or recurring shareholder account fees. If these
charges or fees had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return was
6.64% (quarter ended June 30, 1998). Its lowest quarterly return was -1.51%
(quarter ended March 31, 1994).

AVERAGE ANNUAL TOTAL RETURN

1 YEAR 5 YEARS 10 YEARS
Institutional Shares % % %

Broad-Based Index % % %

The Fund is compared to____ for the calendar periods ended December 31,
1998 The bar chart shows the variability of the Fund's actual total return on a
yearly basis.

The table shows the Fund's total returns averaged over a period of years
relative to ____, a broad-based market index.

Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Shares.

SHAREHOLDER FEES

FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage None
of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of original None
purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and None
other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Reimbursements] )(1)
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fee 0.40%
Distribution (12b-1) Fee(2) None
Shareholder Services Fee(3) 0.25%
Other Expenses(4) 0.14%
Total Annual Fund Operating Expenses 0.79%
1 Although not contractually obligated to do so, the distributor
will reimburse certain amounts. These are shown below along
with the net expenses the Fund would ACTUALLY PAY for the
fiscal year ended January 31, 1999
Reimbursements of Fund Expenses 0.25%
Total Actual Annual Fund Operating Expenses (after 0.54%
reimbursements)

2 Institutional Shares did not pay or accrue the distribution (12b-1) fee
during the fiscal year endedJanuary 31, 1999. Institutional Shares has no
present intention of paying or accruing the distribution (12b-1)fee during
the year ended January 31, 1999.

3 The shareholder services fee for Institutional Shares has been voluntarily
reduced. This voluntary reduction can be terminated at any time. The
shareholder services fee paid by the Fund (after voluntary reduction) was
0.0% for the year ending January 31, 1999. Institutional Shares has no
present intention of paying or accruing the shareholder services fee during
the year ending January 31, 1999.

4 The Adviser voluntarily reimbursed certain operating expenses of the Fund.
The Adviser can terminate this voluntary reimbursement at any time. Total
other expenses paid by the Fund (after the voluntary reimbursement) was
0.14% for the year ended January 31, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund's Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Shares at the end of
those

periods. The Example also assumes that your investment has a 5% return each
year and that the Fund's Institutional Shares operating expenses are BEFORE
REIMBURSEMENTS as shown in the Table and remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
$55 $173 $302 $677
- --------

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests in securities that are direct obligations of the U.S.
government, its agencies and instrumentalities which have a maximum maturity of
five years. The Fund seeks to maintain an average maturity of two to five years.
The Fund intends to invest in U.S. government securities that are state tax
exempt. In order to maintain liquidity, the Fund also invests in repurchase
agreements backed by U.S. government securities. The Adviser manages the
portfolio by targeting a dollar weighted average duration that is consistent
with the maturity constraints. Duration measures the price sensitivity of a
portfolio of fixed income securities to changes in interest rates. Under
ordinary market conditions, the Fund's duration, as determined by the Adviser,
will be within 25% of the Merrill Lynch Three to Five Year Treasury Index based
upon its interest rate outlook. The Adviser formulates its interest rate outlook
by analyzing a variety of factors, such as:

o current U.S. economic activity and the economic outlook,

o current short-term interest rates,

o the Federal Reserve Board's policies regarding short-term interest rates,
and

o potential effects of foreign economic activity on short-term interest
rates.

The Adviser generally shortens the portfolio's average duration when it
expects interest rates to rise and extends the duration when it expects interest
rates to fall. The Adviser selects securities used to lengthen or shorten the
portfolio's average duration by comparing the returns currently offered by
different investments to their historical and expected returns.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

FIXED INCOME SECURITIES

The following describes the types of fixed income securities in which the
Fund invests.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States.

AGENCY SECURITIES

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full, faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities.

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser. The Fund's custodian or
subcustodian will take possession of the securities subject to repurchase
agreements. The Adviser or subcustodian will monitor the value of the underlying
security each day to ensure that the value of the security always equals or
exceeds the repurchase price.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

BOND MARKET RISKS

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security to changes in interest rates.

WHAT DO SHARES COST?

You can purchase or redeem Shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form,
it is processed at the next determined net asset value (NAV).

The Fund does not charge a front-end sales charge. NAV is determined at the
end of regular trading (normally 4 p.m. Eastern time) each day the NYSE is open.

The required minimum initial investment for Fund Shares is $25,000. There
is no required minimum subsequent investment amount.

An account may be opened with a smaller amount as long as the $25,000
minimum is reached within 90 days. An institutional investor's minimum
investment is calculated by combining all accounts it maintains with the Fund.
Accounts established through investment professionals may be subject to a
smaller minimum investment amount. Keep in mind that investment professionals
may charge you fees for their services in connection with your Share
transactions.

HOW IS THE FUND SOLD?

The Fund offers two Share classes: Institutional Service Shares and
Institutional Shares, each representing interests in a single portfolio of
securities. This prospectus relates only to Institutional Shares. Each Share
class has different expenses, which affect their performance. Contact your
investment professional or call 1-800-341-7400 for more information concerning
the other class.

The Fund's Distributor markets the Shares described in this prospectus to
institutions acting in an agency or fiduciary capacity or to individuals
directly or through investment professionals.

The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated).

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional or directly from
the Fund. The Fund reserves the right to reject any request to purchase Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

o Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund on the same day and the Fund receives payment within one
business day. You will become the owner of Shares and receive dividends
when the Fund receives your payment.

Investment professionals should send payments according to the instructions
in the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares and your Shares will be priced at the
next calculated NAV after the Fund receives your wire or your check. If your
check does not clear, your purchase will be canceled and you could be liable for
any losses or fees the Fund or its transfer agent incurs.

An institution may establish an account and place an order by calling the
Fund and the Shares will be priced at the next calculated NAV after the Fund
receives the order.

BY WIRE
Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on
the check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE
that requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund
will not accept third-party checks (checks originally payable to someone other
than you or The Federated Funds).

BY AUTOMATED CLEARINGHOUSE (ACH)

Once you have opened an account, you may purchase additional Shares through
a depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption request to your investment professional by the end
of regular trading on the NYSE (normally 4 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional.

DIRECTLY FROM THE FUND

BY TELEPHONE

You may redeem Shares by calling the Fund once you have completed the
appropriate authorization form for telephone transactions. If you call before
the end of regular trading on the NYSE (normally 4 p.m. Eastern time) you will
receive a redemption amount based on that day's NAV.

BY MAIL

You may redeem Shares by mailing a written request to the Fund. You will
receive a redemption amount based on the next calculated NAV after the Fund
receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317
All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed; and

o signatures of all Shareholders exactly as registered.

Call your investment professional or the Fund if you need special instructions.

SIGNATURE GUARANTEES
Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last thirty days; or

o a redemption is payable to someone other than the shareholder(s) of record.

A signature guarantee is designed to protect your account from fraud.
Obtain a signature guarantee from a bank or trust company, savings association,
credit union or broker, dealer, or securities exchange member. A NOTARY PUBLIC
CANNOT PROVIDE A SIGNATURE GUARANTEE.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record.
The following payment options are available if you complete the appropriate
section of the New Account Form or an Account Service Options Form. These
payment options require a signature guarantee if they were not established when
the account was opened:

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.

REDEMPTION IN KIND

Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day
after receiving a request in proper form. Payment may be delayed up to seven
days:

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the
Fund's ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund
if those checks are undeliverable and returned to the Fund.

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Fund will record your telephone instructions. If the Fund does not
follow reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

The Fund no longer issues share certificates. If you are redeeming or
exchanging Shares represented by certificates previously issued by the Fund, you
must return the certificates with your written redemption or exchange request.
For your protection, send your certificates by registered or certified mail, but
do not endorse them.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases and redemptions. In addition,
you will receive periodic statements reporting all account activity, including
dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares any dividends daily and pays them monthly to
shareholders. If you purchase Shares by wire, you begin earning dividends on the
day your wire is received. If you purchase Shares by check, you begin earning
dividends on the business day after the Fund receives your check. In either
case, you earn dividends through the day your redemption request is received.

In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.

If you purchase Shares just before the Fund declares a dividend or capital
gain distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances,
non-retirement accounts may be closed if redemptions cause the account balance
to fall below the minimum initial investment amount. Before an account is
closed, you will be notified and allowed 30 days to purchase additional Shares
to meet the minimum.

TAX INFORMATION

The Fund sends an annual statement of your account activity to assist you
in completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.

Fund distributions are expected to be primarily dividends. Redemptions are
taxable sales. Please consult your tax adviser regarding your federal, state,
and local tax liability.

WHO MANAGES THE FUND?

The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Federated Management. The Adviser manages the Fund's assets, including
buying and selling portfolio securities. The Adviser's address is Federated
Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

The Fund's portfolio managers are:

Susan M. Nason has been the Fund's portfolio manager since September 1991.
She is Vice President of the Trust. Ms. Nason joined Federated Investors in 1987
and has been a Senior Portfolio Manager and Senior Vice President of the Fund's
investment adviser since 1997. Ms. Nason served as a Portfolio Manager and Vice
President of the investment adviser from 1993 to 1997. Ms. Nason is a Chartered
Financial Analyst and received her M.S.I.A. concentrating in Finance from
Carnegie Mellon University. Robert J. Ostrowski has been the Fund's portfolio
manager since September 1997. Mr. Ostrowski joined Federated in 1987 as an
Investment Analyst and has been a Senior Vice President of the Trust's adviser
since September 1997. Mr. Ostrowski served as Vice President of the Fund's
adviser from 1993 to 1997, and as an Assistant Vice President from 1992 to 1993.
Mr. Ostrowski is a Chartered Financial Analyst. He received his M.S. in
Industrial Administration from Carnegie Mellon University. The Adviser and other
subsidiaries of Federated advise approximately 175 mutual funds and separate
accounts, which total approximately $111 billion in assets as of December 31,
1998. Federated was established in 1955 and is one of the largest mutual fund
investment managers in the United States with approximately 1,900 employees.
More than 4,000 investment professionals make Federated Funds available to their
customers.

ADVISORY FEES

The Adviser receives an annual investment advisory fee of 0.40% of the
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburse the Fund for certain operating expenses.

<PAGE>

YEAR 2000 READINESS

While it is impossible to determine in advance all of the risks to the
Fund, the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Fund's service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Fund's investments.
To assess the potential effect of the Year 2000 problem, the Adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
the Fund may purchase. The financial impact of these issues for the Fund is
still being determined. There can be no assurance that potential Year 2000
problems would not have a material adverse effect on the Fund.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The following Financial Highlights will help you understand the Fund's
financial performance for its past five fiscal years, or since inception, if the
life of the Fund is shorter. Some of the information is presented on a per share
basis. Total returns represent the rate an investor would have earned (or lost)
on an investment in the Fund, assuming reinvestment of any dividends and capital
gains.

This information has been audited by Arthur Andersen LLP, whose report,
along with the Fund's audited financial statements, is included in this
Prospectus.

Financial Statements to be filed by Amendment.

<PAGE>

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

INSTITUTIONAL SHARES

A Statement of Additional Information (SAI) dated March 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is contained in the Fund's annual report to shareholders. The
annual report discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the annual report and other information without charge, call
your investment professional or the Fund at 1-800-341-7400.

You can obtain information about the Fund (including the SAI) by visiting
or writing the Public Reference Room of the Securities and Exchange Commission
in Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

INVESTMENT COMPANY ACT FILE NO. 811-3387
CUSIP 31428P103

000000-00 (3/99)

PROSPECTUS

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

INSTITUTIONAL SERVICE SHARES

A mutual fund seeking current income by investing in U. S. government
securities with remaining maturities of five years or less.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and
any representation to the contrary is a criminal offense.

CONTENTS

March 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

<PAGE>

RISK/RETURN BAR CHART AND TABLE

The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Federated U.S. Government Securities
Fund: 2-5 Years - Institutional Service Shares as of the calendar year-end for
each of six years.

The `y' axis reflects the "% Total Return" beginning with "-4.00" and
increasing in increments of 2% up to 14%. The `x' axis represents calculation
periods from the earliest calendar year end of the Institutional Service Shares
start of business through the calendar year ended December 31, 1998. The light
gray shaded chart features six distinct vertical bars, each shaded in charcoal,
and each visually representing by height the total return percentages for the
calendar year stated directly at its base. The calculated total return
percentage for the Institutional Service Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1993 through
1998. The percentages noted are: 6.83%, -2.16%, 13.29%, 3.32%, 6.87%, and 7.84%.

The bar chart shows the variability of the Fund's Institutional Service
Shares total returns on a yearly basis.

The Fund's Institutional Service Shares are not sold subject to a sales
charge (load) . Hence, the total returns displayed above are based upon the net
asset value. Within the period shown in the Chart, the Fund's highest quarterly
return was 4.66% (quarter ended September 30, 1998). Its lowest quarterly return
was -1.57% (quarter ended March 31, 1994).

AVERAGE ANNUAL TOTAL RETURN

The following table represents the Fund's Average Annual Total Return for
the calendar periods ended December 31, 1998.

LIFE OF THE FUND1 1 YEAR 5 YEARS

Institutional Service Shares

Broad-Based Index % % %

1 Since inception date of May 30, 1992.

The table shows the Fund's total returns averaged over a period of years
relative to ____, a broad-based market index.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold Shares of the Fund's Institutional Service Shares.

SHAREHOLDER FEES
<TABLE>
<CAPTION>

FEES PAID DIRECTLY FROM YOUR INVESTMENT
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering None
price)
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price None
or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None
Distributions) (as a percentage of offering price).
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Reimbursements)(1)

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee %
Distribution (12b-1) Fee(2) %
Shareholder Services Fee(3) %
Other Expenses(4) %
Total Annual Fund Operating Expenses %

</TABLE>

1 Although not contractually obligated to do so, the Adviser waived and
distributor reimbursed certain amounts. These are shown below along with
the net expenses the Fund ACTUALLY PAID for the fiscal year ended January
31, 1999.

Reimbursements of Fund expenses 0.25%
Total actual annual Fund Operating Expenses
(after reimbursements) 0.79%

2 The distribution (12b-1) fee for Institutional Service Shares has been
voluntarily reduced. This voluntary reduction can be terminated at any
time. The distribution (12b-1) fee paid by the Fund (after the voluntary
reimbursement) was 0.02% for the year ended January 31, 1999.

3 The shareholder services fee for Institutional Service Shares has been
voluntarily reduced. This voluntarily reduction can be terminated at any
time. The shareholder services fee paid by the fund (after the voluntarily
reimbursement) was 0.23% for the year ended January 31, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund's Institutional Service Shares with the cost of investing in other mutual
funds.

The Example assumes that you invest $10,000 in the Fund's Institutional
Service Shares for the time periods indicated and then redeem all of your Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE REIMBURSEMENTS as shown in the table and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
- -------

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

o current U.S. economic activity and the economic outlook,

o current short-term interest rates,

o the Federal Reserve Board's policies regarding short-term interest rates,
and

o potential effects of foreign economic activity on short-term interest
rates.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

FIXED INCOME SECURITIES

The following describes the types of fixed income securities in which the
Fund invests.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States.

AGENCY SECURITIES

REPURCHASE AGREEMENTS

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

BOND MARKET RISKS

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

WHAT DO SHARES COST?

You can purchase, redeem, or exchange Shares any day the New York Stock
Exchange (NYSE) is open. When the Fund receives your transaction request in
proper form, it is processed at the next determined net asset value (NAV) .

The Fund does not charge a front-end sales charge. NAV is determined at the
end of regular trading (normally 4 p.m. Eastern time) each day the NYSE is open.

The required minimum initial investment for Fund Shares is $25,000. There
is no required minimum subsequent investment amount.

HOW IS THE FUND SOLD?

The Fund offers two Share classes: Institutional Service Shares and
Institutional Shares, each representing interests in a single portfolio of
securities. This prospectus relates only to Institutional Service Shares. Each
Share class has different expenses, which affect their performance. Contact your
investment professional or call 1-800-341-7400 for more information concerning
the other class.

The Fund's Distributor markets the Shares described in this prospectus to
retail and private banking customers of financial institutions or to individuals
directly or through investment professionals.

When the Distributor receives marketing fees, it may pay some or all of
them to investment professionals. The Distributor and its affiliates may pay out
of their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing
fees to the Distributor and investment professionals for the sale, distribution
and customer servicing of the Fund's Institutional Service Shares. Because these
Shares pay marketing fees on an ongoing basis, your investment cost may be
higher over time than other shares with different sales charges and marketing
fees.

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional, directly from
the Fund, or through an exchange from another Federated Fund. The Fund reserves
the right to reject any request to purchase or exchange Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

o Submit your purchase order to the investment professional before the end
of regular trading on the NYSE (normally 4 p.m. Eastern time). You will receive
the next calculated NAV if the investment professional forwards the order to the
Fund on the same day and the Fund receives payment within one business day. You
will become the owner of Shares and receive dividends when the Fund receives
your payment.

Investment professionals should send payments according to the instructions
in the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

An institution may establish an account and place an order by calling the
Fund and the Shares will be priced at the next calculated NAV after the Fund
receives the order.

BY WIRE
Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on
the check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

<PAGE>

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE
that requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund
will not accept third-party checks (checks originally payable to someone other
than you or The Federated Funds).

THROUGH AN EXCHANGE

You may purchase Shares through an exchange from the same Share class of
another Federated Fund. You must meet the minimum initial investment requirement
for purchasing Shares and both accounts must have identical registrations.

BY AUTOMATED CLEARINGHOUSE (ACH)

HOW TO REDEEM AND EXCHANGE SHARES

You should redeem or exchange Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption or exchange request to your investment professional
by the end of regular trading on the NYSE (normally 4 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV after
the Fund receives the order from your investment professional.

DIRECTLY FROM THE FUND

BY TELEPHONE

You may redeem or exchange Shares by calling the Fund once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.

BY MAIL

You may redeem or exchange Shares by mailing a written request to the Fund.

You will receive a redemption amount based on the next calculated NAV after
the Fund receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317
All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed or exchanged;

o signatures of all Shareholders exactly as registered; and

o if exchanging, the Fund Name and Share Class, account number and account
registration into which you are exchanging.

Call your investment professional or the Fund if you need special instructions.

SIGNATURE GUARANTEES
Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last thirty days;

o a redemption is payable to someone other than the shareholder(s) of record;
or

o IF EXCHANGING (TRANSFERRING) into another fund with a different shareholder
registration.

PAYMENT METHODS FOR REDEMPTIONS

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.

REDEMPTION IN KIND

Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day
after receiving a request in proper form. Payment may be delayed up to seven
days:

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the
Fund's ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund
if those checks are undeliverable and returned to the Fund.

EXCHANGE PRIVILEGES

You may exchange Shares of the Fund into Shares of the same class of
another Federated Fund. To do this, you must:

o ensure that the account registrations are identical;

o meet any minimum initial investment requirements; and

o receive a prospectus for the fund into which you wish to exchange.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

The Fund may modify or terminate the exchange privilege at any time. The
Fund's management or investment Adviser may determine from the amount, frequency
and pattern of exchanges that a shareholder is engaged in excessive trading that
is detrimental to the Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other Federated Funds.

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Fund will record your telephone instructions. If the Fund does not
follow reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges. In
addition, you will receive periodic statements reporting all account activity,
including dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances,
non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, you will be notified and allowed 30 days to purchase
additional Shares to meet the minimum.

TAX INFORMATION

Fund distributions are expected to be primarily dividends. Redemptions and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.

WHO MANAGES THE FUND?

The Fund's portfolio managers are:

ADVISORY FEES

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures
because certain computer systems may be unable to interpret dates after December
31, 1999. The Year 2000 problem may cause systems to process information
incorrectly and could disrupt businesses that rely on computers, like the Fund.
While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
Share transactions or Fund communications.

The Fund's service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from
third-party providers to determine their Year 2000 readiness.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The following Financial Highlights will help you understand the Fund's
financial performance for its past five fiscal years, or since inception, if the
life of the Fund is shorter. Some of the information is presented on a per Share
basis. Total returns represent the rate an investor would have earned (or lost)
on an investment in the Fund, assuming reinvestment of any dividends and capital
gains.

This information has been audited by Arthur Andersen LLP, whose report,
along with the Fund's audited financial statements, is included in this
Prospectus.

Financial Statements to be filed by Amendment.

<PAGE>

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

INSTITUTIONAL SERVICE SHARES

A Statement of Additional Information (SAI) dated March 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual report to shareholders. The
annual report discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the annual report and other information without charge, call
your investment professional or the Fund at 1-800-341-7400.

INVESTMENT COMPANY ACT FILE NO. 811-3387
CUSIP 31428P202

000000-00 (3/99)

STATEMENT OF ADDITIONAL INFORMATION

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

INSTITUTIONAL SHARES

INSTITUTIONAL SERVICE SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectuses for Institutional Shares and
Institutional Service Shares of Federated U.S. Government Securities Fund: 2-5
Years, dated March 31, 1999. Obtain the prospectuses without charge by calling
1-800-341-7400.

MARCH 31, 1999

CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
What do Shares Cost?
How is the Fund Sold?
Exchanging Securities for Shares
Subaccounting Services
Redemption in Kind
Massachusetts Partnership Law
Account and Share Information
Tax Information
Who Manages and Provides Services to the Fund?
How Does the Fund Measure Performance?
Who is Federated Investors, Inc.?
Addresses

CUSIP 31428P103

CUSIP 31428P02

8022502B (3/99)

<PAGE>

HOW IS THE FUND ORGANIZED?

The Fund is a diversified open-end, management investment company that was
established under the laws of the Commonwealth of Massachusetts on December 10,
1981. The Fund changed its name from Federated Intermediate Government Trust to
Federated U.S. Government Securities Fund: 2-5 Years on April 13, 1995.

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.

SECURITIES DESCRIPTIONS AND TECHNIQUES

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a
specified rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund
invests.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

AGENCY SECURITIES

ZERO COUPON SECURITIES

Zero coupon securities do not pay interest or principal until final
maturity unlike debt securities that provide periodic payments of interest
(referred to as a coupon payment). Investors buy zero coupon securities at a
price below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. Investors must wait until maturity to receive interest and principal,
which increases the MARKET

AND CREDIT RISKS of a zero coupon security.

There are many forms of zero coupon securities. Some are issued at a
discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury STRIPs
are the most common forms of stripped zero coupon securities.

SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS

The Fund's custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor the
value of the underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price. Repurchase agreements
are subject to CREDIT RISKS.

DELAYED DELIVERY TRANSACTIONS

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create MARKET
RISKS for the Fund. Delayed delivery transactions also involve CREDIT RISKS in
the event of a counterparty default.

ASSET COVERAGE

In order to secure its obligations in connection with derivatives contracts
or special transactions, the Fund will either own the underlying assets, enter
into an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES. The Adviser will
determinate whether a security is investment grade based upon the credit ratings
given by one or more nationally recognized rating services. For example,
Standard and Poor's, a rating service, assigns ratings to investment grade
securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of
the issuer's inability to pay interest or principal (default) when due on each
security. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Fund must rely entirely upon the Adviser's credit
assessment that the security is comparable to investment grade.

INVESTMENT RISKS

There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.

INVESTMENT RISKS

BOND MARKET RISKS

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

CREDIT RISKS

o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Fund will lose money.

o Credit risk includes the possibility that a party to a transaction
involving the Fund will fail to meet its obligations. This could cause the
Fund to lose the benefit of the transaction or prevent the Fund from
selling or buying other securities to implement its investment strategy.

CALL RISKS

o Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market
price. An increase in the likelihood of a call may reduce the security's
price.

o If a fixed income security is called, the Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Trust will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for clearance
of purchases and sales of portfolio securities.

BORROWING MONEY

The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of its total assets or in an amount up to one-third of the value of
its total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling portfolio securities. This borrowing
provision is not for investment leverage but solely to facilitate management of
the portfolio by enabling the Trust to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. However, such use will not assure that portfolio securities
will not be liquidated at a disadvantageous time.

Interest paid by the Trust on borrowed funds will not be available for
investment. While borrowings are outstanding, no portfolio securities may be
purchased by the Trust.

PLEDGING ASSETS

The Trust will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 10% of the value of total
assets at the time of the borrowing.

LENDING CASH OR SECURITIES

The Trust will not lend any of its assets, except that it may purchase or
hold U.S. government securities, including repurchase agreements, permitted by
its investment objective and policies.

ISSUING SENIOR SECURITIES

The Trust will not issue senior securities, except as permitted by its
investment objective and policies.

The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act. As a matter of investment practice, which can be changed without
shareholder approval, the Trust will not invest more than 15% of its total
assets in securities which are illiquid, including repurchase agreements
providing for settlement in more than seven days after notice.

Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of 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 Trust did not borrow money or pledge securities 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.

As a matter of operating policy, the Trust will not purchase any securities
while borrowings in excess of 5% of its total assets are outstanding.

DETERMINING MARKET VALUE OF SECURITIES

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

for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;

in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;

for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;

for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and

for all other securities, at fair value as determined in good faith by the
Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

The Fund values futures contracts and options at their market values
established by the exchanges on which they are traded at the close of trading on
such exchanges. Options traded in the over-the-counter market are valued
according to the mean between the last bid and the last asked price for the
option as provided by an investment dealer or other financial institution that
deals in the option. The Board may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market value.

WHAT DO SHARES COST?

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.

HOW IS THE FUND SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers Shares on a continuous, best-efforts basis.

RULE 12B-1 PLAN (INSTITUTIONAL SERVICE SHARES)

As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. Also, the
Fund's service providers that receive asset-based fees also benefit from stable
or increasing Fund assets.

The Fund may compensate the Distributor more or less than its actual
marketing expenses. In no event will the Fund pay for any expenses of the
Distributor that exceed the maximum Rule 12b-1 Plan fee.

For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be
paid in any one year may not be sufficient to cover the marketing related
expenses the Distributor has incurred. Therefore, it may take the Distributor a
number of years to recoup these expenses.

SHAREHOLDER SERVICES

The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated) , for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.

SUPPLEMENTAL PAYMENTS

Investment professionals may be paid fees out of the assets of the
Distributor and/or Federated Shareholder Services Company (but not out of Fund
assets). The Distributor and/or Federated Shareholder Services Company may be
reimbursed by the Adviser or its affiliates.

Investment professionals receive such fees for providing
distribution-related or shareholder services such as sponsoring sales, providing
sales literature, conducting training seminars for employees, and engineering
sales-related computer software programs and systems. Also, investment
professionals may be paid cash or promotional incentives, such as reimbursement
of certain expenses relating to attendance at informational meetings about the
Fund or other special events at recreational-type facilities, or items of
material value. These payments will be based upon the amount of Shares the
investment professional sells or may sell and/or upon the type and nature of
sales or marketing support furnished by the investment professional.

EXCHANGING SECURITIES FOR SHARES

You may contact the Distributor to request a purchase of Shares in exchange
for securities you own. The Fund reserves the right to determine whether to
accept your securities and the minimum market value to accept. The Fund will
value your securities in the same manner as it values its assets. This exchange
is treated as a sale of your securities for federal tax purposes.

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.

Because the Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, the Fund is obligated to pay Share redemptions
to any one shareholder in cash only up to the lesser of $250,000 or 1% of the
net assets represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.

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

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.

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

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS

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

Trustees may be removed by the Board or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Board upon the
written request of shareholders who own at least 10% of the Trust's outstanding
Shares of all series entitled to vote.

As of January 7, 1999, the following shareholder owned of record,
beneficially, or both, 5% or more of outstanding Shares: Charles Schwab & Co.
Inc., San Francisco, CA owned approximately 7,147,357 Shares (10.78%) of the
outstanding Institutional Shares of the Trust.

As of January 7, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares: Charles Schwab & Co.
Inc., San Francisco, CA owned approximately 316,840 Shares (6.88%); and
Chittenden Bank, Burlington, VT owned approximately 336,873 (7.32%) Shares of
the outstanding Institutional Service Shares of the Trust.

TAX INFORMATION

FEDERAL INCOME TAX

The Fund intends to meet requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will pay federal
income tax.

WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

BOARD OF TRUSTEES

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and other notable positions held,
total compensation received as a Trustee from the Trust for its most recent
fiscal year, and the total compensation received from the Federated Fund Complex
for the most recent calendar year. The Trust is comprised of one fund, and the
Federated Fund Complex is comprised of 56 investment companies, whose investment
advisers are affiliated with the Fund's Adviser.

As of January 7, 1999, the Fund's Board and Officers as a group owned less
than 1% of the Fund's outstanding Institutional or Institutional Service Shares.

An asterisk (*) denotes a Trustee who is deemed to be an interested person
as defined in the Investment Company Act of 1940. The following symbol (#)
denotes a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.

<PAGE>

NAME
BIRTHDATE AGGREGATE TOTAL
ADDRESS COMPENSATION COMPENSATION
POSITION WITH TRUST PRINCIPAL OCCUPATIONS FROM TRUST FROM TRUST AND
FOR PAST 5 YEARS FUND COMPLEX

JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies in
Pittsburgh, PA Federated Research; Chairman and Director, the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Investment Management Corp.;
Chairman, Passport Research, Ltd.

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

GLEN R. JOHNSON Trustee, Federated Investors, Inc.; staff $ $0 for the
Birthdate: May 2, 1929 member, Federated Securities Corp. Trust and
Federated Investors 8 other
Tower investment
1001 Liberty Avenue companies
Pittsburgh, PA in the Fund
PRESIDENT Complex
- -------------------------

J. CHRISTOPHER DONAHUE + President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and
1949 Trustee of some of the Funds in the 16 other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
EXECUTIVE VICE PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.

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

<PAGE>

EDWARD C. GONZALES Trustee or Director of some of the Funds in $0 $0 for the
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated company in the
1001 Liberty Avenue Investors, Inc.; Vice President, Federated Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT 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.

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

JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and
1938 President, Secretary, and Director, 54 other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE PRESIDENT Research Corp.; Director, Federated
AND SECRETARY Services Company; Director, Federated

Securities Corp.

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

RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and
Federated Investors Director or Trustee of some of the Funds in 6 other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.

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

THOMAS G. BIGLEY Director or Trustee of the Federated Fund $ $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the Trust and
1934 Committee, Children's Hospital of 54 other
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst investment
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, companies
TRUSTEE Inc.; Director, Member of Executive in the Fund
Committee, University of Pittsburgh. Complex

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

JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $ $125,264.48 for
Birthdate: June 23, 1937 Complex; President, Investment Properties the Trust and
Wood/IPC Commercial Corporation; Senior Vice President, 54 other
Dept. John R. Wood and Associates, Inc., investment
John R. Wood Realtors; Partner or Trustee in private companies
Associates, Inc. real estate ventures in Southwest Florida; in the Fund
Realtors formerly: President, Naples Property Complex
3255 Tamiami Trial Management, Inc. and Northgate Village
North Naples, FL Development Corporation.

TRUSTEE

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

WILLIAM J. COPELAND Director or Trustee of the Federated Fund $ $125,264.48 for
Birthdate: July 4, 1918 Complex; Director and Member of the the Trust and
One PNC Plaza-23rd Floor Executive Committee, Michael Baker, Inc.; 54 other
Pittsburgh, PA formerly: Vice Chairman and Director, PNC investment
TRUSTEE Bank, N.A., and PNC Bank Corp.; Director, companies
Ryan Homes, Inc. in the Fund
Complex

Retired: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic

Light Opera.

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

JAMES E. DOWD, ESQ. Director or Trustee of the Federated Fund $ $125, 264.48
Birthdate: May 18, 1922 Complex; Attorney-at-law; Director, The for the Trust
571 Hayward Mill Road Emerging Germany Fund, Inc. and 54 other
Concord, MA investment
TRUSTEE Retired: President, Boston Stock Exchange, companies
Inc.; Regional Administrator, United States in the Fund
Securities and Exchange Commission. Complex

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

LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $ $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the Trust and
1932 of Pittsburgh; Medical Director, University 54 other
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; investment
Suite 1111 Hematologist, Oncologist, and Internist, companies
Pittsburgh, PA Presbyterian and Montefiore Hospitals; in the Fund
TRUSTEE Member, National Board of Trustees, Complex
Leukemia Society of America.

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

EDWARD L. FLAHERTY, Director or Trustee of the Federated Fund $ $125,264.48 for
JR., ESQ. # Complex; Attorney, of Counsel, Miller, the Trust and
Birthdate: June 18, 1924 Ament, Henny & Kochuba; Director, Eat'N 54 other
Miller, Ament, Henny & Park Restaurants, Inc.; formerly: Counsel, investment
Kochuba Horizon Financial, F.A., Western Region; companies
205 Ross Street Partner, Meyer and Flaherty. in the Fund
Pittsburgh, PA Complex
TRUSTEE

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

PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the Trust and
1942 Commonwealth of Massachusetts General 54 other
One Royal Palm Way Court; President, State Street Bank and investment
100 Royal Palm Way Trust Company and State Street Corporation. companies
Palm Beach, FL in the Fund
TRUSTEE Retired: Director, VISA USA and VISA Complex
International; Chairman and Director,
Massachusetts Bankers Association;
Director, Depository Trust Corporation.

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

CHARLES F. MANSFIELD, Director or Trustee of some of the $ $0 for the
JR. Federated Funds; Management Consultant. Trust and
Birthdate: April 10, [__] other
1945 Previous Positions: Chief Executive investment
80 South Road Officer, PBTC International Bank; Chief companies in
Westhampton Beach, NY Financial Officer of Retail Banking Sector, the Fund Complex
TRUSTEE Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School
of Business, Hofstra University.

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

JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $ $113,860.22 for
J.D, S.J.D. Complex; President, Law Professor, Duquesne the Trust and
Birthdate: December 20, University; Consulting Partner, Mollica & 54 other
1932 Murray. investment
President, Duquesne companies
University Retired: Dean and Professor of Law, in the Fund
Pittsburgh, PA University of Pittsburgh School of Law; Complex
TRUSTEE Dean and Professor of Law, Villanova
University School of Law.

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

WESLEY W. POSVAR Director or Trustee of the Federated Fund $ $113,860.22 for
Birthdate: September Complex; President, World Society of the Trust and
14, 1925 Ekistics, Athens; Professor, International 54 other
1202 Cathedral of Politics; Management Consultant; Trustee, investment
Learning Carnegie Endowment for International Peace, companies
University of Pittsburgh RAND Corporation, Online Computer Library in the Fund
Pittsburgh, PA Center, Inc., National Defense University Complex
TRUSTEE 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.

Retired: Professor, United States Military
Academy; Professor, United States Air Force

Academy.

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

MARJORIE P. SMUTS Director or Trustee of the Federated Fund $ $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies
Company of America; business owner. in the Fund

Complex

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

JOHN S. WALSH Director or Trustee of some of the $ $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and
1957 Heat Wagon, Inc.; President and Director, [__] other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly: Vice
President, Walsh & Kelly, Inc.

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

WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and
Federated Investors Complex; Executive Vice President, 41 other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Investment Management Corp., companies in
Pittsburgh, PA Federated Advisers, Federated Management, the Fund Complex
CHIEF INVESTMENT OFFICER Federated Research, and Passport Research,

Ltd.; Registered Representative, Federated

Securities Corp.; Portfolio Manager,

Federated Administrative Services; Vice

President, Federated Investors, Inc.;

Formerly: Executive Vice President and
Senior Vice President, Federated Investment
Counseling Institutional Portfolio
Management Services Division; Senior Vice
President, Federated Research Corp.,
Federated Advisers, Federated Management,
Federated Research, and Passport Research,

Ltd.

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

SUSAN M. NASON Susan M. Nason has been the Fund's $0 $0 for the
Birthdate: August 29, portfolio manager since September 1991. She Trust and
1961 is Vice President of the Trust. Ms. Nason 3 other
Federated Investors joined Federated Investors in 1987 and has investment
Tower been a Senior Portfolio Manager and Senior companies in
1001 Liberty Avenue Vice President of the Fund's investment the Fund Complex
Pittsburgh, PA adviser since 1997. Ms. Nason served as a
VICE PRESIDENT Portfolio Manager and Vice President of the
investment adviser from 1993 to 1997. Ms.

Nason is a Chartered Financial Analyst and
received her M.S.I.A. concentrating in
Finance from Carnegie Mellon University.

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

RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and
1954 Division, Federated Investors, Inc.; 54 other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA

TREASURER
</TABLE>

+ Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for
the Fund.

The Adviser is a wholly-owned subsidiary of Federated.

The Adviser shall not be liable to the Fund or any Fund 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.

OTHER RELATED SERVICES

Affiliates of the Adviser may, from time to time, provide certain
electronic equipment and software to institutional customers in order to
facilitate the purchase of Fund Shares offered by the Distributor.

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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.

RESEARCH SERVICES

Research services 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. Research
services may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting those 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.

For the fiscal year ended, January 31, 1999, the Fund's adviser directed
brokerage transactions to certain brokers due to research services they
provided. The total amount of these transactions was $_______ for which the Fund
paid $_______ in brokerage commissions.

Investment decisions for the Fund are made independently from those of
other accounts managed by the Adviser. When the Fund and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.

ADMINISTRATOR

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

MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE
FEE FEDERATED FUNDS
0.150 of 1% on the first $250 million

- -------------------------
0.125 of 1% on the next $250 million
- -------------------------
0.100 of 1% on the next $250 million
- -------------------------
0.075 of 1% 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 voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.

Federated Services Company also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments for a
fee based on Fund assets plus out-of-pocket expenses.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian
for the securities and cash of the Fund. Foreign instruments purchased by the
Fund are held by foreign banks participating in a network coordinated by State
Street Bank.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, through its registered transfer agent
subsidiary, Federated Shareholder Services Company, maintains all necessary
shareholder records. The Fund pays the transfer agent a fee based on the size,
type, and number of accounts and transactions made by shareholders.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP is the independent public accountant for the Fund.

<PAGE>

FEES PAID BY THE FUND FOR SERVICES

FOR THE YEAR ENDED JANUARY 31 1999 1998 1997
Advisory Fee Earned $ $3,003,737 $3,384,916
- ---------------------------------
Advisory Fee Reduction $ $0 $69,622
- ---------------------------------
Brokerage Commissions $ $ $
- ---------------------------------
Administrative Fee $ $566,831 $639,583
- ---------------------------------
12b-1 Fee

- ---------------------------------
Institutional Service Shares $ ---- ----
- ---------------------------------
Shareholder Services Fee

- ---------------------------------
Institutional Shares $ ---- ----
- ---------------------------------
Institutional Service Shares $ ---- ----
- ---------------------------------

Fees are allocated among Classes based on their pro rata share of Fund
assets, except for marketing (Rule 12b-1) fees and shareholder services fees,
which are borne only by the applicable Class of Shares.

HOW DOES THE FUND MEASURE PERFORMANCE?

The Fund may advertise Share performance by using the Securities and
Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.

Unless otherwise stated, any quoted Share performance reflects the effect
of non-recurring charges, such as maximum sales charges, which, if excluded,
would increase the total return and yield. The performance of Shares depends
upon such variables as: portfolio quality; average portfolio maturity; type and
value of portfolio securities; changes in interest rates; changes or differences
in the Fund's or any class of Shares' expenses; and various other factors.

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

AVERAGE ANNUAL TOTAL RETURNS AND YIELD

Total returns given for the one-, five- and ten-year periods ended January
31, 1999.

Yield given for the 30-day period ended January 31, 1999.

30 -DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
INSTITUTIONAL SHARES

Total Return N/A

Yield

Total returns given for the one-, five- and since inception periods ended
January 31, 1999.

Yield given for the 30-day period ended January 31, 1999.

30 -DAY PERIOD 1 YEAR 5 YEARS SINCE INCEPTION
ON MAY 30, 1992
INSTITUTIONAL SERVICE SHARES

Total Return N/A

Yield

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital
gains distributions.

The average annual total return for Shares 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 NAV 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 the annual reinvestment of all
dividends and distributions.

YIELD

The yield of Shares is calculated by dividing: (i) the net investment
income per Share earned by the Shares over a thirty-day period; by (ii) the
maximum offering price per Share on the last day of the period. This number is
then annualized using semi-annual compounding. This means that the amount of
income generated during the thirty-day period is assumed to be generated each
month over a 12-month period and is reinvested every six months. The yield does
not necessarily reflect income actually earned by Shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

o information about the mutual fund industry from sources such as the
Investment Company Institute.

The Fund may compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.

The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete
view of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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:

o 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 Trust will quote its Lipper ranking in the
U.S. government funds category in advertising and sales literature.

o MERRILL LYNCH 1-5 YEAR TREASURY INDEX is an unmanaged index comprised of
U.S. Treasury securities maturing between 1 and 4.99 years.

o MERRILL LYNCH 3-YEAR TREASURY INDEX is an unmanaged index comprised of the
most recently issued 3-year U.S. Treasury notes.

o 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.

WHO IS FEDERATED INVESTORS, INC.?

Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.

FEDERATED FUNDS OVERVIEW

MUNICIPAL FUNDS

In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.

EQUITY FUNDS

In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.

CORPORATE BOND FUNDS

In the corporate bond sector, as of December 31, 1998, Federated managed 9
money market funds and 15 bond funds with assets approximating $22.8 billion and
$7.1 billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset-backed securities market, a market
totaling more than $209 billion.

GOVERNMENT FUNDS

In the government sector, as of December 31, 1998, Federated manages 9
mortgage-backed, 5 government/ agency and 19 government money market mutual
funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion,
respectively. Federated trades approximately $425 million in U.S. government and
mortgage-backed securities daily and places approximately $25 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 approximately $43.2 billion in government funds within
these maturity ranges.

<PAGE>

MONEY MARKET FUNDS

In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high yield - J. Thomas
Madden; U.S. fixed income -William D. Dawson, III; and global equities and fixed
income - Henry A. Frantzen. The Chief Investment Officers are Executive Vice
Presidents of the

Federated advisory companies.

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 $5 trillion to the more than 7,300 funds
available, according to the Investment Company Institute.

FEDERATED CLIENTS OVERVIEW

Federated distributes mutual funds through its subsidiaries for a variety
of investment purposes. Specific markets include:

INSTITUTIONAL CLIENTS

Federated meets the needs of approximately 900 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of purposes, 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
advisers. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division, Federated Securities Corp.

BANK MARKETING

Other institutional clients include 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.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated Funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported 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, Broker/Dealer Sales Division, Federated Securities Corp.

<PAGE>

ADDRESSES

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

Institutional Shares

Institutional Service 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 Management

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 PUBLIC ACCOUNTANTS

Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812

PART C. OTHER INFORMATION.

Item 23. EXHIBITS

(a) (i) Conformed Copy of Amended and Restated
Declaration of Trust; (2)
(ii) Conformed Copy of Amendment No. 4 to the
Declaration of Trust; (4)
(iii) Conformed Copy of Amendment No. 5 to the
Declaration of Trust; (5)
(iv) Conformed Copy of Amendment No. 6 to the
Declaration of Trust; (5)
(b) (i) Copy of Amended and Restated By-Laws of the
Registrant; (4)
(ii) Copy of Amendment No.5 to By-Laws of the
Registrant; (7)
(iii) Copy of Amendment No. 6 to By-Laws of the
Registrant; +
(iv) Copy of Amendment No. 7 to By-Laws of the
Registrant; +
(v) Copy of Amendment No. 8 to By-Laws of the
Registrant; +
(c) (i) Copy of Specimen Certificate for
Institutional Shares of the Trust; (3)
(ii) Copy of Specimen Certificate for
Institutional Service Shares of the
Trust; (3)

(d) Conformed Copy of Investment Advisory Contract of
the Registrant; (1)
(e) (i) Conformed Copy of Distributor's Contract
of the Registrant; (6)

(ii) 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 Numbers 33-38550 and 811-6269);

(f) Not applicable;

.......
+ All exhibits have been filed electronically.

1. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed January 19, 1990. (File Nos. 2-75769
and 811-3387)

2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed March 24, 1993. (File Nos. 2-75769 and
811-3387)

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed March 25, 1994. (File Nos. 2-75769 and
811-3387)

4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed March 29, 1995. (File Nos. 2-75769 and
811-3387)

5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed March 26, 1996. (File Nos. 2-75769 and
811-3387)

6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed March 24, 1997. (File Nos. 2-75769 and
811-3387)

7. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 29 on Form N-1A filed May 26, 1998 (File Nos. 2- 75769 and
811-3387)

(g) (i) Conformed Copy of Custodian Agreement of the Registrant; (3)
(ii)Conformed Copy of Custodian Fee Schedule; +

(h) (i) Conformed Copy of Amended and Restated Fund
Accounting Services, Administrative Services, Transfer Agency
Services and Custody Services Procurement; (6)
(ii) The responses described in Item 23(e)(ii)are hereby
incorporated by reference;

(iii)The Registrant hereby incorporates the conformed copy of the
Shareholder Services Sub-Contract between Fidelity and Federated
Shareholder Services from Item 23(h)(iii) of the Federated GNMA
Trust Registration Statement on Form N-1A, filed with the
Commission on March 26, 1996. (File Nos. 2-75670 and 811-3375).

(iv) Conformed Copy of Amended and Restated Shareholder Services
Agreement; (7)
(i) Conformed Copy of Opinion and Consent of Counsel as to Legality of
Shares being Registered; (3)
(j) Conformed Copy of Consent of Independent Public Accountants; (7)
(k) Not applicable;
(l) Conformed Copy of Initial Capital Understanding; (3)
(m) (i) Conformed copy of Rule 12b-1 Plan of the Registrant; (3)

(ii) The responses described in Item 23(e)(ii) are hereby
incorporated by reference;
(n) Copy of Financial Data Schedules; (7)

(o) The Registrant hereby incorporates the conformed Copy of the specimen
Multiple Class Plan from Item 23(o)(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);

+ All exhibits have been filed electronically.

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed March 25, 1994. (File Nos. 2-75769 and
811-3387)

6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed March 24, 1997. (File Nos. 2-75769 and
811-3387)

7. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 29 on Form N-1A filed May 26, 1998 (File Nos. 2- 75769 and
811-3387)

(p) (i) Conformed Copy of Power of Attorney of the
Registrant; (7)
(ii) Conformed Copy of Power of Attorney of
Chief Investment Officer; +
(iii) Conformed Copy of Power of Attorney of
Treasurer; +
(iv) Conformed Copy of Power of Attorney of
Trustee; +
(v) Conformed Copy of Power of Attorney of
Trustee; +

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

None

Item 25. INDEMNIFICATION: (1)

Item 26. Business and Other Connections of Investment Adviser:

For a description of the other business of the investment adviser, see the
section entitled "Who Manages the Fund" 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 under "Who Manages
and Provides Services to the Fund." 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

+ All exhibits have been filed electronically.

1. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed January 19, 1990. (File Nos. 2-75769
and 811-3387)

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed March 25, 1994. (File Nos. 2-75769 and
811-3387)

6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed March 24, 1997. (File Nos. 2-75769 and
811-3387)

7. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 29 on Form N-1A filed May 26, 1998 (File Nos. 2- 75769 and
811-3387)

Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski

Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
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
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
Charles A. Ritter
Keith J. Sabol
Frank Semack
Aash M. Shah
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Marc Halperin

Assistant Vice Presidents: Nancy J. Belz
Robert E. Cauley
Lee R. Cunningham, II
B. Anthony Delserone, Jr.
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
John Sheehy
Michael W. Sirianni
Leonardo A. Vila
Lori A. Wolff
Gary Farwell

Secretary: Stephen A. Keen

Treasurer: Thomas R. Donahue

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

Assistant Treasurer: Richard B. Fisher

The business address of each of the Officers of the investment adviser is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779. These individuals are also officers of a majority of the investment
advisers to the investment companies in the Federated Fund Complex described in
Part B of this Registration Statement.

Item 27. 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:

Automated Government Money Trust; Cash Trust Series II; Cash Trust Series,
Inc.; CCB Funds; 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 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.; Fixed Income Securities, Inc.; ; Hibernia
Funds; Independence One Mutual Funds; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; 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; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal FundsTrust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; High Yield Cash Trust; Investment Series Trust; Star Funds;
Targeted Duration Trust; The Virtus Funds; Trust for Financial Institutions;

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

<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief

1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.

Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, President

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

Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

</TABLE>

<PAGE>

Item 28. 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:
<TABLE>
<CAPTION>

<S> <C> <C>
Registrant Federated Investors Tower
Federated Investors Funds 1001 Liberty Avenue
5800 Corporate Drive Pittsburgh, PA 15222-3779

Pittsburgh, PA 15237-7000 (Notices should be sent to the agent for Services at above address)

Federated Shareholder Services

Company P.O. Box 8600
("Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and

Portfolio Recordkeeper")

Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Federated Management Federated Investors Tower
("Adviser") 1001 Liberty Avenue

Pittsburgh, PA 15222-3779

State Street Bank and Trust Federated Investors Tower
Company 1001 Liberty Avenue
("Custodian") Pittsburgh, PA 15222-3779
</TABLE>

Item 29. MANAGEMENT SERVICES: Not applicable.

Item 30. UNDERTAKINGS:

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED U.S. GOVERNMENT
SECURITIES FUND: 2-5 YEARS has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Pittsburgh and Commonwealth of Pennsylvania, on the 29th day of January,
1999.

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

BY: /s/ Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue

January 29, 1999

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/Karen M. Brownlee Attorney In Fact January 29, 1999

Karen M. Brownlee For the Persons
ASSISTANT SECRETARY Listed Below

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

Glen R. Johnson* President

William D. Dawson, III* Chief Investment Officer

Richard J. Thomas* Treasurer(Principal Financial and
Accounting Officer)

Thomas G. Bigley* Trustee

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

James e. Dowd, Esq.* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr., Esq.* Trustee

Peter E. Madden* Trustee

Charles F. Mansfield, Jr.* Trustee

John E. Murray, Jr., J.D., S.J.D.* Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

John S. Walsh* Trustee

* By Power of Attorney

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

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

AMENDMENT #6

TO THE BY-LAWS

(EFFECTIVE FEBRUARY 23, 1998)

Delete Sections 1, 2 and 3 of Article I, OFFICERS AND THEIR ELECTION, and
replace with:

Section 1. OFFICERS. The Officers of the Trust shall be a President, one or
more Vice Presidents, a Treasurer, and a Secretary. The Board of Trustees, in
its discretion, may also elect or appoint a Chairman of the Board of Trustees
(who must be a Trustee) and other Officers or agents, including one or more
Assistant Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. A Vice President, the Secretary or the Treasurer may
appoint an Assistant Vice President, an Assistant Secretary or an Assistant
Treasurer, respectively, to serve until the next election of Officers. Two or
more offices may be held by a single person except the offices of President and
Vice President may not be held by the same person concurrently. It shall not be
necessary for any Trustee or any Officer to be a holder of shares in any Series
or Class of the Trust.

Section 2. ELECTION OF OFFICERS. The Officers shall be elected annually by
the Trustees. Each Officer shall hold office for one year and until the election
and qualification of his successor, or until earlier resignation or removal. The
Chairman of the Board of Trustees, if there is one, shall be elected annually by
and from the Trustees, and serve until a successor is so elected and qualified,
or until earlier resignation or removal.

Section 3. RESIGNATIONS AND REMOVALS AND VACANCIES. Any Officer of the
Trust may resign at any time by filing a written resignation with the Board of
Trustees (or Chairman of the Trustees, if there is one), with the President, or
with the Secretary. Any such resignation shall take effect at the time specified
therein or, if no time is specified, at the time of receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Any Officer elected by the Board of Trustees or whose
appointment has been ratified by the Board of Trustees may be removed with or
without cause at any time by a majority vote of all of the Trustees. Any other
employee of the Trust may be removed or dismissed at any time by the President.
Any vacancy in any of the offices, whether by resignation, removal or otherwise,
may be filled for the unexpired portion of the term by the President. A vacancy
in the office of Assistant Vice President may be filled by a Vice President; in
the office of Assistant Secretary by the Secretary; or in the office of
Assistant Treasurer by the Treasurer. Any appointment to fill any vacancy shall
serve subject to ratification by the Board of Trustees at its next regular
meeting.

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

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

AMENDMENT #7

TO THE BY-LAWS

(EFFECTIVE FEBRUARY 27, 1998)

Delete Section 5 PROXIES of Article IV SHAREHOLDERS' MEETINGS, and replace
with the following:

Section 5. PROXIES. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person, by telephone, by electronic means
including facsimile, or by proxy, but no proxy which is dated more than six
months before the meeting named therein shall be accepted unless otherwise
provided in the proxy. Every proxy shall be in writing, subscribed by the
shareholder or his duly authorized agent or be in such other form as may be
permitted by law, including documents conveyed by electronic transmission. Every
proxy shall be dated, but need not be sealed, witnessed or acknowledged.

The placing of a shareholder's name on a proxy or authorizing another to
act as the shareholder's agent, pursuant to telephone or electronically
transmitted instructions obtained in accordance with procedures reasonably
designed to verify that such instructions have been authorized by such
shareholder, shall constitute execution of a proxy by or on behalf of such
shareholder. Where Shares are held of record by more than one person, any
co-owner or co-fiduciary may execute the proxy or give authority to an agent,
unless the Secretary of the Trust is notified in writing by any co-owner or
co-fiduciary that the joinder of more than one is to be required. All proxies
shall be filed with and verified by the Secretary or an Assistant Secretary of
the Trust, or the person acting as Secretary of the Meeting. Unless otherwise
specifically limited by their term, all proxies shall entitle the holders
thereof to vote at any adjournment of such meeting but shall not be valid after
the final adjournment of such meeting.

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

FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS

AMENDMENT #8

TO THE BY-LAWS

(EFFECTIVE MAY 12, 1998)

Strike Section 3 - Place of Meeting of Article IV - Shareholders' Meetings
and replace it with the following:

Section 3. PLACE OF MEETING. Meetings of the shareholders of the Trust or a
particular Series or Class shall be held at such place within or without The
Commonwealth of Massachusetts as may be fixed from time to time by resolution of
the Trustees.

Strike Section 6 - Place of Meeting of Article V - Trustees' Meetings and
replace it with the following:

Section 6. PLACE OF MEETING. Meetings of the Trustees shall be held at such
place within or without The Commonwealth of Massachusetts as fixed from time to
time by resolution of the Trustees, or as the person or persons requesting said
meeting to be called may designate, but any meeting may adjourn to any other
place.

Exhibit (g)(ii) 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
o 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 p(ii) 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 Secretaries of FEDERATED U.S. GOVERNMENT SECURITIES
FUND: 2-5 YEARS 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/ WILLIAM D. DAWSON, III Chief Investment January 12, 1999
- ----------------------------------------
William D. Dawson, III Officer

Sworn to and subscribed before me this 12th day of January, 1999

/S/ CHERI S. GOOD

Cheri S. Good

Notary Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

Exhibit p(iii) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/ RICHARD J. THOMAS Treasurer December 11, 1998
- ----------------------------------------
Richard J. Thomas (Principal Financial and
Accounting Officer)

Sworn to and subscribed before me this 11th day of December, 1998

/S/ CHERI S. GOOD

Cheri S. Good

Notary Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

Exhibit p(iv) 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 U.S. GOVERNMENT SECURITIES
FUND: 2-5 YEARS and the Deputy General Counsel of Federated Investors, 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 S. WALSH Trustee January 13, 1999
- ----------------------------------------
John S. Walsh

Sworn to and subscribed before me this 13th day of January, 1999

/S/ CHERI S. GOOD

Cheri S. Good

Notary Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

Exhibit p(ii) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/ CHARLES F. MANSFIELD, JR. Trustee January 13, 1999
- ----------------------------------------
Charles F. Mansfield, Jr.

Sworn to and subscribed before me this 13th day of January, 1999

/S/ CHERI S. GOOD

Cheri S. Good

Notary Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries