FEDERATED FUND FOR US GOVERNMENT SECURITIES INC, 485APOS, 1999-03-29

FEDERATED FUND FOR US GOVERNMENT SECURITIES INC
485APOS, 1999-03-29

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1933 Act File No. 2-33490
1940 Act File No. 811-1890

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. 69 .................... X
------- ------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 41 ...................................X
------- ------

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds

5800 Corporate Drive

Pittsburgh, Pennsylvania 15237-7000

(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire,

Federated Investors Tower

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 MAY 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.

Copies To:

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

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

PROSPECTUS

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

A mutual fund seeking to provide current income by investing at least 65% of its
assets in a diversified portfolio of U.S. government securities.

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

May 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?

The Fund pursues its investment objective by investing at least 65% of its
assets in U.S. government securities, including mortgage backed securities
issued by U. S. government agencies. In addition, the Fund may invest at least
35% of its assets in non-governmental mortgage backed securities.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose
money in the Fund. The primary factors that may reduce the Fund's returns
include:

o INTEREST RATE RISK. Prices of the fixed-income securities in which the Fund
invests generally fall when interest rates rise.

o PREPAYMENT RISK. Prices of the mortgage backed securities in which the Fund
invests are adversely affected by changes in the rate at which homeowners
prepay their mortgages which rate often corresponds to changes in interest
rates.

o CREDIT RISK. It is possible that issuers of non-governmental mortgage
backed securities in which the Fund invests will fail to pay interest or
principal on these securities when due, which would result in the Fund
losing money.

o LIQUIDITY RISK. The non-governmental mortgage backed securities in which
the Fund invests may be less readily marketable and may be subject to
greater fluctuation in price than other securities.

The Shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.

<PAGE>

RISK/RETURN BAR CHART AND TABLE

The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Class A Shares of the Fund 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 2.00% up to 16.00%.

The `x' axis represents calculation periods for the last ten calendar years of
the Class A Shares, 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
Class A Shares 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: 13.48%, 9.67%, 13.41%, 5.27%, 4.92%, -1.93%, 14.40%, 4.20%, 8.45% and
6.31%, respectively.

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

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.

The Fund's Class A Shares' total return from January 1, 1999, to March 31, 1999
was ___%.

Within the period shown in the Chart, the Fund's Class A Shares' highest
quarterly return was 7.91% (quarter ended June 30, 1989). Its lowest quarterly
return was -2.29% (quarter ended March 31, 1994).

The following table shows the Fund's Class A, Class B, and Class C Shares
Average Annual Total Returns for the calendar periods through December 31, 1998.

AVERAGE ANNUAL TOTAL RETURN

1 YEAR 5 YEARS 10 YEAR LIFE OF FUND [1]
Class A Shares 1.56% 5.17% 7.22% N/A
Class B Shares -0.36% N/A N/A 6.23%
Class C Shares 4.43% 5.29% N/A 4.88%
LB5YRTBI ___% ___% % %
LBMBSI 6.97% 7.23% 9.12% %
LUSMFA ___% ___% ___% %

1 The Fund's Class B Shares and Class C Shares start of performance dates
were July 26, 1994, and April 27, 1993, respectively.

The table shows the Fund's Class A Shares' total returns averaged over a period
of years relative to the Lehman Brothers 5-Year Treasury Bellwether Index
(LB5YRTBI) and the Lehman Brothers Mortgage backed Securities Index (LBMBSI),
broad-based market indices, and the Lipper U.S. Mortgage Funds Average (LUSMFA),
an average of funds with similar investment objectives.

The Fund's Class A Shares' 30-Day Net Yield as of ___ was ___%. Investors may
call the Fund at 1-800-____ to acquire the current 30-Day Net Yield. 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 FUND FOR U.S. GOVERNMENT SECURITIES, INC.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund's Class A Shares, Class B Shares, and Class C Shares.

SHAREHOLDER FEES CLASS CLASS B CLASS
A C
<S> <C> <C> <C>
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a 4.50% None None
percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of 0.00% 5.50% 1.00%
original purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and None None None
other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Exchange Fee None None None

ANNUAL FUND OPERATING EXPENSES (Before Waiver)(1) EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management Fee 0.39%
0.39% 0.39% Distribution (12b-1) Fee None 0.75% 0.75% Shareholder Services Fee
(2) 0.25% 0.25% 0.25% Other Expenses 0.34% 0.34% 0.34% Total Annual Fund
Operating Expenses 0.98% 1.73%(3)1.73% 1 Although not contractually obligated to
do so, the shareholder services provider
waived certain amounts. These are shown below along with the net expenses the Fund
ACTUALLY PAID for the fiscal year ended March 31, 1999.
Waiver of Fund Expenses 0.02% 0.00% 0.00%

Total Actual Annual Fund Operating Expenses (after waiver) 0.96% 1.73% 1.73%
2 The shareholder services fee for Class A Shares has been voluntarily reduced. This
</TABLE>

voluntary reduction can be terminated at any time. The shareholder services
fee paid by the Fund's Class A Shares (after the voluntary reduction) was
0.23% for the year ended March 31, 1999.

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

<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund's Class A, B, and C Shares with the cost of investing in other mutual
funds. The Example assumes that you invest $10,000 in the Fund's Class A, B, and
C Shares for the time periods indicated and then redeem all of your Shares at
the end of those periods. Expenses assuming no redemption are also shown. The
Example also assumes that your investment has a 5% return each year and that the
Fund's Class A, B, and C Shares' operating expenses are BEFORE WAIVERS 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:

SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS A SHARES
Expenses assuming redemption $545 $748 $967 $1,597
Expenses assuming no $545 $748 $967 $1,597
redemption
CLASS B SHARES
Expenses assuming redemption $726 $945 $1,139 $1,842
Expenses assuming no $176 $545 $939 $1,842
redemption
CLASS C SHARES
Expenses assuming redemption $276 $545 $939 $2,041
Expenses assuming no $176 $545 $939 $2,041
redemption

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests at least 65% of its assets in a portfolio of U. S. government
securities. Under normal market conditions, the Fund is invested primarily in
the agency mortgage backed security sector. The Adviser believes that, in most
market environments, the mortgage sector generates risk-adjusted returns
superior to other types of U. S. government securities, such as Treasury and
Agency coupon securities. A description of the principal securities in which the
Fund invests, and their risks, immediately follows the strategy discussion. The
Fund's Adviser actively manages the Fund's portfolio, seeking to limit the
prepayment risk taken by the Fund while selecting fixed income securities that
the Adviser believes will provide attractive returns over comparable Treasury
securities. The relatively inefficient pricing in the mortgage-backed market
offers opportunities for incremental return through careful security selection.
The Fund may invest in a variety of mortgage securities, including fixed-rate
mortgage securities, adjustable rate mortgage securities, and structured
mortgage products such as CMOs. The Adviser attempts to assess the relative
returns and risks of these securities by analyzing how the timing, amount and
division of cash flows from the pool of mortgages supporting the security might
change in response to changing economic and market conditions. In addition to
buying mortgage backed securities outright, the Fund may acquire securities on a
"to be announced" basis in order to enhance yield. The Fund engages in dollar
roll transactions to increase income. Mortgage backed securities offer higher
relative returns because of their prepayment risk. The Adviser attempts to
manage the Fund's prepayment risk based on its interest rate outlook. The
Adviser selects mortgage backed securities that the Adviser believes will
provide the best relative performance in response to expected interest rate
changes and that pay interest rates high enough to compensate for their
anticipated prepayment risk. For example, if the Adviser expects market interest
rates to decline, the Adviser may select mortgage backed securities with
underlying mortgages which have restrictions on prepayment or which have been
outstanding for longer periods of time so that prepayment may be less likely.

If the Adviser expects a significant increase or decrease in market interest
rates, the Adviser may change the structure of the Fund's portfolio. For
example, the Adviser could increase the Fund's investment in CMOs with
relatively predictable cash flows (such as sequential pay, planned amortization
class and targeted amortization classes). The Adviser may use combinations of
CMOs, and CMOs and other mortgage backed securities to attempt to provide a
higher yielding investment with relatively low sensitivity to fluctuations in
interest rates. The Adviser may reduce the amount of the Fund's portfolio that
is invested in mortgage backed securities and select other Treasury or Agency
securities that are not subject to prepayment risk.

The Adviser formulates its interest rate outlook by analyzing a variety of
factors such as:

o.......current and expected U. S. economic growth,

o.......current and expected interest rates and inflation,

o.......the Federal Reserve's monetary policy, and

o.......changes in the supply of or demand for U. S. government securities.

There is no assurance that the Adviser's efforts to forecast market interest
rates and assess the impact of market interest rates on particular securities
will be successful.

PORTFOLIO TURNOVER

Prepayments of mortgage backed securities will cause the Fund to have an
increased portfolio turnover rate, which is likely to generate short-term gains
(losses) for its shareholders. Short-term gains are taxed at a higher rate than
long-term gains. Portfolio turnover increases the Fund's trading costs and may
have an adverse impact on the Fund's performance.

TEMPORARY DEFENSIVE INVESTMENTS

The Fund may temporarily depart from its principal investment strategies by
investing its assets in cash, cash items, and shorter-term, higher-quality debt
securities and similar obligations. It may do this to minimize potential losses
and maintain liquidity to meet shareholder redemptions during adverse market
conditions. This may cause the Fund to give up greater investment returns to
maintain the safety of principal, that is, the original amount invested by
shareholders.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
fixed rate. The rate may be a fixed percentage of 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.

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
principally 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

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. Agency
securities are generally regarded as having low credit risks, but not as low
as U.S. Treasury securities.

MORTGAGE BACKED SECURITIES

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the PREPAYMENT
RISKS of the underlying mortgages.

COLLATERALIZED MORTGAGE OBLIGATIONS

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different PREPAYMENT AND MARKET RISKS for each CMO
class.

SEQUENTIAL CMOS

PACS, TACS AND COMPANION CLASSES

More sophisticated CMOs include planned amortization classes (PACs) and
targeted amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive principal
payments and prepayments in excess of the specified rate. In addition,
PACs will receive the companion classes' share of principal payments, if
necessary, to cover a shortfall in the prepayment rate. This helps PACs
and TACs to control prepayment risks by increasing the risks to their
companion classes.

The degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of
mortgage backed security depend upon the performance of the underlying
pool of mortgages, which no one can predict and will vary among pools.

NON-GOVERNMENTAL MORTGAGE BACKED SECURITIES

Non-governmental mortgage backed securities are issued by private entities,
rather than by U. S. government agencies. The pools of mortgages which support
these securities may be guaranteed by a GSE or by a form of private credit
enhancement. These securities involve credit risks and liquidity risks.

CREDIT ENHANCEMENT

Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security if the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

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.

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.

TO BE ANNOUNCED SECURITIES (TBAS)

DOLLAR ROLLS

Dollar rolls are transactions where the Portfolio sells mortgage backed
securities with a commitment to buy similar, but not identical, mortgage
backed securities on a future date at a lower price. Normally, one or
both securities involved are TBA mortgage backed securities. Dollar
rolls are subject to MARKET RISKS.

ASSET COVERAGE

In order to secure its obligations in connection with 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
special transactions.

SECURITIES LENDING

The Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for the Fund. However, the Fund must pay interest to the
borrower for the use of cash collateral.

Loans are subject to termination at the option of the Fund or the borrower. The
Fund will not have the right to vote on securities while they are on loan, but
it will terminate a loan in anticipation of any important vote. The Fund may pay
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash collateral to a securities
lending agent or broker.

Securities lending activities are subject to MARKET RISKS AND CREDIT RISKS.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine 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.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

INTEREST RATE RISKS

o Prices of fixed income securities rise and fall in response to changes in
the interest rate paid by similar securities. Generally, when interest rates
rise, prices of fixed income securities fall. However, market factors, such
as the demand for particular fixed income securities, may cause the price of
certain fixed income securities to fall while the prices of other securities
rise or remain unchanged.

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.

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.

PREPAYMENT RISKS

o Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates.
Other economic factors can also lead to increases or decreases in
prepayments. Increases in prepayments of high interest rate mortgage backed
securities, or decreases in prepayments of lower interest rate mortgage
backed securities, may reduce their yield and price. These factors,
particularly the relationship between interest rates and mortgage
prepayments makes the price of mortgage backed securities more volatile than
many other types of fixed income securities with comparable credit risks.

o Mortgage backed securities generally compensate for greater prepayment risk
by paying a higher yield. The difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security is
perceived to have an increased prepayment risk or perceived to have less
market demand. An increase in the spread will cause the price of the
security to decline.

o The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks,
or other less favorable characteristics.

LIQUIDITY RISKS

o Trading opportunities are more limited for CMOs that have complicated terms
or that are not widely held. These features may make it more difficult to
sell or buy a security at a favorable price or time. Consequently, the Fund
may have to accept a lower price to sell a security, sell other securities
to raise cash or give up an investment opportunity, any of which could have
a negative effect on the Fund's performance. Infrequent trading of
securities may also lead to an increase in their price volatility.

o Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security when it wants to. If this happens, the Fund will be
required to continue to hold the security, and the Fund could incur losses.

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 calculated net asset value (NAV) plus any applicable
front-end sales charge (public offering price).

NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE is open.

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

The following table summarizes the minimum required investment amount and the
maximum sales charge, if any, that you will pay on an investment in the Fund.
Keep in mind that investment professionals may charge you fees for their
services in connection with your Share transactions.

MAXIMUM SALES CHARGE
MINIMUM FRONT-END CONTINGENT
SHARES OFFERED INITIAL/SUBSEQUENT SALES CHARGE2 DEFERRED SALES
INVESTMENT AMOUNTS1 CHARGE3

Class A $1,500/$100 4.50% None
Class B $1,500/$100 None 5.50%
Class C $1,500/$100 None 1.00%

1 THE MINIMUM INITIAL AND SUBSEQUENT INVESTMENT AMOUNTS FOR RETIREMENT PLANS ARE
$250 AND $100, RESPECTIVELY. THE MINIMUM SUBSEQUENT INVESTMENT AMOUNTS FOR
SYSTEMATIC INVESTMENT PROGRAMS IS $50. INVESTMENT PROFESSIONALS MAY IMPOSE
HIGHER OR LOWER MINIMUM INVESTMENT REQUIREMENTS ON THEIR CUSTOMERS THAN THOSE
IMPOSED BY THE FUND. ORDERS FOR $250,000 OR MORE WILL BE INVESTED IN CLASS A
SHARES INSTEAD OF CLASS B SHARES TO MAXIMIZE YOUR RETURN AND MINIMIZE THE SALES
CHARGES AND MARKETING FEES. ACCOUNTS HELD IN THE NAME OF AN INVESTMENT
PROFESSIONAL MAY BE TREATED DIFFERENTLY. CLASS B SHARES WILL AUTOMATICALLY
CONVERT INTO CLASS A SHARES AFTER EIGHT FULL YEARS FROM THE PURCHASE DATE. THIS
CONVERSION IS A NON-TAXABLE EVENT. 2 FRONT-END SALES CHARGE IS EXPRESSED AS A
PERCENTAGE OF PUBLIC OFFERING PRICE. SEE "SALES CHARGE WHEN YOU PURCHASE." 3 SEE
"SALES CHARGE WHEN YOU REDEEM."

SALES CHARGE WHEN YOU PURCHASE

CLASS A SHARES

<PAGE>

Sales Charge as a Sales Charge as a
Purchase Amount Percentage of Public Percentage of NAV
Offering Price

Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1 million 2.00% 2.04%
$1 million or greater1 0.00% 0.00%

1 A CONTINGENT DEFERRED SALES CHARGE OF 0.75% OF THE REDEMPTION AMOUNT APPLIES
TO CLASS A SHARES REDEEMED UP TO 24 MONTHS AFTER PURCHASE UNDER CERTAIN
INVESTMENT PROGRAMS WHERE AN INVESTMENT PROFESSIONAL RECEIVED AN ADVANCE PAYMENT
ON THE TRANSACTION.

THE SALES CHARGE AT PURCHASE MAY BE REDUCED OR ELIMINATED BY:

o purchasing Shares in greater quantities to reduce the applicable sales
charge;

o combining concurrent purchases of Shares:

- - by you, your spouse, and your children under age 21; or

- - of the same share class of two or more Federated Funds (other than money
market funds);

o accumulating purchases (in calculating the sales charge on an additional
purchase, include the current value of previous Share purchases still
invested in the Fund); or

o signing a letter of intent to purchase a specific dollar amount of Shares
within 13 months (call your investment professional or the Fund for more
information).

THE SALES CHARGE WILL BE ELIMINATED WHEN YOU PURCHASE SHARES:

o within 120 days of redeeming Shares of an equal or lesser amount;

O by exchanging shares from the same share class of another Federated Fund
(other than a money market fund);

o through wrap accounts or other investment programs where you pay the
investment professional directly for services;

o through investment professionals that receive no portion of the sales
charge;

o as a Federated Life Member (Class A Shares only) and their immediate family
members; or

o as a Director or employee of the Fund, the Adviser, the Distributor and
their affiliates, and the immediate family members of these individuals.

If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional should notify the Fund's Distributor,
Federated Securities Corp., at the time of purchase. If the Distributor is
not notified, you will receive the reduced sales charge only on additional
purchases, and not retroactively on previous purchases.

SALES CHARGE WHEN YOU REDEEM

Your redemption proceeds may be reduced by a sales charge, commonly referred to
as a contingent deferred sales charge (CDSC).

CLASS A SHARES

A CDSC of 0.75% of the redemption amount applies to Class A Shares redeemed up
to 24 months after purchase under certain investment programs where an
investment professional received an advance payment on the transaction.

CLASS B SHARES

---------
Shares Held Up To: CDSC
1 year 5.50%
2 years 4.75%
3 years 4.00%
4 years 3.00%
5 years 2.00%
6 years 1.00%
7 years or more 0.00%

CLASS C SHARES

You will pay a 1% CDSC if you redeem Shares within one year of the purchase
date.

YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING SHARES:

o purchased with reinvested dividends or capital gains;

o purchased within 120 days of redeeming Shares of an equal or lesser amount;

o that you exchanged into the same share class of another Federated Fund
where the shares were held for the applicable CDSC holding period (other
than a money market fund);

o purchased through investment professionals who did not receive advanced
sales payments; or

O if, after you purchase Shares, you become disabled as defined by the IRS.

IN ADDITION, YOU WILL NOT BE CHARGED A CDSC:

o if the Fund redeems your Shares and closes your account for not meeting the
minimum balance requirement;

o if your redemption is a required retirement plan distribution;

o upon the death of the last surviving shareholder of the account.

If your redemption qualifies, you or your investment professional should notify
the Distributor at the time of redemption to eliminate the CDSC. If the
Distributor is not notified, the CDSC will apply.

TO KEEP THE SALES CHARGE AS LOW AS POSSIBLE, THE FUND REDEEMS YOUR SHARES IN
THIS ORDER:

o Shares that are not subject to a CDSC; and

o Shares held the longest (to determine the number of years your Shares have
been held, include the time you held shares of other Federated Funds that
have been exchanged for Shares of this Fund).

o The CDSC is then calculated using the share price at the time of purchase
or redemption, whichever is lower.

HOW IS THE FUND SOLD?

The Fund offers three share classes: Class A Shares, Class B Shares, and Class C
Shares, each representing interests in a single portfolio of securities.

The Fund's Distributor markets the Shares described in this prospectus to
institutions or individuals, directly or through investment professionals.

When the Distributor receives sales charges and 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 Class B Shares and Class C 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.

Where the Fund offers more than one share class and you do not specify the class
choice on your New Account Form or form of payment (e.g., Federal Reserve wire
or check) you automatically will receive Class A 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 4:00 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 three
business days. 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).

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 SYSTEMATIC INVESTMENT PROGRAM

Once you have opened an account, you may automatically purchase additional
Shares on a regular basis by completing the Systematic Investment Program
section of the New Account Form or by contacting the Fund or your investment
professional.

BY AUTOMATED CLEARING HOUSE (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.

RETIREMENT INVESTMENTS

You may purchase Shares as retirement investments (such as qualified plans and
IRAs or transfer or rollover of assets). Call your investment professional or
the Fund for information on retirement investments. We suggest that you discuss
retirement investments with your tax adviser. You may be subject to an annual
IRA account fee.

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 4:00 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 4:00 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 30 days;

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

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

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.

REDEMPTIONS FROM RETIREMENT ACCOUNTS

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes. This
withholding only applies to certain types of retirement accounts.

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.

SYSTEMATIC WITHDRAWAL PROGRAM

You may automatically redeem or exchange Shares in a minimum amount of $100 on a
regular basis. Complete the appropriate section of the New Account Form or an
Account Service Options Form or contact your investment professional or the
Fund. Your account value must meet the minimum initial investment amount at the
time the program is established. This program may reduce, and eventually
deplete, your account. Payments should not be considered yield or income.

Generally, it is not advisable to continue to purchase Shares subject to a sales
charge while redeeming Shares using this program.

SYSTEMATIC WITHDRAWAL PROGRAM (SWP) ON CLASS B SHARES You will not be charged a
CDSC on SWP redemptions if:

o you redeem 12% or less of your account value in a single year;

o you reinvest all dividends and capital gains distributions; and

o your account has at least a $10,000 balance when you establish the SWP.
(You cannot aggregate multiple Class B Share accounts to meet this minimum
balance.)

You will be subject to a CDSC on redemption amounts that exceed the 12% annual
limit. In measuring the redemption percentage, your account is valued when you
establish the SWP and then annually at calendar year-end. You can redeem
monthly, quarterly, or semi-annually.

For SWP accounts established prior to April 1, 1999, your account must be at
least one year old to be eligible for the waiver of the CDSC.

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, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares and pays any dividends monthly to shareholders. Dividends are
paid to all shareholders invested in the Fund on the record date. The record
date is the date on which a shareholder must officially own Shares in order to
earn a dividend.

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 a 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 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

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 and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.

WHO MANAGES THE FUND?

The Board of Directors governs the Fund. The Board selects and oversees the
Adviser, Federated Investment Management Company. 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 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.

The Fund's portfolio managers are:

Kathleen M. Foody-Malus has been the Fund's portfolio manager since July
1993. She is Vice President of the Fund. Ms. Foody-Malus joined Federated in
1983 and has been a Senior Portfolio Manager since 1996 and a Vice President of
the Fund's Adviser since 1993. She was a Portfolio Manager and a Vice President
of the Fund's Adviser from 1993 to 1996. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh.

Todd A. Abraham has been the Fund's portfolio manager since May 1997. Mr.
Abraham has been a Portfolio Manager since ____ and a Vice President of the
Fund's Adviser since July 1997. Mr. Abraham joined Federated in 1993 as an
Investment Analyst and served as Assistant Vice President from 1995 to 1997. Mr.
Abraham served as a Portfolio Analyst at Ryland Mortgage Co. from 1992 to 1993.
Mr. Abraham is a Chartered Financial Analyst and received his M.B.A. in finance
from Loyola College.

Christopher J. Smith has been the Fund's portfolio manager since November
1997. Mr. Smith joined Federated 1995 as a Vice President of the Fund's advisory
subsidiary. He has been a Vice President of the Fund's Adviser since March 1997.
He was an Assistant Vice President Provident Life & Accident Insurance Company
from 1987 through 1994. Mr. Smith is a Chartered Financial Analyst. He received
his M.A. in Economics and Finance from the University of Kentucky.

ADVISORY FEES

The Adviser receives an annual investment advisory fee based on the Fund's
average daily net assets as shown in the chart below plus 4.50% of the Fund's
gross income. The Adviser may voluntarily waive a portion of its fee or
reimburse the Fund for certain operating expenses.

AVERAGE DAILY NET ASSETS PERCENT OF AVERAGE DAILY NET ASSETS

First $500 million 0.250%

Second $500 million 0.225%

Over $1 billion 0.200%

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 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.

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 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 Deloitte & Touche LLP, whose report, along
with the Fund's audited financial statements, is included in the Annual Report.

<PAGE>

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

A Statement of Additional Information (SAI) dated May 31, 1999, is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's annual and semi-annual reports to
shareholders as they become available. 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,
semi-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. 811-1890

CUSIP 314182106
CUSIP 314182205
CUSIP 314182304

G01095-01 (5/99)

STATEMENT OF ADDITIONAL INFORMATION

FEDERATED FUND FOR U.S. GOVERNMENT

SECURITIES, INC.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for Federated Fund for U.S.
Government Securities, Inc. (Fund), dated May 31, 1999.

This SAI incorporates by reference the Fund's Annual Report. Obtain the
prospectus or the Annual Report without charge by calling 1-800-341-7400.

May 31, 1999

CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
What do Shares Cost?
How is the Fund Sold?
Subaccounting Services
Redemption in Kind
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.?
Financial Information
Investment Ratings
Addresses

CUSIP 314182106

CUSIP 314182205

CUSIP 314182304

8062807B (5/99)

<PAGE>

HOW IS THE FUND ORGANIZED?

The Fund is a diversified open-end, management investment company that was
established under the laws of the State of Maryland on June 9, 1969. The Fund
changed its name from Fund for U.S. Government Securities, Inc. to Federated
Fund for U.S. Government Securities, Inc. on February 26, 1996.

The Board of Directors (the Board) has established three classes of shares of
the Fund, known as Class A Shares, Class B Shares, and Class C Shares (Shares).
This SAI relates to all classes of the above-mentioned Shares. The Fund's
investment adviser is Federated Investment Management Company (Adviser). The
Adviser, formerly known as Federated Advisers, changed its name effective March
31, 1999.

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 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. Agency securities are generally
regarded as having low

credit risks, but not as low as treasury securities.

The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the MARKET AND PREPAYMENT RISKS of these mortgage backed
securities. MORTGAGE BACKED SECURITIES Mortgage backed securities represent
interests in pools of mortgages. The mortgages that comprise a pool normally
have similar interest rates, maturities and other terms. Mortgages may have
fixed or adjustable interest rates. Interests in pools of adjustable rate
mortgages are known as ARMs. Mortgage backed securities come in a variety of
forms. Many have extremely complicated terms. The simplest form of mortgage
backed securities are pass-through certificates. An issuer of pass-through
certificates gathers monthly payments from an underlying pool of mortgages.
Then, the issuer deducts its fees and expenses and passes the balance of the
payments onto the certificate holders once a month. Holders of pass-through
certificates receive a pro rata share of all payments and pre-payments from
the underlying mortgages. As a result, the holders assume all the PREPAYMENT
RISKS of the underlying mortgages. The Fund may invest in MORTGAGE BACKED
securities primarily by investing in another mutual fund (which is not
available for general investment by the public) that owns those securities
and that is advised by an affiliate of the Adviser. This other mutual fund
in managed independently of the Fund and may incur additional administrative
expenses. Therefore, any such investment by the Fund may be subject to
duplicate expenses. However, the Adviser believes that the benefits and
efficiencies of this approach should outweigh the potential additional
expenses. The Fund may also invest in such securities directly.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying
pass-through certificate among holders of different classes of mortgage
backed securities. This creates different PREPAYMENT AND MARKET RISKS
for each CMO class.

SEQUENTIAL CMOS

In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all
principal payments after the first class is paid off. This process
repeats for each sequential class of CMO. As a result, each class of
sequential pay CMOs reduces the prepayment risks of subsequent
classes. PACS, TACS AND COMPANION CLASSES More sophisticated CMOs
include planned amortization classes (PACs) and targeted amortization
classes (TACs). PACs and TACs are issued with companion classes. PACs
and TACs receive principal payments and prepayments at a specified
rate. The companion classes receive principal payments and
prepayments in excess of the specified rate. In addition, PACs will
receive the companion classes' share of principal payments, if
necessary, to cover a shortfall in the prepayment rate. This helps
PACs and TACs to control prepayment risks by increasing the risks to
their companion classes. IOS AND POS CMOs may allocate interest
payments to one class (Interest Only or IOs) and principal payments
to another class (Principal Only or POs). POs increase in value when
prepayment rates increase. In contrast, IOs decrease in value when
prepayments increase, because the underlying mortgages generate less
interest payments. However, IOs tend to increase in value when
interest rates rise (and prepayments decrease), making IOs a useful
HEDGE against market risks.

FLOATERS AND INVERSE FLOATERS

Another variant allocates interest payments between two classes of
CMOs. One class (Floaters) receives a share of interest payments
based upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts PREPAYMENT AND MARKET RISKS from the
Floater to the Inverse Floater class, reducing the price volatility
of the Floater class and increasing the price volatility of the
Inverse Floater class. PRIVATELY ISSUED MORTGAGE BACKED SECURITIES
Privately issued mortgage backed securities are issued by entities
that are not U.S. government agencies. The pools of mortgages which
support these securities may be guaranteed enhancement by a GSE or by
a form of private credit enhancement. These securities involve credit
risks and liquidity risks. Z CLASSES CMOs must allocate all payments
received from the underlying mortgages to some class. To capture any
unallocated payments, CMOs generally have an accrual (Z) class. Z
classes do not receive any payments from the underlying mortgages
until all other CMO classes have been paid off. Once this happens,
holders of Z class CMOs receive all payments and prepayments. The
degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of
mortgage backed security depend upon the performance of the
underlying pool of mortgages, which no one can predict and will vary
among pools.

NON-GOVERNMENTAL MORTGAGE BACKED SECURITIES

MORTGAGE RELATED ASSET BACKED SECURITIES

Asset backed securities are payable from pools of obligations other than
first-lien mortgages. Most asset backed securities involve consumer or
commercial debt. The Fund will invest only in the following kinds of asset
backed securities: home equity loans, second mortgages and manufactured
housing obligations. Asset backed securities may take the form of commercial
paper, notes, or pass through certificates. Asset backed securities have
PREPAYMENT RISKS. Like CMOs, asset backed securities may be structured like
Floaters, Inverse Floaters, IOs and POs. CREDIT ENHANCEMENT Credit
enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases
the company providing credit enhancement makes all payments directly to the
security holders and receives reimbursement from the issuer. Normally, the
credit enhancer has greater financial resources and liquidity than the
issuer. For this reason, the Adviser usually evaluates the credit risk of a
fixed income security based solely upon its credit enhancement.

SPECIAL TRANSACTIONS
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.
Repurchase agreements are subject to CREDIT RISKS. REVERSE REPURCHASE
AGREEMENTS Reverse repurchase agreements are repurchase agreements in which
the Fund is the seller (rather than the buyer) of the securities, and agrees
to repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Fund. Reverse
repurchase agreements are subject to CREDIT risks. In addition, reverse
repurchase agreements create LEVERAGE RISKS because the Fund must repurchase
the underlying security at a higher price, regardless of the market value of
the security at the time of repurchase. 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.

TO BE ANNOUNCED SECURITIES (TBAS)

As with other delayed delivery transactions, a seller agrees to issue a
TBA security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Fund and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages. The
seller would not identify the specific underlying mortgages until it
issues the security. TBA mortgage backed securities increase MARKET
RISKS because the underlying mortgages may be less favorable than
anticipated by the Fund. DOLLAR ROLLS Dollar rolls are transactions
where the Fund sells mortgage backed securities with a commitment to buy
similar, but not identical, mortgage backed securities on a future date
at a lower price. Normally, one or both securities involved are TBA
mortgage backed securities. Dollar rolls are subject to MARKET RISKS AND
CREDIT RISKS.

ASSET COVERAGE

SECURITIES LENDING

The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Fund the equivalent of any dividends or interest received on
the loaned securities. The Fund will reinvest cash collateral in securities
that qualify as an acceptable investment for the Fund. However, the Fund
must pay interest to the borrower for the use of cash collateral. Loans are
subject to termination at the option of the Fund or the borrower. The Fund
will not have the right to vote on securities while they are on loan, but it
will terminate a loan in anticipation of any important vote. The Fund may
pay administrative and custodial fees in connection with a loan and may pay
a negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker. Securities lending activities are
subject to MARKET RISKS AND CREDIT RISKS.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash. The
Fund may invest in MORTGAGE BACKED securities primarily by investing in another
mutual fund (which is not available for general investment by the public) that
owns those securities and that is advised by an affiliate of the Adviser. This
other mutual fund in managed independently of the Fund and may incur additional
administrative expenses. Therefore, any such investment by the Fund may be
subject to duplicate expenses. However, the Adviser believes that the benefits
and efficiencies of this approach should outweigh the potential additional
expenses. The Fund may also invest in such securities directly.

INVESTMENT RATINGS

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

INVESTMENT RISKS

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

INTEREST RATE RISKS

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.

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.

PREPAYMENT RISKS

o The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks,
or other less favorable characteristics.

LIQUIDITY RISKS

O Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security when it wants to. If this happens, the Fund will be
required to continue to hold the security, and the Fund could incur losses.

RISKS ASSOCIATED WITH COMPLEX CMOS

o CMOs with complex terms, such as companion classes, IOs, POs, and Inverse
Floaters, generally entail greater market, prepayment and liquidity risks
than other mortgage backed securities. For example, their prices are more
volatile and their trading market may be more limited.

LEVERAGE RISKS

o Leverage risk is created when an investment exposes the Fund to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify the Fund's risk of loss and potential for gain.

FUNDAMENTAL INVESTMENT POLICIES

The Fund will invest at least 65% of its assets in U.S. government securities,
including mortgage backed securities issued by U.S. government agencies. In
addition, the Fund may invest at least 35% of its assets in on-governmental
mortgage backed securities.

The U.S. government securities in which the Fund invests are primary or
direct obligations of the U.S. government or its instrumentalities or securities
which are guaranteed as to payment of principal and interest by the U.S.
government or its instrumentalities (hereinafter referred to as "U.S. government
securities").

The Fund will not borrow money, issue senior securities, or pledge assets,
except that under certain circumstances the Fund may borrow money and engage in
reverse repurchase agreement transactions in amounts up to one-third of the
value of its net assets, including the amounts borrowed, and pledge up to 10% of
the value of those assets to secure such borrowings.

The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by enabling the Fund to meet
redemption requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. However, during the period any reverse
repurchase agreements are outstanding, but only to the extent necessary to
assure completion of the reverse repurchase agreements, the Fund will restrict
the purchase of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund 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 securities. The Fund may purchase and dispose of U.S
.government securities and CMOs before they are issued and may also purchase and
dispose of them on a delayed delivery basis. INVESTING IN COMMODITIES The Fund
will not purchase or sell commodities or commodity contracts. UNDERWRITING The
Fund will not underwrite any issue of securities. BUYING OR SELLING REAL ESTATE
The Fund will not buy or sell real estate, but the Fund may invest in real
estate investment trusts, marketable securities of companies that may represent
indirect interest in real estate, or any investment security that derives its
value from real estate. LENDING CASH OR SECURITIES The Fund will not lend any
assets except portfolio securities. (This shall not prevent the purchase or
holding of U.S. government securities, repurchase agreements covering U.S.
government securities, or other transactions which are permitted by the Fund's
investment objective and policies or Charter.)

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.

ILLIQUID SECURITIES

The Fund 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 Fund did not borrow money in
excess of 5% of the value of its net assets during the last fiscal year and has
no present intent to do so in the coming fiscal year. The Fund does not intend
to invest more than 5% of the value of its total assets in inverse floaters or
interest-only mortgage-related securities in the coming fiscal year.

PORTFOLIO TURNOVER

The Fund's policy of managing its portfolio of U.S. government securities,
including the sale of securities held for a short period of time, to achieve its
investment objective of current income may result in high portfolio turnover.
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. During the fiscal years ended March 31, 1999
and 1998, the portfolio turnover rates were ___% and 88%, respectively.

DETERMINING MARKET VALUE OF SECURITIES

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

o 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;

o 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

o 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.

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.

REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE

You can reduce or eliminate the applicable front-end sales charge, as follows:

QUANTITY DISCOUNTS

Larger purchases of the same Share class reduce or eliminate the sales charge
you pay. You can combine purchases of Shares made on the same day by you, your
spouse and your children under age 21. In addition, purchases made at one time
by a trustee or fiduciary for a single trust estate or a single fiduciary
account can be combined.

ACCUMULATED PURCHASES

If you make an additional purchase of Shares, you can count previous Share
purchases still invested in the Fund in calculating the applicable sales charge
on the additional purchase.

CONCURRENT PURCHASES

You can combine concurrent purchases of the same share class of two or more
Federated Funds in calculating the applicable sales charge.

LETTER OF INTENT CLASS A SHARES

You can sign a Letter of Intent committing to purchase a certain amount of the
same class of Shares within a 13-month period to combine such purchases in
calculating the sales charge. The Fund's custodian will hold Shares in escrow
equal to the maximum applicable sales charge. If you complete the Letter of
Intent, the Custodian will release the Shares in escrow to your account. If you
do not fulfill the Letter of Intent, the Custodian will redeem the appropriate
amount from the Shares held in escrow to pay the sales charges that were not
applied to your purchases.

REINVESTMENT PRIVILEGE

You may reinvest, within 120 days, your Share redemption proceeds at the next
determined NAV without any sales charge.

PURCHASES BY AFFILIATES OF THE FUND

The following individuals and their immediate family members may buy Shares at
NAV without any sales charge because there are nominal sales efforts associated
with their purchases:

o the Directors, employees and sales representatives of the Fund, the\
Adviser, the Distributor and their affiliates;

o Employees of State Street Bank Pittsburgh who started their employment
on January 1, 1998, and were employees of Federated Investors, Inc.
(Federated) on December 31, 1997;

o any associated person of an investment dealer who has a sales agreement
with the Distributor; and

o trusts, pension or profit-sharing plans for these individuals.

FEDERATED LIFE MEMBERS

Shareholders of the Fund known as "Federated Life Members" are exempt from
paying any front-end sales charge. These shareholders joined the Fund
originally:

o through the "Liberty Account," an account for Liberty Family of Funds
shareholders on February 28, 1987 (the Liberty Account and Liberty Family
of Funds are no longer marketed); or

o as Liberty Account shareholders by investing through an affinity group
prior to August 1, 1987.

REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE

These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.

Upon notification to the Distributor or the Fund's transfer agent, no CDSC will
be imposed on redemptions:

o following the death or post-purchase disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder;

o representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age
of 701/2;

o representing a total or partial distribution from a qualified plan. A total
or partial distribution does not include an account transfer, rollover or
other redemption made for purposes of reinvestment. A qualified plan does not
include an Individual Retirement Account, Keogh Plan, or a custodial account,
following retirement;

o which are involuntary redemptions processed by the Fund because the
accounts do not meet the minimum balance requirements;

o which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program;

o of Shares that represent a reinvestment within 120 days of a previous
redemption;

o of Shares held by the Directors, employees, and sales representatives of the
Fund, the Adviser, the Distributor and their affiliates; employees of any
investment professional that sells Shares according to a sales agreement with
the Distributor; and the immediate family members of the above persons; and

o of Shares originally purchased through a bank trust department, a registered
investment adviser or retirement plans where the third party administrator
has entered into certain arrangements with the Distributor or its affiliates,
or any other investment professional, to the extent that no payments were
advanced for purchases made through these entities.

HOW IS THE FUND SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.

FRONT-END SALES CHARGE REALLOWANCES

The Distributor receives a front-end sales charge on certain Share sales. The
Distributor generally pays up to 90% (and as much as 100%) of this charge to
investment professionals for sales and/or administrative services. Any payments
to investment professionals in excess of 90% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to an investment professional.

RULE 12B-1 PLAN

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. In
addition, 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.

Federated and its subsidiaries may benefit from arrangements where the Rule
12b-1 Plan fees related to Class B Shares may be paid to third parties who have
advanced commissions to investment professionals.

SHAREHOLDER SERVICES

The Fund may pay Federated Shareholder Services Company, a subsidiary of
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.

When an investment professional's customer purchases shares, the investment
professional may receive:

o an amount equal to 0.50% of the NAV of Class A Shares under certain qualified
retirement plans as approved by the Distributor. (Such payments are subject
to a reclaim from the investment professional should the assets leave the
program within 12 months after purchase.)

o an amount up to 5.50% and 1.00%, respectively, of the NAV of Class B and
C Shares.

In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Class A Shares that its customer has not
redeemed over the first year.

CLASS A SHARES

Investment professionals purchasing Class A Shares for their customers are
eligible to receive an advance payment from the Distributor based on the
following breakpoints:

AMOUNT ADVANCE PAYMENTS AS A PERCENTAGE OF PUBLIC
OFFERING PRICE

First $1 - $5 0.75%
million
Next $5 - $20 0.50%
million
Over $20 million 0.25%

For accounts with assets over $1 million, the dealer advance payments reset
annually to the first breakpoint on the anniversary of the first purchase.

Class A Share purchases under this program may be made by Letter of Intent or by
combining concurrent purchases. The above advance payments will be paid only on
those purchases that were not previously subject to a front-end sales charge and
dealer advance payments. Certain retirement accounts may not be eligible for
this program.

A contingent deferred sales charge of 0.75% of the redemption amount applies to
Class A Shares redeemed up to 24 months after purchase. The CDSC does not apply
under certain investment programs where the investment professional does not
receive an advance payment on the transaction including, but not limited to,
trust accounts and wrap programs where the investor pays an account level fee
for investment management.

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.

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote.

All Shares of the Fund have equal voting rights, except that in matters
affecting only a particular class, only Shares of that class are entitled to
vote.

Directors 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 Fund's outstanding shares.

As of March 4, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Shares:

MLPF&S for the sole benefit of its customers, Jacksonville, FL, owned
approximately 2,021,795 Shares (32.44%); East Mississippi, Electric Power
Association, Meridian, MS, owned approximately 381,652 Shares (6.12%); and
Hubco, Regions Financial Corp., Birmingham, AL, owned approximately 324,933
Shares (5.21%).

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

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 DIRECTORS

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

As of March 4, 1999, the Fund's Board and Officers as a group owned less than 1%
of the Fund's outstanding Class A, B, C, Shares.

An asterisk (*) denotes a Director 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
BIRTH DATE AGGREGATE TOTAL
ADDRESS COMPENSATION COMPENSATION
POSITION WITH FUND PRINCIPAL OCCUPATIONS FROM FUND FROM FUND AND
FOR PAST FIVE YEARS FUND COMPLEX

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

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

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

DIRECTOR

NICHOLAS CONSTANTAKIS Director or Trustee of the Federated Fund $ $47,958.02for
Birth Date: September Complex; formerly: Partner, Andersen the
3, 1939 Worldwide SC. Fund and
175 Woodshire Drive 29 other
Pittsburgh, PA investment
DIRECTOR companies
in the Fund
Complex

JOHN F. CUNNINGHAM Director or Trustee of some of the $ $0 for the
Birth Date: March 5, Federated Funds; Chairman, President and Fund and
1943 Chief Executive Officer, Cunningham & Co., 26 other
353 El Brillo Way Inc. ; Trustee Associate, Boston College; investment
Palm Beach, FL Director, EMC Corporation; formerly: companies
DIRECTOR Director, Redgate Communications. in the Fund
Complex

Previous Positions: Chairman of the Board
and Chief Executive Officer, Computer
Consoles, Inc.; President and Chief
Operating Officer, Wang Laboratories;
Director, First National Bank of Boston;
Director, Apollo Computer, Inc.

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

PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22
Birth Date: March 16, Complex; formerly: Representative, for the
1942 Commonwealth of Massachusetts General Fund and
One Royal Palm Way Court; President, State Street Bank and 54 other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
DIRECTOR Previous Positions: Director, VISA USA and in the Fund
VISA International; Chairman and Director, Complex
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. Fund and
Birth Date: April 10, 26 other
1945 Previous Positions: Chief Executive investment
80 South Road Officer, PBTC International Bank; Chief companies
Westhampton Beach, NY Financial Officer of Retail Banking Sector, in the Fund
DIRECTOR Chase Manhattan Bank; Senior Vice Complex
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
J.D., S.J.D. Complex; President, Law Professor, Duquesne for the
Birth Date: December University; Consulting Partner, Mollica & Fund and
20, 1932 Murray. 54 other
President, Duquesne investment
University Previous Positions: Dean and Professor of companies
Pittsburgh, PA Law, University of Pittsburgh School of in the Fund
DIRECTOR Law; Dean and Professor of Law, Villanova Complex
University School of Law.

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

JOHN S. WALSH Director or Trustee of some of the $ $0 for the
Birth Date: November Federated Funds; President and Director, Fund and
28, 1957 Heat Wagon, Inc.; President and Director, 23 other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies
DIRECTOR Manufacturers Products, Inc.; Director, in the Fund
Walsh & Kelly, Inc.; formerly: Vice Complex
President, Walsh & Kelly, Inc.

J. CHRISTOPHER DONAHUE+* President or Executive Vice President of $0 $0 for the
Birth Date: April 11, the Federated Fund Complex; Director or Fund 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
1001 Liberty Avenue President and Trustee, Federated Investment in the Fund
Pittsburgh, PA Management Company; President and Director, Complex
PRESIDENT AND DIRECTOR Federated Investment Counseling and
Federated Global Investment Management
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
Birth Date: October 22, the Federated Fund Complex; President, Fund 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
1001 Liberty Avenue Investors, Inc.; Vice President, Federated in the Fund
Pittsburgh, PA investment Management Company, Federated Complex
EXECUTIVE VICE PRESIDENT Investment Counseling, Federated Global
Investment Management 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
Birth Date: October 26, the Federated Fund Complex; Executive Vice Fund and
1938 President, Secretary, and Director, 54 other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Investment Management Company; companies
1001 Liberty Avenue Director, Federated Investment Counseling in the Fund
Pittsburgh, PA and Federated Global Investment Management Complex
EXECUTIVE VICE Corp.; Director, Federated Services
PRESIDENT AND SECRETARY Company; Director, Federated Securities
Corp.

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

RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Fund 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
Pittsburgh, PA Chairman and Director, Federated Securities in the Fund
VICE PRESIDENT Corp. Complex

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

KATHLEEN M. FOODY-MALUS Kathleen M. Foody-Malus has been the Fund's $0 $0 for the
Birth Date: March 26, portfolio manager since July 1993. She is Fund and
1960 Vice President of the Fund. Ms. 3 other
Federated Investors Foody-Malus joined Federated in 1983 and investment
Tower has been a Senior Portfolio Manager since companies
1001 Liberty Avenue 1996 and a Vice President of the Fund's in the Fund
Pittsburgh, PA Adviser since 1993. She was a Portfolio Complex
VICE PRESIDENT Manager and a Vice President of the Fund's
Adviser from 1993 to 1996. Ms. Foody-Malus
received her M.B.A. in Accounting/Finance
from the University of Pittsburgh.
</TABLE>

+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, PRESIDENT OF THE FUND.

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 March 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 FEDERATED
FEE 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

Deloitte & Touche LLP is the independent public accountant for the Fund.

FEES PAID BY THE FUND FOR SERVICES

FOR THE YEAR ENDED MARCH 31 1999 1998 1997
Advisory Fee Earned $ $7,402,162 $8,025,601
Advisory Fee Reduction $ $0 $0
Brokerage Commissions $ $0 $0
Administrative Fee $ $1,006,395 $1,069,801
12B-1 FEE
Class B Shares $ ---- ----
Class C Shares $ ---- ----
SHAREHOLDER SERVICES FEE

Class A Shares $ ---- ----
Class B Shares $ ---- ----
Class C 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-year, five-year and ten-year or since inception
periods ended March 31, 1999.

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

30 DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
CLASS A SHARES

Total Return
Yield

30 DAY PERIOD 1 YEAR SINCE INCEPTION ON JULY
25, 1994

CLASS B SHARES

Total Return
Yield

30 DAY PERIOD 1 YEAR 5 YEARS SINCE INCEPTION ON
APRIL 26, 993
CLASS C SHARES

Total Return
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 30-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 30-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 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.

o LEHMAN BROTHERS FIVE-YEAR TREASURY BELLWETHER INDEX is an unmanaged index
comprised of U.S. government Treasury Bonds with an average maturity of five
years.

o LEHMAN BROTHERS MORTGAGE BACKED SECURITIES INDEX is a universe of fixed rate
securities backed by mortgage pools of Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, and Federal National
Mortgage Association. The minimum principal amount required for inclusion is
$50 million. Total return comprises price appreciation/depreciation and
income as a percentage of the original investment.

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

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.

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.

FINANCIAL INFORMATION

The Financial Statements for the Fund for the fiscal year ended March 31,
1999 are incorporated herein by reference to the Annual Report to Shareholders
of Federated Fund for U.S. Government Securities, Inc. dated March 31, 1999.

<PAGE>

INVESTMENT RATINGS

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

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

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

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

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

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

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

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

BAA--Bonds which are rated BAA are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

<PAGE>

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

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

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

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

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

<PAGE>

ADDRESSES

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

Class A Shares
Class B Shares
Class C Shares

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

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

INVESTMENT ADVISER

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

CUSTODIAN

State Street Bank and Trust Company
P.O. Box 8600

Boston, MA 02266-8600

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

INDEPENDENT PUBLIC ACCOUNTANTS

Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110-1617

PART C. OTHER INFORMATION

Item 23. EXHIBITS:

(a) Conformed copy of Restated Articles of
Incorporation of the Registrant; + (i) Conformed
copy of Articles of Amendment 4/96; +

(b) Copy of Restated By-Laws of the Registrant; + (i)
Amendment #11 to the By-Laws; + (ii) Amendment #12
to the By-Laws; + (iii) Amendment #13 to the
By-Laws; +

(c) (i) Copy of Specimen Certificate for Class A
Shares of Capital Stock of the
Registrant; (12)
(ii) Copy of Specimen Certificate for Class B
Shares of Capital Stock of the
Registrant; (12)
(iii) Copy of Specimen Certificate for Class C
Shares of Capital Stock of the
Registrant; (12)
(d) Conformed copy of Investment Advisory Contract of the
Registrant; (8) (e) (i) Conformed copy of Distributor's
Contract of the Registrant; (12)

(ii) Conformed copy of Exhibit D to Distributor's
Contract; (13) (iii) Conformed copy of Class B
Distributor's Contract; (16)

(iv) 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;

(g) (i) Conformed copy of Custodian Agreement of the
Registrant; (13) (II) CONFORMED COPY OF CUSTODY FEE
SCHEDULE; (16)

+ All exhibits have been filed electronically.

8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 49 filed on July 28, 1989. (File No. 2-33490 and File No.
811-1890)

12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 60 filed on May 25, 1994. (File No. 2-33490 and File No.
811-1890)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 63 filed on May 25, 1995. (File No. 2-33490 and File No.
811-1890)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 68 filed on May 26, 1998. (File No. 2-33490 and File No.
811-1890)

<PAGE>

(h) (i) Conformed copy of Agreement for Fund
Accounting Services, Administrative
Services, Shareholder Transfer Agency
Services and Custody
Services Procurement; (14)

(ii) The responses described in Item 24(b)(6)(iv)
are hereby incorporated by reference. (iii)
Conformed copy of Amended and Restated Shareholder
Services Agreement; (16) (iv) Conformed copy of
Class B Shareholder Services Agreement; (16) (v)
Conformed copy of Class B Principal Shareholder
Services Agreement; (16)

(vi) The Registrant hereby incorporates the
conformed copy of the Shareholder Services
Sub-Contract between Fidelity and Federated
Shareholder Services from Item 24(b)(9)(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).

(i) Conformed copy of Opinion as to Legality of Shares
Being Registered; (13) (j) Conformed copy of Consent of
Independent Public Accountants; (16) (k) Not applicable;
(l) Not applicable; (m) (i) Conformed copy of Distribution
Plan of the Registrant; (13)

(ii) Conformed copy of Exhibit C to 12b-1
Distribution Plan of the Registrant; (13)

(iii) Conformed copy of Exhibit 1, Amendment to the
Distribution Plan of the Registrant (Class B
Shares); (16) (iv) The responses described in Item
24(b)(6)(iv) are hereby incorporated by reference.

(n) Copy of Financial Data Schedules; (16)
(To be filed by Amendment)

(o) The Registrant hereby incorporates the conformed
copy of the specimen Multiple Class Plan from Item
24(b)(18) of the World Investment Series, Inc.
Registration Statement on Form N-1A, filed with the
Commission on January 26, 1996. (File Nos. 33-52149
and 811-07141);

(p) Conformed copy of Power of Attorney; (15)

(i) Conformed copy of Power of Attorney of
Treasurer of the Registrant; +
(ii) Conformed copy of Power of Attorney of
Chief Investment Officer of the
Registrant. +

+ All exhibits have been filed electronically.

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 63 filed on May 25, 1995. (File Nos. 2-33490 and 811-1890)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 65 filed on May 24, 1996. (File Nos. 2-33490 and 811-1890)

15. Response is incorporated by reference to Registrant's filing on Form N-14
filed March 24, 1997. (File Nos. 2-33490 and 811-1890)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 68 filed on May 26, 1998. (File No. 2-33490 and File No.
811-1890)

<PAGE>

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

None.

Item 25. INDEMNIFICATION: (10)

Item 26. Business and Other Connections of Investment Adviser:

(a) 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 -- Board of Directors." The remaining Trustee of the
investment adviser, his position with the investment adviser, and, in
parentheses, his principal occupation is: Mark D. Olson (Partner,
Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown,
Delaware 19947.

The remaining Officers of the investment adviser are:

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

Senior Vice Presidents: Joseph M. Balestrino
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Sandra L. McInerney
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

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 55 filed on July 23, 1992.(File No. 2-33490 and File No.
811-1890)

Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
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.

<PAGE>

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; 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.; DG Investor Series; 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.

(b)

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Richard B. Fisher Director, Chairman, Chief 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

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

<PAGE>

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

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

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

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, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
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:

Registrant Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779

(Notices should be sent to the Agent for Service at above address)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

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

Disbursing Agent")

Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Federated Investment Management Federated Investors Tower
Company 1001 Liberty Avenue
("Adviser") Pittsburgh, PA 15222-3779

State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8604

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
Directors 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 FUND FOR U.S.
GOVERNMENT SECURITIES, INC., has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
29th day of March, 1999.

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

BY: /s/ Matthew S. Hardin
Matthew S. Hardin, Assistant Secretary
Attorney in Fact for John F. Donahue

March 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/Matthew S. Hardin Attorney In Fact March 29, 1999
Matthew S. Hardin For the Persons
ASSISTANT SECRETARY Listed Below

NAME TITLE

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

J. Christopher Donahue* President and Director

John W. McGonigle* Executive Vice President

William D. Dawson, III* Chief Investment Officer

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

Thomas G. Bigley* Director

John T. Conroy, Jr.* Director

William J. Copeland* Director

James E. Dowd, Esq.* Director

Lawrence D. Ellis, M.D.* Director

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

Peter E. Madden* Director

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

Wesley W. Posvar* Director

Marjorie P. Smuts* Director

* By Power of Attorney

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

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

(FORMERLY: FUND FOR U.S. GOVERNMENT SECURITIES, INC.)

AMENDMENT #11

TO THE BY-LAWS

(EFFECTIVE FEBRUARY 23, 1998)

Delete Sections 1, 2, 3, 4 & 5 from Article IV, OFFICERS, and replace with the
following:

Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall be
a President, one or more Vice Presidents, a Treasurer, and a Secretary.
The Board of Directors, in its discretion, may elect or appoint a
Chairman of the Board of Directors 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 Director or any Officer to be a holder of shares in any Series
or Class of the Corporation.

Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers
shall be elected annually by the Board of Directors at its Annual
Meeting. 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 Directors, if there
is one, shall be elected annually by and from the Directors, and serve
until a successor is so elected and qualified, or until earlier
resignation or removal.

Section 3. REMOVAL. Any Officer elected by the Board of Directors or
whose appointment has been ratified by the Board of Directors may be
removed with or without cause at any time by a majority vote of all of
the Directors. Any other employee of the Corporation may be removed or
dismissed at any time by the President.

Section 4. RESIGNATIONS. Any Officer may resign at any time by giving
written notice to the Board of Directors. 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 , the acceptance of
such resignation shall not be necessary to make it effective.

Section 5. VACANCIES. 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 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 Directors at its next Regular Meeting.

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

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

AMENDMENT #12

TO THE BY-LAWS

(EFFECTIVE FEBRUARY 27, 1998)

Delete Section 7 PROXIES of Article I, MEETINGS OF SHAREHOLDERS, and replace
with the following:

Section 7. PROXIES. Any Shareholder entitled to vote at any meeting of
Shareholders may vote either in person or by proxy, but no proxy which
is dated more than eleven months before the meeting named therein shall
be accepted unless otherwise provided in the proxy. Every proxy shall be
in writing and signed by the Shareholder or his duly authorized agent or
be in such other form as may be permitted by the Maryland General
Corporation Law, including electronic transmissions from the shareholder
or his authorized agent. Authorization may be given orally, in writing,
by telephone, or by other means of communication. A copy, facsimile
transmission or other reproduction of the writing or transmission may be
substituted for the original writing or transmission for any purpose for
which the original transmission could be used. Every proxy shall be
dated, but need not be sealed, witnessed or acknowledged. Where Shares
are held of record by more than one person, any co-owner or co-fiduciary
may appoint a proxy holder, unless the Secretary of the Corporation 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 Corporation,
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(iii) under Form N-1A
Exhibit 3(ii) under Item 601/Reg. S-K

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.

AMENDMENT #13
TO THE BY-LAWS

(EFFECTIVE MAY 12, 1998)

Strike Section 3 - Place of Meetings from Article I - Meeting of Shareholder and
replace it with the following:

Section 3. PLACE OF MEETINGS. All meetings of the Shareholders of the
Corporation or a particular Series or Class, shall be held at such place
within or without the State of Maryland as may be fixed by the Board of
Directors.

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

FUND FOR U.S. GOVERNMENT SECURITIES, INC.

ARTICLES OF AMENDMENT

FUND FOR U.S. GOVERNMENT SECURITIES, INC., a Maryland corporation having
its principal office in the state of Maryland in Baltimore City (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:

FIRST: The Articles of Restatement of the Corporation are hereby amended by
striking Article SECOND and inserting the following in its place:

"SECOND: The name of the Corporation is Federated Fund for U.S. Government
Securities, Inc."

SECOND: The foregoing amendment to the charter of the Corporation was
approved by a majority of the entire Board of Directors of the Corporation; the
charter amendment is limited to a change expressly permitted by Section 2-605 of
the Maryland General Corporation Law to be made without action by stockholders;
and the Corporation is registered as an open-end company under the Investment
Company Act of 1940, as amended.

THIRD: These Articles of Amendment will become effective at the end of
business on March 31, 1996.

IN WITNESS WHEREOF, Fund for U.S. Government Securities, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on March 29, 1996.

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

WITNESS: FUND FOR U.S. GOVERNMENT
SECURITIES, INC.

/S/ CHARLES H. FIELD /S/ J. CHRISTOPHER DONAHUE
Charles H. Field J. Christopher Donahue
Assistant Secretary President

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

ARTICLES OF RESTATEMENT

FUND FOR U.S. GOVERNMENT SECURITIES, INC.

Fund for U.S. Government Securities, Inc., a Maryland Corporation (the
"Corporation", having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

FIRST: The Corporation desires to restate its Charter as currently in
effect. The Charter as restated is as follows:

FIRST: WE, THE UNDERSIGNED, MIRIAM CASLEY, FRED C. HOUSTON, JR., AND THOMAS J.
DONNELLY, EACH OF WHOSE POST OFFICE ADDRESS IS 1128 UNION TRUST BUILDING,
PITTSBURGH, PENNSYLVANIA 15219, EACH BEING AT LEAST TWENTY-ONE YEAR OF AGE, DO
UNDER AND BY VIRTUE OF THE GENERAL LAWS OF THE STATE OF MARYLAND AUTHORIZING THE
FORMATION OF CORPORATIONS, ASSOCIATE OURSELVES AS INCORPORATORS WITH THE
INTENTION OF FORMING A CORPORATION.

SECOND: THE NAME OF THE CORPORATION IS FUND FOR U.S. GOVERNMENT SECURITIES,
INC.

THIRD: THE PURPOSES FOR WHICH THE CORPORATION IS FORMED ARE:

1. TO PURCHASE OR OTHERWISE ACQUIRE, HOLD FOR INVESTMENT OR OTHERWISE,
SELL, EXCHANGE, OR OTHERWISE DISPOSE OF SECURITIES WHICH ARE PRIMARY OR DIRECT
OBLIGATIONS OF THE U.S. GOVERNMENT OR ITS INSTRUMENTALITIES OR SECURITIES WHICH
ARE GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY THE U.S. GOVERNMENT OR
ITS INSTRUMENTALITIES (HERIENAFTER REFERRED TO AS "U.S. GOVERNMENT SECURITIES")
AND GENERALLY TO DEAL IN ANY SUCH SECURITIES; AND TO EXERCISE AS OWNER OR HOLDER
OF ANY SECURITIES, ALL RIGHTS, POWERS AND PRIVILEGES IN RESPECT THEREOF.

2. TO SELL, EXCHANGE, ISSUE, DISPOSE OF, PURCHASE OR OTHERWISE ACQUIRE,
HOLD, RESELL, TRANSFER, REISSUE OR CANCEL (ALL WITHOUT THE VOTE OR CONSENT OF
THE STOCKHOLDERS OF THE CORPORATION) SHARES OF ITS CAPITAL STOCK IN ANY MANNER
AND TO THE EXTENT NOW OR HEREAFTER PERMITTED BY THE LAWS OF THE STATE OF
MARYLAND AND THE CHARTER OF THE CORPORATION.

3. TO HAVE ONE OR MORE OFFICES AND CARRY ON ALL OR ANY OF ITS OPERATIONS
AND BUSINESS IN ANY OF THE STATES, DISTRICTS, TERRITORIES, AND POSSESSIONS OF
THE UNITED STATES, AND IN ANY AND ALL FOREIGN COUNTRIES, SUBJECT, IN EACH CASE,
TO THE LAWS THEREOF.

4. TO CARRY OUT ALL OR ANY OF THE OBJECTS AND PURPOSES SET FORTH IN THIS
ARTICLE THIRD AS PRINCIPAL OR AGENT, OR OTHERWISE, EITHER ALONE OR THROUGH OR IN
CONJUNCTION WITH ANY CORPORATION, JOINT STOCK COMPANY, SYNDICATE, ASSOCIATION,
FIRM, TRUST OR PERSON, PUBLIC OR PRIVATE, AND IN CARRYING ON ITS BUSINESS AND
FOR THE PURPOSE OF ATTAINING OR FURTHERING ANY OF ITS OBJECTS AND PURPOSES, TO
EXERCISE ANY POWERS SUITABLE, CONVENIENT OR PROPER FOR THE ACCOMPANIMENT OF ANY
OF THE OBJECTS AND PURPOSES HEREIN ENUMERATED OR INCIDENTAL TO THE POWERS HEREIN
SPECIFIED, OR WHICH AT ANY TIME MAY APPEAR CONDUCIVE TO OR EXPEDIENT FOR THE
ACCOMPLISHMENT OF ANY SUCH OBJECTS AND PURPOSES.

5. ANYTHING IN THIS ARTICLE THIRD OR ELSEWHERE IN THE CHARTER OF THE
CORPORATION TO THE CONTRARY NOTWITHSTANDING THE CORPORATION MAY NOT AND SHALL
NOT:

(A) INVEST IN ANY SECURITIES OTHER THAN U.S. GOVERNMENT
SECURITIES.

(B) BORROW MONEY EXCEPT AS A TEMPORARY MEASURE FOR EXTRAORDINARY OR
EMERGENCY PURPOSES AND THEN ONLY IN AMOUNTS NOT IN EXCESS OF 10% OF ITS TOTAL
ASSETS TAKEN AT COST.

(C) THE CORPORATION MAY NOT AND SHALL NOT PURCHASE SECURITIES ON
MARGIN BUT IT MAY OBTAIN SUCH SHORT-TERM CREDITS AS MAY BE NECESSARY FOR THE
CLEARANCE OF PURCHASE AND SALE OF SECURITIES. THE CORPORATION MAY PURCHASE AND
DISPOSE OF U.S. GOVERNMENT SECURITIES BEFORE THE ISSUANCE THEREOF. THE
CORPORATION MAY ALSO PURCHASE AND SELL U.S. GOVERNMENT SECURITIES ON A DELAYED
DELIVERY BASIS. THE SETTLEMENT DATES OF THESE TRANSACTIONS SHALL BE DETERMINED
BY THE MUTUAL AGREEMENT OF THE PARTIES.

(D) EFFECT SHORT SALES OF SECURITIES.

(E) LEND ANY ASSETS EXCEPT PORTFOLIO SECURITIES. (THIS SHALL NOT
PREVENT THE PURCHASE OR HOLDING OF U.S. GOVERNMENT SECURITIES, REPURCHASE
AGREEMENTS COVERING U.S. GOVERNMENT SECURITIES OR OTHER TRANSACTIONS WHICH ARE
PERMITTED BY THE FUND'S INVESTMENT OBJECTIVE AND POLICIES.)

(F) MORTGAGE, PLEDGE, HYPOTHECATE SECURITIES.

THE FOREGOING OBJECTS AND PURPOSES SHALL, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED, BE IN NO WAY LIMITED OR RESTRICTED BY REFERENCE TO OR INFERENCE FROM
THE TERMS OF ANY OTHER CLAUSE OR PROVISION OF THE CHARTER, AND EACH SHALL BE
REGARDED AS INDEPENDENT AND CONSTRUED AS POWERS AS WELL AS OBJECTS AND PURPOSES
AND THE ENUMERATION OF SPECIFIC PURPOSES, OBJECTS AND POWERS SHALL NOT BE
CONSTRUED TO LIMIT OR RESTRICT IN ANY MANNER THE MEANING OF GENERAL POWERS OF
THE CORPORATION NOW OR HEREAFTER CONFERRED BY THE LAWS OF THE STATE OF MARYLAND,
NOR SHALL THE EXPRESSION OF ONE THING BE DEEMED TO EXCLUDE ANOTHER THOUGH IT BE
OF LIKE NATURE, NOT EXPRESSED.

FOURTH: THE POST OFFICE ADDRESS OF THE PRINCIPAL OFFICE AND THE OFFICE OF THE
RESIDENT AGENT OF THE CORPORATION IN THE STATE OF MARYLAND IS 32 SOUTH STREET,
BALTIMORE, MARYLAND 21202. THE RESIDENT AGENT OF THE CORPORATION IN THE STATE OF
MARYLAND IS THE CORPORATION TRUST INCORPORATED, WHICH IS A CORPORATION ORGANIZED
AND EXISTING UNDER THE LAWS OF THE STATE OF MARYLAND.

FIFTH: (A) THE CORPORATION IS AUTHORIZED TO ISSUE 2,000,000,000 SHARES OF COMMON
STOCK, PAR VALUE $0.001 PER SHARE. THE AGGREGATE PAR VALUE OF ALL SHARES WHICH
THE CORPORATION IS AUTHORIZED TO ISSUE IS $2,000,000. SUBJECT TO THE FOLLOWING
PARAGRAPH, THE AUTHORIZED SHARES ARE CLASSIFIED AS SEPARATE CLASSES OF COMMON
STOCK, WITH 750,000,000 CLASSIFIED INTO EACH OF CLASS A AND CLASS C SHARES, AND
500,000,000 UNCLASSIFIED SHARES.

(B) THE BOARD OF DIRECTORS IS AUTHORIZED TO CLASSIFY OR TO
RECLASSIFY (I.E., INTO SERIES AND CLASSES OF SERIES), FROM TIME TO TIME, ANY
UNISSUED

SHARES OF STOCK OF THE CORPORATION, WHETHER NOW OR HEREAFTER AUTHORIZED, BY
SETTING, CHANGING OR ELIMINATING THE PREFERENCES, CONVERSION OR OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS OR
TERMS OR CONDITIONS OF OR RIGHTS TO REQUIRE REDEMPTION OF THE STOCK.

UNLESS OTHERWISE PROVIDED BY THE BOARD OF DIRECTORS PRIOR TO THE ISSUANCE
OF THE STOCK, THE SHARES OF EACH CLASS OR SERIES OF STOCK SHALL BE SUBJECT TO
THE FOLLOWING:

(I) THE BOARD OF DIRECTORS MAY REDESIGNATE A CLASS OR SERIES OF STOCK
WHETHER OR NOT SHARE OF SUCH CLASS OR SERIES ARE ISSUED AND OUTSTANDING,
PROVIDED THAT SUCH REDESIGNATION DOES NOT AFFECT THE PREFERENCES, CONVERSION OR
OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS,
QUALIFICATIONS OR TERMS OR CONDITIONS OF REDEMPTION OF SUCH CLASS OR SERIES OF
STOCK.

(II) THE ASSETS ATTRIBUTABLE TO EACH CLASS OR
SERIES MAY BE INVESTED IN A COMMON INVESTMENT PORTFOLIO. THE ASSETS AND
LIABILITIES AND THE

INCOME AND EXPENSES OF EACH CLASS OR SERIES OF THE CORPORATION'S STOCK SHALL BE
DETERMINED SEPARATELY AND, ACCORDINGLY, THE NET ASSET VALUE OF SHARES OF THE
CORPORATION'S STOCK MAY VARY AMONG CLASSES OR SERIES. THE INCOME OR GAIN AND THE
EXPENSES OR LIABILITIES OF THE CORPORATION SHALL BE ALLOCATED TO EACH CLASS OR
SERIES OF STOCK AS DETERMINED BY OR UNDER THE DIRECTION OF THE BOARD OF
DIRECTORS.

(III)SHARES OF EACH CLASS OR SERIES OF STOCK SHALL BE ENTITLED TO SUCH
DIVIDENDS OR DISTRIBUTIONS, IN STOCK OR IN CASH OR BOTH, AS MAY BE
DECLARED FROM TIME TO TIME BY THE BOARD OF DIRECTORS WITH RESPECT TO
SUCH CLASS OR SERIES. DIVIDENDS OR DISTRIBUTIONS SHALL BE PAID ON
SHARES OF A CLASS OR SERIES OF STOCK ONLY OUT OF THE ASSETS BELONGING
TO THAT CLASS OR SERIES.

(IV) IN THE EVENT OF THE LIQUIDATION OR DISSOLUTION
OF THE CORPORATION, THE STOCKHOLDERS OF A CLASS OR SERIES OF THE CORPORATION'S
STOCK SHALL

BE ENTITLED TO RECEIVE, AS A CLASS OR SERIES, OUT OF THE ASSETS OF THE
CORPORATION AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS, THE ASSETS BELONGING TO
THAT CLASS OR SERIES LESS THE LIABILITIES ALLOCATED TO THAT CLASS OR SERIES. THE
ASSETS SO DISTRIBUTABLE TO THE STOCKHOLDERS OF A CLASS OR SERIES SHALL BE
DISTRIBUTED AMONG SUCH STOCKHOLDERS IN PROPORTION TO THE NUMBER OF SHARES OF
THAT CLASS OR SERIES HELD BY THEM AND RECORDED ON THE BOOKS OF THE CORPORATION.
IN THE EVENT THAT THERE ARE ANY ASSETS AVAILABLE FOR DISTRIBUTION THAT ARE NOT
ATTRIBUTABLE TO ANY PARTICULAR CLASS OR SERIES OF STOCK, SUCH ASSETS SHALL BE
ALLOCATED TO ALL CLASSES AND SERIES IN PROPORTION TO THE NET ASSET VALUE OF THE
RESPECTIVE CLASSES OR SERIES.

(V) ALL HOLDERS OF SHARES OF STOCK VOTE AS A SINGLE CLASS OR SERIES EXCEPT WITH
RESPECT TO ANY MATTER WHICH AFFECTS ONLY ONE OR MORE CLASSES OR SERIES OF
STOCK, IN WHICH CASE ONLY THE HOLDERS OF SHARES OF THE CLASSES OR SERIES
AFFECTED SHALL BE ENTITLED TO VOTE.

(C) THE CORPORATION MAY ISSUE FRACTIONAL SHARES. ANY
FRACTIONAL SHARES SHALL CARRY PROPORTIONATELY ALL THE RIGHTS OF A WHOLE SHARE,
EXCEPT ANY

RIGHT TO RECEIVE A CERTIFICATE EVIDENCING SUCH FRACTIONAL SHARE, BUT INCLUDING,
WITHOUT LIMITATION, THE RIGHT TO VOTE AND THE RIGHT RECEIVE DIVIDENDS.

SIXTH: EACH STOCKHOLDER OF THE CORPORATION SHALL BE ENTITLED TO ONE VOTE OR
FRACTION THEREOF FOR EACH SHARES OF CAPITAL STOCK OR FRACTION THEREOF
STANDING IN HIS NAME ON THE BOOKS OF THE CORPORATION.

SEVENTH: 1. (A) EACH STOCKHOLDER SHALL BE ENTITLED TO REQUIRE THE CORPORATION TO
REDEEM ALL OR ANY PART OF ITS SHARES OF SUCH STOCKHOLDER AT THE NET ASSET VALUE
THEREOF (AS HEREINAFTER DEFINED IN SECTION 2 OF THIS ARTICLE SEVENTH) AS
DETERMINED BY OR ON BEHALF OF THE BOARD OF DIRECTORS. CERTIFICATES REPRESENTING
SHARES TO BE SO REDEEMED SHALL BE DEPOSITED AT THE OFFICE OF THE CUSTODIAN, DULY
ENDORSED OR ACCOMPANIED BY PROPER INSTRUMENTS OF TRANSFER, TOGETHER WITH A
REQUEST THAT THE CORPORATION REDEEM THE SHARES REPRESENTED THEREBY. IF THE DATE
OF DEPOSIT IS A DAY OTHER THAN SATURDAY UPON WHICH A DETERMINATION OF NET ASSET
VALUE AS OF THE CLOSE OF BUSINESS IS REQUIRED BY SECTION 2 OF THIS ARTICLE
SEVENTH TO BE MADE, OR IS MADE, AND IF SUCH SHARES ARE DEPOSITED PRIOR TO THE
CLOSE OF BUSINESS ON THE NEW YORK STOCK EXCHANGE ON THAT DAY, THE REDEMPTION
PRICE SHALL BE THE NET ASSET VALUE AS OF THE CLOSE OF BUSINESS ON SUCH DAY. IF
THE DAY OF DEPOSIT IS NOT SUCH A DAY, OR SUCH SHARES ARE DEPOSITED AFTER THE
CLOSE OF BUSINESS ON THE NEW YORK STOCK EXCHANGE, THEN THE REDEMPTION PRICE
SHALL BE THE NET ASSET VALUE AS OF THE CLOSE OF BUSINESS ON THE FIRST DAY UPON
WHICH A DETERMINATION OF THE NET ASSET VALUE IS SO MADE OR REQUIRED TO BE MADE
NEXT SUCCEEDING THE DATE ON WHICH SUCH SHARES ARE SO DEPOSITED. IF THE
DETERMINATION OF THE REDEMPTION PRICE IS POSTPONED BEYOND THE DATE ON WHICH IT
WOULD NORMALLY OCCUR BY REASON OF A DECLARATION BY THE BOARD OF DIRECTORS
SUSPENDING DETERMINATION OF THE NET ASSET VALUE PURSUANT TO SECTION 3 OF THIS
ARTICLE SEVENTH THE RIGHT OF THE STOCKHOLDER TO HAVE HIS SHARES REDEEMED BY THE
CORPORATION SHALL BE SIMILARLY SUSPENDED AND HE MAY WITHDRAW HIS CERTIFICATE OR
CERTIFICATES FROM DEPOSIT IF SHE SO ELECTS; OR IF HE DOES NOT SO ELECT THE
REDEMPTION PRICE SHALL BE THE NET ASSET VALUE OF THE SHARES DEPOSITED DETERMINED
AS OF THE CLOSE OF BUSINESS UPON THE FIRST DAY AFTER THE SUSPENSION UPON WHICH
SUCH A DETERMINATION IS MADE.

(B) NOTWITHSTANDING THE FOREGOING, THE CORPORATION
MAY, HOWEVER, REDEEM SHARES OF THE CORPORATION BY AGREEMENT WITH THE OWNER
THEREOF (I) AT A

PRICE NOT EXCEEDING THE NET ASSET VALUE PER SHARE AT THE TIME THE REDEMPTION OR
CONTRACT OF REDEMPTION IS MADE, OR (II) AT A PRICE NOT EXCEEDING THE NET ASSET
VALUE PER SHARE TO BECOME EFFECTIVE AT SOME LATER TIME.

2. THE TERM "NET ASSET VALUE" OF THE CORPORATION SHALL
MEAN THE AMOUNT BY WHICH THE ASSETS OF THE CORPORATION, TAKEN AT FAIR MARKET
VALUES, EXCEED ITS LIABILITIES, ALL AS DETERMINED BY OR UNDER THE DIRECTION OF
THE BOARD OF DIRECTORS, IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVESTMENT
COMPANY ACT OF 1940 AND IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING
PRACTICES AND PRINCIPLES. THE NET ASSET VALUE OF THE CORPORATION THUS OBTAINED
DIVIDED BY THE NUMBER OF SHARES OF CAPITAL STOCK OF THE CORPORATION THEN ISSUED
AND OUTSTANDING SHALL BE THE NET ASSET VALUE PER SHARE. SUCH VALUES WILL BE
DETERMINED AT LEAST ONCE ON EACH BUSINESS DAY THAT THE NEW YORK STOCK EXCHANGE
IS OPEN. THE BOARD OF DIRECTORS MAY DELEGATE ANY OF THE POWERS AND DUTIES UNDER
THIS SECTION 2 WITH RESPECT TO APPRAISAL OF ASSETS AND LIABILITIES TO THE
EXECUTIVE COMMITTEE, TO AN OFFICER OR OFFICERS OF THE CORPORATION, THE
INVESTMENT ADVISER, THE ADMINISTRATIVE SERVICES AGENT OR TO THE CUSTODIAN OF
ITS SECURITIES, OR TO SUCH OTHER PERSON OR PERSONS AS MAY BE DEEMED QUALIFIED
IN THE JUDGMENT OF THE BOARD OF DIRECTORS.

3. THE BOARD OF DIRECTORS MAY DECLARE A SUSPENSION OF THE
DETERMINATION OF NET ASSET VALUE FOR THE WHOLE OR ANY PART OF ANY PERIOD (A)
DURING WHICH THE NEW YORK STOCK EXCHANGE IS CLOSED OTHER THAN CUSTOMARY WEEK-END
AND HOLIDAY CLOSINGS, (B) DURING WHICH TRADING ON THE NEW YORK STOCK EXCHANGE IS
RESTRICTED, (C) DURING WHICH AN EMERGENCY EXISTS AS A RESULT OF WHICH DISPOSAL
BY THE CORPORATION OF SECURITIES OWNED BY IT IS NOT REASONABLY PRACTICABLE, OR
IT IS NOT REASONABLY PRACTICABLE FOR THE CORPORATION FAIRLY TO DETERMINE THE
VALUE OF ITS NET ASSETS, OR (D) DURING SUCH OTHER PERIODS AS THE SECURITIES AND
EXCHANGE COMMISSION MAY BY ORDER PERMIT FOR THE PROTECTION OF SECURITY HOLDERS
OF THE CORPORATION; PROVIDED, THAT APPLICABLE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION SHALL GOVERN AS TO WHETHER THE CONDITIONS
PRESCRIBED IN (B), (C) OR (D) EXIST. SUCH SUSPENSION SHALL TAKE EFFECT AT SUCH
TIME AS THE BOARD OF DIRECTORS SHALL SPECIFY BUT NOT LATER THAN THE CLOSE OF
BUSINESS ON THE BUSINESS DAY NEXT FOLLOWING THE DECLARATION, AND THEREAFTER
THERE SHALL BE NO DETERMINATION OF NET ASSET VALUE UNTIL THE BOARD OF DIRECTORS
SHALL DECLARE THE SUSPENSION AT AN END, EXCEPT THAT THE SUSPENSION SHALL
TERMINATE IN ANY EVENT ON THE FIRST DAY ON WHICH THE NEW YORK STOCK EXCHANGE
SHALL HAVE REOPENED OR THE PERIOD SPECIFIED IN (B) OR (C) SHALL HAVE EXPIRED (AS
TO WHICH IN THE ABSENCE OF AN OFFICIAL RULING BY THE SECURITIES AND EXCHANGE
COMMISSION THE DETERMINATION OF THE BOARD OF DIRECTORS SHALL BE CONCLUSIVE).

4. THE CORPORATION SHALL HAVE THE RIGHT, EXERCISABLE AT THE
DISCRETION OF THE BOARD OF DIRECTORS, TO REDEEM SHARES OF ANY SHAREHOLDER FOR
THEIR THEN CURRENT NET ASSET VALUE PER SHARE IF AT SUCH TIME THE SHAREHOLDER
OWNS SHARES HAVING AN AGGREGATE NET ASSET VALUE OF LESS THAN $1,000.

EIGHTH: (1) THE NUMBER OF DIRECTORS OF THE CORPORATION SHALL BE THREE, OR SUCH
OTHER NUMBER AS MAY BE FROM TIME TO TIME FIXED IN THE MANNER PROVIDED BY THE
BY-LAWS OF THE CORPORATION BUT SHALL NEVER BE LESS THAN THREE (3). THE BY-LAWS
OF THE CORPORATION SHALL ALSO SPECIFY THE NUMBER OF DIRECTORS WHICH SHALL
CONSTITUTE A QUORUM; PROVIDED, HOWEVER, THAT IN NO CASE SHALL A QUORUM BE LESS
THAN ONE-THIRD OF THE TOTAL NUMBER OF DIRECTORS, NOR LESS THAN THREE (3)
DIRECTORS. UNLESS OTHERWISE PROVIDED BY THE BY-LAWS OF THE CORPORATION,
DIRECTORS NEED NOT BE STOCKHOLDER THEREOF.

(2) UNLESS OTHERWISE PROVIDED BY THE BY-LAWS OF THE CORPORATION
AND EXCEPT AS OTHERWISE PROVIDED BY LAW, ANY VACANCY OCCURRING IN THE BOARD OF
DIRECTORS FOR ANY CAUSE OTHER THAN BY REASON OF AN INCREASE IN THE NUMBER OF
DIRECTORS MAY BE FILLED BY A MAJORITY OF THE REMAINING MEMBERS OF THE BOARD OF
DIRECTORS AND ANY VACANCY OCCURRING BY REASON OF AN INCREASE IN THE NUMBER OF
DIRECTORS MAY BE FILLED BY A MAJORITY OF THE ENTIRE BOARD OF DIRECTORS.

(3) THE NAMES OF THE DIRECTORS WHO ARE CURRENTLY IN OFFICE ARE:

JOHN F. DONAHUE EDWARD L. FLAHERTY, JR.
JOHN T. CONROY, JR. PETER E. MADDEN
WILLIAM J. COPELAND GREGOR F. MEYER
J. CHRISTOPHER DONAHUE WESLEY W. POSVAR
JAMES E. DOWD MARJORIE P. SMUTS
LAWRENCE D. ELLIS, M.D.

NINTH: THE FOLLOWING PROVISIONS ARE HEREBY ADOPTED FOR THE PURPOSE OF DEFINING,
LIMITING, AND REGULATING THE POWERS OF THE CORPORATION AND OF THE DIRECTORS
AND SHAREHOLDERS:

1. NO SHAREHOLDER SHALL HAVE ANY PRE-EMPTIVE OR PREFERENTIAL
RIGHT OF SUBSCRIPTION TO ANY SHARES OF ANY CLASS WHETHER NOW OR HEREAFTER
AUTHORIZED. THE BOARD OF DIRECTORS MAY ISSUE SHARES WITHOUT OFFERING THE SAME
EITHER IN WHOLE OR IN PART TO THE SHAREHOLDERS.

2. SHARES MAY BE PURCHASED, HELD AND DISPOSED OF BY THE OFFICERS
AND DIRECTORS OF THE CORPORATION, BY PARTNERSHIPS OF WHICH ANY SUCH OFFICER OR
DIRECTOR MAY BE A MEMBER AND BY CORPORATIONS OF WHICH ANY OFFICER OR DIRECTOR OF
THE CORPORATION MAY BE AN OFFICER OR DIRECTOR. EXCEPT AS ABOVE SET FORTH, OR
AUTHORIZED BY THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICERS AND DIRECTORS
OF THE CORPORATION AND PARTNERSHIPS OR CORPORATIONS WHICH ARE AFFILIATES OF THE
OFFICERS AND DIRECTORS MAY NOT DEAL WITH THE CORPORATION AS PRINCIPALS IN THE
PURCHASE OR SALE OF ANY SECURITIES OR OTHER PROPERTY.

3. THE CORPORATION MAY ENTER INTO EXCLUSIVE OR NON-EXCLUSIVE
UNDERWRITING CONTRACTS OR CONTRACTS FOR THE SALE OF ITS SHARES AND MAY ALSO
ENTER INTO CONTRACTS FOR INVESTMENT ADVISORY, MANAGEMENT AND ADMINISTRATIVE
SERVICES. THE TERMS AND CONDITIONS, METHODS OF AUTHORIZATION, RENEWAL, AMENDMENT
AND TERMINATION OF THE AFORESAID CONTRACTS SHALL BE AS DETERMINED AT THE
DISCRETION OF THE BOARD OF DIRECTORS; SUBJECT, HOWEVER, TO THE PROVISIONS OF THE
CHARTER OF THE CORPORATION, THE BY-LAWS OF THE CORPORATION, APPLICABLE STATE
LAW, AND THE INVESTMENT COMPANY ACT OF 1940 AND THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION.

4. EXCEPT AS OTHERWISE PROVIDED BY LAW OR BY THE CHARTER OF THE
CORPORATION, NO CONTRACT OR OTHER TRANSACTION BETWEEN THE CORPORATION AND ANY
PERSON, PARTNERSHIP OR CORPORATION AND NO ACT OF THE CORPORATION SHALL IN ANY
WAY BE AFFECTED OR INVALIDATED BY THE FACT THAT ANY OFFICER OR DIRECTOR OF THE
CORPORATION IS PECUNIARILY OR OTHERWISE INTERESTED THEREIN OR IS SUCH PERSON OR
A MEMBER, OFFICER OR DIRECTOR OF SUCH PARTNERSHIP OR OTHER CORPORATION,
PROVIDED, THAT THE FACT OF SUCH INTEREST SHALL BE KNOWN TO THE BOARD OF
DIRECTORS OF THE CORPORATION. SPECIFICALLY, BUT WITHOUT LIMITATION OF THE
FOREGOING, THE CORPORATION MAY:

(A) ENTER INTO A WRITTEN UNDERWRITING CONTRACT, MANAGEMENT
CONTRACTS FOR RESEARCH AND ADVISORY SERVICES WITH THE STANDARD FIRE INSURANCE
COMPANY OR

ITS PARENT, AFFILIATES OR SUBSIDIARIES THEREOF, OR THEIR RESPECTIVE SUCCESSORS,
OR OTHERWISE DO BUSINESS WITH SUCH CORPORATION, NOTWITHSTANDING THE FACT THAT
ONE OR MORE OF THE DIRECTORS OF THE CORPORATION AND SOME OR ALL OF ITS OFFICERS
ARE, HAVE BEEN, OR MAY BECOME DIRECTORS, OFFICERS, EMPLOYEES OR STOCKHOLDERS OF
THE STANDARD FIRE INSURANCE COMPANY OR ITS PARENT, AFFILIATES OR SUBSIDIARIES OR
SUCCESSORS, AND IN THE ABSENCE OF ACTUAL FRAUD THE CORPORATION MAY DEAL FREELY
WITH THE STANDARD FIRE INSURANCE COMPANY OR ITS PARENT, AFFILIATES, SUBSIDIARIES
OR SUCCESSORS, AND NEITHER SUCH UNDERWRITING CONTRACT, MANAGEMENT CONTRACT OR
CONTRACT FOR RESEARCH OR ADVISORY SERVICES NOR ANY OTHER CONTRACT OR TRANSACTION
BETWEEN THE CORPORATION AND THE STANDARD FIRE INSURANCE COMPANY OR ITS PARENT,
AFFILIATES, SUBSIDIARIES OR SUCCESSORS SHALL BE INVALIDATED OR IN ANYWAY
AFFECTED THEREBY, NOR SHALL ANY DIRECTOR OR OFFICER OF THE CORPORATION BE LIABLE
TO THE CORPORATION OR ANY SHAREHOLDER OR CREDITOR OF THE CORPORATION OR TO ANY
OTHER PERSON FOR ANY LOSS INCURRED UNDER OR BY REASON OF ANY SUCH CONTRACT OR
TRANSACTION. ANYTHING IN THE FOREGOING NOTWITHSTANDING, NO OFFICER OR DIRECTOR
OR UNDERWRITER OR INVESTMENT ADVISER OF THE CORPORATION SHALL BE PROTECTED
AGAINST ANY LIABILITY TO THE CORPORATION OR TO ITS SECURITY HOLDERS TO WHICH HE
WOULD OTHERWISE BE SUBJECT BY REASON OF WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE OR RECKLESS DISREGARD OF THE DUTIES INVOLVED IN THE CONDUCT OF THIS
OFFICE;

(B) EMPLOY ANY PERSON, PARTNERSHIP OR CORPORATION AS
COUNSEL, REGISTRAR, TRANSFER AGENT, DIVIDEND DISBURSING AGENT OR CUSTODIAN,
WHETHER OR NOT

SUCH PERSON, PARTNERSHIP OR CORPORATION IS OR HAS A MEMBER, OFFICER, DIRECTOR,
OR STOCKHOLDER WHO IS AN OFFICER OR DIRECTOR OF THE CORPORATION SO LONG AS ONLY
CUSTOMARY FEES SHALL BE CHARGED FOR THE SERVICES RENDERED TO OR FOR THE BENEFIT
OF THE CORPORATION;

(C) PURCHASE OR SELL SECURITIES FOR OR FROM THE INVESTMENT
PORTFOLIO OF THE CORPORATION FROM, TO OR THROUGH ANY PERSON, PARTNERSHIP OR
CORPORATION

WHICH IS OR HAS A MEMBER, OFFICER, DIRECTOR OR STOCKHOLDER WHO IS AN OFFICER OR
DIRECTOR OF THE CORPORATION SO LONG AS SUCH PERSON, PARTNERSHIP OR CORPORATION,
UNLESS OTHERWISE AUTHORIZED BY THE SECURITIES AND EXCHANGE COMMISSION, SHALL ACT
ONLY AS AGENT OR BROKER AND NOT AS PRINCIPAL AND THE COMMISSION OR OTHER
COMPENSATION PAID BY THE CORPORATION SHALL NOT EXCEED CUSTOMARY BROKERAGE
CHARGES FOR SUCH SERVICES.

5. NO OFFICER OR DIRECTOR OF THE CORPORATION OR OF ANY INVESTMENT
ADVISORY COMPANY OR MANAGEMENT COMPANY, NOR THE CORPORATION ITSELF, NOR SUCH
INVESTMENT ADVISORY OR MANAGEMENT COMPANY OR UNDERWRITER OF THE CORPORATION
SHALL TAKE LONG OR SHORT POSITIONS IN RESPECT OF ANY SHARES ISSUED BY THE
CORPORATION; PROVIDED, HOWEVER, THAT SUCH PROHIBITION SHALL NOT PREVENT:

(A) ANY UNDERWRITER FROM PURCHASING FROM THE CORPORATION
SHARES ISSUED BY THE CORPORATION, PROVIDED THAT ORDERS TO PURCHASE FROM THE
CORPORATION

ARE ENTERED WITH THE CORPORATION BY SUCH UNDERWRITER EITHER FOR INVESTMENT OR
UPON RECEIPT BY IT OF PURCHASE ORDERS FOR SHARES OF THE CORPORATION, AND
PROVIDED SUCH PURCHASES ARE NOT IN EXCESS OF PURCHASE ORDERS RECEIVED BY SUCH
UNDERWRITER;

(B) THE CORPORATION OR ANY DISTRIBUTOR OR UNDERWRITER FROM
MAINTAINING A MARKET FOR SHARES ISSUED BY THE CORPORATION;

(C) THE PURCHASE FROM THE CORPORATION OF SHARES BY THE
OFFICERS OR DIRECTORS OF THE CORPORATION OR OF ANY INVESTMENT ADVISORY,
MANAGEMENT COMPANY

OR UNDERWRITER OR DISTRIBUTOR OF THE CORPORATION AT THE PRICES AVAILABLE TO THE
PUBLIC OR AS AUTHORIZED BY THE SECURITIES EXCHANGE COMMISSION AT THE MOMENT OF
SUCH PURCHASE.

6. THE CORPORATION SHALL AT ALL TIMES CAUSE ITS SECURITIES TO BE
HELD BY A CUSTODIAN, WHICH SHALL BE A BANK OR TRUST COMPANY, HAVING AN AGGREGATE
CAPITAL SURPLUS AND UNDIVIDED PROFIT (AS SHOWN IN ITS LAST PUBLISHED REPORT) OF
AT LEAST TWO MILLION ($2,000,000) DOLLARS. THE CUSTODIAN SHALL ALSO RECEIVE ALL
MONIES DUE TO THE CORPORATION AND SHALL DEPOSIT SAME IN ITS BANKING DEPARTMENT
OR ELSEWHERE AS THE BOARD OF DIRECTORS MAY DIRECT. THE BOARD OF DIRECTORS MAY,
IN IT DISCRETION, ENTER INTO AGREEMENTS WITH THE CUSTODIAN AUTHORIZING IT TO ACT
AS AGENT FOR THE CORPORATION IN THE DISBURSEMENT OF DIVIDENDS, PURCHASE AND SALE
OF SECURITIES, REDEMPTION OF THE CORPORATION'S SECURITIES, DELIVERY OF PROXIES,
MAINTENANCE OF BOOKS AND ACCOUNTS AND THE PERFORMANCE OF SUCH OTHER SERVICE AS
THE BOARD MAY DEEM ADVISABLE. ALL AGREEMENTS WITH THE CUSTODIAN SHALL BE SUBJECT
TO APPLICABLE STATE LAW, THE CHARTER AND BY-LAWS OF THE CORPORATION, AND THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION. IN THE EVENT OF THE RESIGNATION, REMOVAL OR
INABILITY OF THE CUSTODIAN TO SERVE, THE CORPORATION SHALL USE ITS BEST EFFORTS
TO OBTAIN A SUCCESSOR CUSTODIAN AND THE CASH AND SECURITIES OF THE CORPORATION
HEREABOVE MENTIONED SHALL BE DELIVERED DIRECTLY TO SUCH SUCCESSOR CUSTODIAN. IN
THE EVENT NO SUCH SUCCESSOR CUSTODIAN CAN BE FOUND, THE BOARD OF DIRECTORS OF
THE CORPORATION SHALL CALL A SPECIAL MEETING OF STOCKHOLDERS TO DETERMINE
WHETHER THE CORPORATION SHALL BE LIQUIDATED OR SHALL FUNCTION WITHOUT A
CUSTODIAN.

7. EACH PERSON WHO IS OR HAS BEEN A DIRECTOR OR OFFICER (AND HIS
HEIRS, EXECUTORS AND ADMINISTRATORS) SHALL BE INDEMNIFIED BY THE CORPORATION
AGAINST REASONABLE COSTS AND EXPENSES INCURRED BY HIM IN CONNECTION WITH ANY
CLAIM OR IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING WHETHER JUDICIAL,
ADMINISTRATIVE OR OTHERWISE, TO WHICH HE MAY BE A PARTY BY REASON OF HIS BEING
OR HAVING BEEN A DIRECTOR OR OFFICER OF THE CORPORATION, EXCEPT IN RELATION TO
ANY ACTION, SUIT OR PROCEEDING, IN WHICH HE HAS BEEN ADJUDGED LIABLE BECAUSE OF
WILLFUL MISFEASANCE, BAD FAITH, GROSS NEGLIGENCE OR RECKLESS DISREGARD OF THE
DUTIES INVOLVED IN THE CONDUCT OF HIS OFFICE. IN THE ABSENCE OF AN ADJUDICATION
WHICH EXPRESSLY ABSOLVES THE DIRECTOR OR OFFICER OF LIABILITY TO THE CORPORATION
OR ITS STOCKHOLDERS FOR WILLFUL MISFEASANCE, BAD FAITH, GROSS NEGLIGENCE AND
RECKLESS DISREGARD OF THE DUTIES INVOLVED IN THE CONDUCT OF HIS OFFICE, OR IN
THE EVENT OF A SETTLEMENT, EACH DIRECTOR AND OFFICER (AND HIS HEIRS, EXECUTORS
AND ADMINISTRATORS) SHALL BE INDEMNIFIED BY THE CORPORATION AGAINST PAYMENTS
MADE, INCLUDING REASONABLE COSTS AND EXPENSES, PROVIDED THAT SUCH INDEMNITY
SHALL BE CONDITIONED UPON THE PRIOR DETERMINATION BY A RESOLUTION OF TWO-THIRDS
OF THOSE MEMBERS OF THE BOARD OF DIRECTORS OF THE CORPORATION WHO ARE NOT
INVOLVED IN THE ACTION, SUIT, OR PROCEEDING THAT THE DIRECTOR OR OFFICER HAS NO
LIABILITY BY REASON OF WILLFUL MISFEASANCE, BAD FAITH, GROSS NEGLIGENCE OR
RECKLESS DISREGARD OF THE DUTIES INVOLVED IN THE CONDUCT OF HIS OFFICE, AND
PROVIDED FURTHER THAT IF A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OF
THE CORPORATION ARE INVOLVED IN THE ACTION, SUIT OR PROCEEDING, SUCH
DETERMINATION SHALL HAVE BEEN MADE BY A WRITTEN OPINION OF INDEPENDENT COUNSEL.
SUCH A DETERMINATION BY THE BOARD OF DIRECTORS, OR BY INDEPENDENT COUNSEL, AND
THE PAYMENTS BY THE CORPORATION ON THE BASIS THEREOF SHALL NOT PREVENT A
STOCKHOLDER FROM CHALLENGING SUCH INDEMNIFICATION BY APPROPRIATE LEGAL
PROCEEDINGS ON THE GROUNDS THAT THE PERSON INDEMNIFIED WAS LIABLE TO THE
CORPORATION OR ITS SECURITY HOLDERS BY REASON OF WILLFUL MISFEASANCE, BAD FAITH,
GROSS NEGLIGENCE OR RECKLESS DISREGARD OF THE DUTIES INVOLVED IN THE CONDUCT OF
HIS OFFICE. THE FOREGOING RIGHTS AND INDEMNIFICATION SHALL NOT BE EXCLUSIVE OF
ANY OTHER RIGHTS TO WHICH THE OFFICERS AND DIRECTORS MAY BE ENTITLED ACCORDING
TO LAW.

8. SECURITIES OF OTHER CORPORATIONS ENTITLING THE HOLDER THEREOF TO VOTE
SHALL BE VOTED BY SUCH OFFICER OR OFFICERS OF THE CORPORATION AS THE BOARD OF
DIRECTORS SHALL DESIGNATE FOR THE PURPOSE, OR BY A PROXY OR PROXIES THEREUNDER
DULY AUTHORIZED BY THE BOARD OF DIRECTORS.

9. THE BOARD OF DIRECTORS SHALL, SUBJECT TO THE LAWS OF MARYLAND,
HAVE THE POWER TO DETERMINE, FROM TIME TO TIME, WHETHER AND TO WHAT EXTENT AND
AT WHAT TIMES AND PLACES AND UNDER WHAT CONDITIONS AND REGULATIONS ANY ACCOUNTS
AND BOOKS OF THE CORPORATION, OR ANY OF THEM, SHALL BE OPEN TO THE INSPECTION OF
THE SHAREHOLDERS.

10. NOTWITHSTANDING ANY PROVISION OF LAW REQUIRING A GREATER
PROPORTION THAN A MAJORITY OF THE VOTES OF ALL CLASSES OF SHARES ENTITLED TO BE
CAST, TO TAKE OR AUTHORIZE ANY ACTION, THE CORPORATION MAY TAKE OR AUTHORIZE ANY
SUCH ACTION UPON THE CONCURRENCE OF A MAJORITY OF THE AGGREGATE NUMBER OF THE
VOTES ENTITLED TO BE CAST THEREON.

11. THE CORPORATION RESERVES THE RIGHT FROM TIME TO TIME TO MAKE
ANY AMENDMENT OF ITS CHARTER NOW OR HEREAFTER AUTHORIZED BY LAW, INCLUDING ANY
AMENDMENT WHICH ALTERS THE CONTRACT RIGHTS, AS EXPRESSLY SET FORTH IN ITS
CHARTER, OF ANY OUTSTANDING SHARES, EXCEPT THAT NO ACTION AFFECTING THE VALIDITY
OR ASSESSIBILITY OF SUCH SHARES SHALL BE TAKEN WITHOUT THE UNANIMOUS APPROVAL OF
THE OUTSTANDING SHARES.

12. IN ADDITION TO THE POWERS AND AUTHORITY CONFERRED UPON THEM
BY THE CHARTER OF THE CORPORATION OR BY-LAWS, THE BOARD OF DIRECTORS MAY
EXERCISE ALL SUCH POWERS AND AUTHORITY AND DO ALL SUCH ACTS AND THINGS AS MAY BE
EXERCISED OR DONE BY THE CORPORATION, SUBJECT, NEVERTHELESS, TO THE PROVISIONS
OF APPLICABLE STATE LAW AND THE CHARTER AND BY-LAWS OF THE CORPORATION.

TENTH: THE DURATION OF THE CORPORATION SHALL BE PERPETUAL.

SECOND:The restatement of the Charter was approved by a majority of the
entire Board of Directors.

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

FOURTH:The Charter is not amended by these Articles of Restatement.

IN WITNESS WHEREOF, Fund for U.S. Government Securities, Inc. has caused
these Articles of Restatement to be signed in its name and on its behalf by its
Vice President and attested by its Assistant Secretary on April 30, 1993. The
undersigned Vice President acknowledges these Articles of Restatement to be the
corporate act of the Corporation and states to the best of his knowledge,
information and belief that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects and that this
statement is made under the penalties of perjury.

WITNESS: FUND FOR U.S. GOVERNMENT
SECURITIES, INC.

/S/ CHARLES H. FIELD By: /S/ RICHARD B. FISHER

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

FUND FOR U.S. GOVERNMENT SECURITIES, INC.

BY-LAWS

ARTICLE I

MEETING OF SHAREHOLDERS

Section 1. ANNUAL MEETINGS. The Corporation is not required to hold an
annual meeting of Shareholders in any year in which the election of Directors is
not required to be acted upon under the Investment Company Act of 1940. If the
Corporation is required to hold a meeting of Shareholders to elect Directors,
the meeting shall be designated the annual meeting of Shareholders for that
year. If an annual meeting of Shareholders is held, it shall be held at a date
and time determined by the Board of Directors within 120 days after the
occurrence of the event requiring the meeting. Any other business may be
considered at the meeting.

Section 2. SPECIAL MEETINGS. Special Meetings of Shareholders of the
Company or of a particular Series or Class may be called by the Chairman, or by
the Board of Directors; and shall be called by the Secretary whenever ordered by
the Chairman, any Director, or as requested in writing by shareholders entitled
to cast at least 10% of the voter shares entitled to be cast at the meetings.
Such request shall state the purpose of such meeting and the matters proposed to
be acted on thereat, and no other business shall be transacted at any such
special meeting. The Secretary shall inform such Shareholders of the reasonably
estimated costs of preparing and mailing the notice of the meeting, and upon
payment to the Corporation of such costs, the Secretary shall give not less than
ten nor more than 90 days' notice of the meeting. Unless required by
Shareholders entitled to cast a majority of all the votes entitled to be cast at
the meeting, a special meeting need not be called to consider any matter which
is substantially the same as a matter voted on at by special meeting of the
Shareholders held during the preceding 12 months.

Section 3. PLACE OF MEETINGS. All meetings of the Shareholders of the
Corporation or a particular Series or Class, shall be held at the office of the
Corporation in Pittsburgh, Pennsylvania, or at such other place within or
without the State of Maryland as may be fixed by the Board of Directors.

Section 4. NOTICE. Not less than ten nor more than ninety days before the
date of every Annual or Special Meeting of Shareholders the Secretary or an
Assistant Secretary shall give to each Shareholder of record of the Corporation
or of the relevant Series or Class written notice of such meeting. Such notice
shall be deemed to have been given when mailed to the Shareholder at his address
appearing on the books of the Corporation, which shall be maintained separately
for the shares of each Series or Class. It shall not be necessary to set forth
the business proposed to be transacted in the notice of any Annual Meeting
except that any proposal to amend the Charter of the Corporation shall be set
forth in such notice. Notice of a Special Meeting shall state the purpose or
purposes for which it is called.

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Section 5. QUORUM. The presence in person or by proxy of holders of
one-third of the shares of stock of the Corporation entitled to vote without
regard to class shall constitute a quorum at any meeting of the shareholders,
except with respect to any matter which by law requires the approval of one or
more classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class entitled to vote on
the matter shall constitute a quorum.

In the absence of a quorum at any meeting, a majority of those Shareholders
present in person or by proxy may adjourn the meeting from time to time to a
date not later than 120 days after the original record date without further
notice than by announcement to be given at the meeting until a quorum, as above
defined, shall be present. Any business may be transacted at the adjourned
meeting which might have been transacted at the meeting originally called had
the same been held at the time so called.

Section 6. VOTING. At all meetings of Shareholders each Shareholder shall
be entitled to one vote or fraction thereof for each Share or fraction thereof
standing in his name on the books of the Corporation on the date for the
determination of Shareholders entitled to vote at such meeting. All shares of
each portfolio or class in the Corporation have equal voting rights, except that
in matters affecting only a particular portfolio or class, only shares of that
portfolio or class are entitled to vote.

Section 8. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at any meeting of Shareholders may be taken without a
meeting, if a consent in writing, setting forth such action, is signed by all
the Shareholders entitled to vote on the subject matter thereof, and such
consent is filed with the records of the Corporation.

ARTICLE II

BOARD OF DIRECTORS

Section 1. POWERS. The business and affairs of the Corporation shall be
managed under the direction of its Board of Directors. All powers of the
Corporation may be exercised by or under the authority of the Board of Directors
except as conferred on or reserved to the Shareholders by law, by the Charter or
by these By-Laws.

Section 2. NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF OFFICE.
The number of Directors of the Corporation can be changed from time to time to
not less than three or the number of Shareholders, whichever is less, nor more
than twenty. Directors need not be Shareholders. The term of office of a
Director shall not be affected by any decrease in the number of Directors made
by the Board pursuant to the foregoing authorization. Each Director shall hold
office until the Annual Meeting next held after he

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becomes a director and until the election and qualification of his successor.

Section 3. PLACE OF MEETING. The Board of Directors may hold its meetings
at such place or places within or without the State of Maryland as the Board or
as the person or persons requesting said meeting to be called may from time to
time determine.

Section 4. ANNUAL MEETINGS. The Board of Directors shall meet annually for
the election of Officers and any other business.

Section 5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such intervals and on such dates as the Board may from time to
time designate, provided that any Director who is absent when such designation
is made shall be given notice of the designation.

Section 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be held at such times and at such places as may be designated at the call of
such meeting. Special meetings shall be called by the Secretary or Assistant
Secretary at the request of the Chairman or any Director. If the Secretary when
so requested refuses or fails for more than twenty-four hours to call such
meeting, the Chairman or such Director may in the name of the Secretary call
such meeting by giving due notice in the manner required when notice is given by
the Secretary.

Section 7. NOTICE. The Secretary or Assistant Secretary shall give, at
least two days before the meeting, notice of each meeting of the Board of
Directors, whether Annual, Regular or Special, to each member of the Board by
mail, telegram or telephone to his last known address. It shall not be necessary
to state the purpose or business to be transacted in the notice of any meeting.
Personal attendance at any meeting by a Director other than to protest the
validity of said meeting shall constitute a waiver of the foregoing requirement
of notice. In addition, notice of a meeting need not be given if a written
waiver of notice executed by such Director before or after the Meeting is filed
with the records of the meeting.

Section 8. CONDUCT OF MEETINGS AND BUSINESS. The Board of Directors may
adopt such rules and regulations for the conduct of their meetings and the
management of the affairs of the Corporation as they may deem proper and not
inconsistent with applicable law, the Charter of the Corporation or these
By-Laws.

Section 9. QUORUM. One-third of the entire Board of Directors but not less
than two directors shall constitute a quorum at any meeting of the Board of
Directors. The action of a majority of Directors present at any meeting at which
a quorum is present shall be the action of the Board of Directors unless the
concurrence of a greater proportion is required for such action by statute, the
Charter of the Corporation, or these By-Laws. In the absence of a quorum at any
meeting a majority of Directors present may adjourn the meeting from day to day
or for such longer periods as they may designate until a quorum shall be
present. Notice of any adjourned meeting need not be given other than by
announcement at the meeting.

Section 10. RESIGNATIONS. Any Director of the Corporation may resign

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at any time by written notice to the Chairman of the Board of Directors or to
the Secretary of the Corporation. The resignation of any Director shall take
effect at the time specified therein or, if no time is specified, when received
by the Corporation. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

Section 11. REMOVAL. At any meeting of Shareholders duly called for the
purpose, any Director may by the vote of a majority of all of the Shares
entitled to vote be removed from office. At the same meeting, the vacancy in the
Board of Directors may be filled by the election of a Director to serve until
the next annual meeting of Shareholders and the election and qualification of
his successor.

Section 12. VACANCIES. Except as otherwise provided by law, any vacancy
occurring in the Board of Directors for any cause other than by reason of an
increase in the number of Directors may be filled by a majority of the remaining
members of the Board of Directors although such majority is less than a quorum
and any vacancy occurring by reason of an increase in the number of Directors
may be filled by action of a majority of the entire Board of Directors. A
Director elected by the Board to fill a vacancy shall be elected to hold office
until the next Annual Meeting of Shareholders and until his successor is duly
elected and qualifies.

Section 13. COMPENSATION OF DIRECTORS. The Directors may receive
compensation for their services as Directors as determined by the Board of
Directors and expenses of attendance at each Meeting. Nothing herein contained
shall be construed to preclude any Director from serving the Corporation in any
other capacity, as an Officer, Agent or otherwise, and receiving compensation
therefor.

Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or permitted
to be taken at any Annual, Regular or Special Meeting of the Board of Directors
may be taken without a meeting if a written consent to such action is signed by
all members of the Board and such written consent is filed with the minutes of
proceedings of the Board.

Section 15. TELEPHONE CONFERENCE. Members of the Board of Directors or any
committee thereof may participate in a meeting of the Board or such committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person at the
meeting.

ARTICLE III

EXECUTIVE AND OTHER COMMITTEES

Section 1. APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The Board
of Directors may appoint an Executive Committee, which shall consist of two (2)
or more Directors.

Section 2. VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in the
Executive Committee from any cause may be filled by the Board of Directors.

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Section 3. EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the
Executive Committee shall be reported to the Board of Directors at its Meeting
next succeeding
such action.

Section 4. PROCEDURE OF EXECUTIVE COMMITTEE. The Executive Committee shall
fix its own rules of procedure not inconsistent with these By-Laws or with any
directions of the Board of Directors. It shall meet at such times and places and
upon such notice as shall be provided by such rules or by resolution of the
Board of Directors. The presence of a majority shall constitute a quorum for the
transaction of business, and in every case the affirmative vote of a majority of
the members of the Committee present shall be necessary for the taking of any
action.

Section 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between the
Meetings of the Board of Directors the Executive Committee, except as limited by
law or by specific directions of the Board of Directors, shall possess and may
exercise all the powers of the Board of Directors in the management and
direction of the business and conduct of the affairs of the Corporation.

Section 6. OTHER COMMITTEES. From time to time the Board of Directors may
appoint any other Committee or Committees which shall have such powers as shall
be specified in the resolution of appointment and may be delegated by law.

Section 7. COMPENSATION. The members of any duly appointed Committee shall
receive such compensation as from time to time may be fixed by the Board of
Directors and reimbursement of expenses.

Section 8. INFORMAL ACTION BY EXECUTIVE COMMITTEE OR OTHER COMMITTEES. Any
action required or permitted to be taken at any meeting of the Executive
Committee or any other duly appointed Committee may be taken without a meeting
if written consent to such action is signed by all Members of such Committee and
such written consent is filed with the minutes of the proceedings of such
Committee.

Section 9. ADVISORY BOARD. The Directors may appoint an Advisory Board to
consist in the first instance of not less than three (3) members. Members of
such Advisory Board shall not be Directors or Officers and need not be
Shareholders. Members of this Board shall hold office for such period as the
Directors may by resolution provide. Any Member of such Board may resign
therefrom by written instrument signed by him which shall take effect upon
delivery to the Directors. The Advisory Board shall have no legal powers and
shall not perform functions of Directors in any manner, said Board being
intended to act merely in an advisory capacity. Such Advisory Board shall meet
at such times and upon such notice as the Board of Directors may by resolution
provide. The compensation of the Members of the Advisory Board, if any, shall be
determined by the Board of Directors.

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ARTICLE IV

OFFICERS

Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall be a
Chairman, a President, one or more Vice Presidents, a Treasurer, and a
Secretary. The Board of Directors may elect or appoint other Officers or agents,
including one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. The same person may hold any
two offices except those of President and Vice President.

Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers shall
be elected annually by the Board of Directors at its Annual Meeting. Each
Officer shall hold office for one year and until the election and qualification
of his successor. Any vacancy in any of the offices may be filled for the
unexpired portion of the term by the Board of Directors at any Regular or
Special Meeting of the Board. The Board of Directors may elect or appoint
additional Officers or agents at any Regular or Special Meeting of the Board.

Section 3. REMOVAL. Any Officer elected by the Board of Directors may be
removed with or without cause at any time by the Board of Directors. Any other
employee of the Corporation may be removed or dismissed at any time by the
President.

Section 4. RESIGNATIONS. Any Officer may resign at any time by giving
written notice to the Board of Directors. 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.

Section 5. VACANCIES. A vacancy in any Office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-Laws for
regular election or appointment to such Office.

Section 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of
Directors, if there be a Chairman, shall preside at the meetings of Shareholders
and of the Board of Directors. He shall receive such information and reports as
he may request from the Officers of the Corporation. He shall counsel and advise
the President on matters of major importance.

Section 7. PRESIDENT. The Chairman for Fund for U.S. Government Securities,
Inc. shall be the chief executive officer of the Corporation. He shall, unless
other provisions are made therefor by the Board or Executive Committee, employ
and define the duties of all employees of the Corporation, shall have the power
to discharge any such employees, shall exercise general supervision over the
affairs of the Corporation and shall perform such other duties as may be
assigned to him from time to time by the Board of Directors. In the absence of
the Chairman of the Board of Directors, the President or an officer or Director
appointed by the President, shall preside at all meetings of Shareholders.

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Section 8. VICE PRESIDENT. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Board. Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Board of Directors, the Executive
Committee, or the President.

Section 9. SECRETARY. The Secretary shall keep or cause to be kept in books
provided for the purpose the Minutes of the Meetings of the Shareholders, and of
the Board of Directors; shall see that all Notices are duly given in accordance
with the provisions of these By-Laws and as required by Law; shall be custodian
of the records and of the Seal of the Corporation and see that the Seal is
affixed to all documents the execution of which on behalf of the Corporation
under its seal is duly authorized; shall keep directly or through a transfer
agent a register of the post office address of each Shareholder, and make all
proper changes in such register, retaining and filing his authority for such
entries; shall see that the books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed; and in
general shall perform all duties incident to the Office of Secretary and such
other duties as may, from time to time, be assigned to him by the Board of
Directors, the Executive Committee, or the President.

Section 10. TREASURER. The Treasurer shall have supervision of the custody
of all funds and securities of the Corporation, subject to applicable law. He
shall perform such other duties as may be from time to time assigned to him by
the Board of Directors, the Executive Committee, or the President.

Section 11. ASSISTANT VICE PRESIDENT. The Assistant Vice President or Vice
Presidents of the Corporation shall have such authority and perform such duties
as may be assigned to them by the Board of Directors, the Executive Committee,
or the President of the Corporation.

Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers shall perform
the duties of the Secretary and of the Treasurer respectively, in the absence of
those Officers and shall have such further powers and perform such other duties
as may be assigned to them respectively by the Board of Directors or the
Executive Committee or by the President.

Section 13. SALARIES. The salaries of the Officers shall be fixed from time
to time by the Board of Directors. No Officer shall be prevented from receiving
such salary by reason of the fact that he is also a Director of the Corporation.

ARTICLE V

SHARES AND THEIR TRANSFER

Section 1. CERTIFICATES. All share certificates shall be signed by the
Chairman, the President, or any Vice President and by the Treasurer or Secretary
or any Assistant Treasurer or Assistant Secretary and may be sealed with the
seal of the Corporation. The signatures may be either

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manual or facsimile signatures and the seal may be either facsimile or any other
form of Seal. Certificates for shares for which the Corporation has appointed an
independent Transfer Agent and Registrar shall not be valid unless countersigned
by such Transfer Agent and registered by such Registrar. In case any Officer who
has signed any certificate ceases to be an Officer of the Corporation before the
certificate is issued, the certificate may nevertheless be issued by the
Corporation with the same effect as if the Officer had not ceased to be such
Officer as of the date of its issuance. Share certificates shall be in such form
not inconsistent with law and these By-Laws as may be determined by the Board of
Directors.

Section 2. TRANSFER OF SHARES. Shares of each Series and Class shall be
transferable on the books of the Corporation by the holder thereof in person or
by duly authorized attorney upon surrender of the certificate representing the
shares to be transferred properly endorsed.

Section 3. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The Board of
Directors may fix in advance a date as the record date for the purpose of
determining Shareholders of a Series or Class entitled to notice of or to vote
at any Meeting of Shareholders or Shareholders to receive payment of any
dividend. Such date shall in any case not be more than 90 days and in case of a
Meeting of Shareholders not less than l0 days prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
Only Shareholders of record on the record date shall be entitled to notice of
and to vote at such meeting or to receive such dividends or rights, as the case
may be. In lieu of fixing a record date the Board of Directors may provide that
the share transfer books of the Corporation shall be closed for a stated period
not to exceed in any case 20 days. If the share transfer books are closed for
the purpose of determining Shareholders entitled to notice of or to vote at a
Meeting of Shareholders such books shall be closed for at least l0 days
immediately preceding such meeting.

Section 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case any Share
certificate is lost, mutilated or destroyed the Board of Directors may issue a
new certificate in place thereof upon indemnity to the relevant Series or Class
against loss and upon such other terms and conditions as the Board may deem
advisable.

Section 5. TRANSFER AGENT AND REGISTRAR: REGULATIONS. The Board of
Directors shall have power and authority to make all such rules and regulations
as they may deem expedient concerning the issuance, transfer and registration of
Share certificates and may appoint a Transfer Agent and/or Registrar of Share
certificates of each Series or Class, and may require all such Share
certificates to bear the signature of such Transfer Agent and/or of such
Registrar.

ARTICLE VI

AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

Section 1. AGREEMENTS, ETC. The Board of Directors or the Executive
Committee may authorize any Officer or Officers, or Agent or Agents of the
Corporation to enter into any Agreement or execute and deliver any

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instrument in the name of the Corporation and such authority may be general or
confined to specific instances; and, unless so authorized by the Board of
Directors or by the Executive Committee or by these By-Laws, no Officer, Agent
or Employee shall have any power or authority to bind the Corporation by any
Agreement or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.

Section 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officer or Officers, Employee or Employees, or Agent or Agents as shall be
from time to time designated by the Board of Directors or the Executive
Committee, or as may be specified in or pursuant to the agreement between the
Corporation on behalf of any Series or Class and the Bank or Trust Company
appointed as custodian.

Section 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All
endorsements, assignments, stock powers or other instruments of transfer of
securities standing in the name of the Corporation or its nominee or directions
for the transfer of securities belonging to the Corporation shall be made by
such Officer or Officers, Employee or Employees, or Agent or Agents as may be
authorized by the Board of Directors or the Executive Committee.

ARTICLE VII

BOOKS AND RECORDS

Section 1. LOCATION. The books and records of the Corporation, including
the Stock ledger or ledgers, may be kept in or outside the State of Maryland at
such office or agency of the Corporation as may be from time to time determined
by the Board of Directors.

ARTICLE VIII

MISCELLANEOUS

Section 1. SEAL. The Seal of the Corporation shall consist of a flat-faced
die with the word "Maryland," together with the name of the Corporation and the
year of its organization cut or engraved thereon, but unless otherwise required
by the Directors, the Seal shall not be necessary to be placed on, and its
absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Corporation.

Section 2. FISCAL YEAR. The Fiscal Year of the Corporation shall be
designated from time to time by the Board of Directors.

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ARTICLE IX

INDEMNIFICATION

Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation shall
indemnify its directors to the fullest extent that indemnification of directors
is permitted by the Maryland General Corporation Law. The Corporation shall
indemnify its officers to the same extent as its directors and to such further
extent as is consistent with law. The Corporation shall indemnify its directors
and officers who while serving as directors or officers also serve at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership joint venture, trust,
other enterprise or employee benefit plan to the fullest extent consistent with
law. The indemnification and other rights provided by this Article shall
continue as to a person who has ceased to be a director of officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person. This Article shall not protect any such person against any liability to
the Corporation or any Shareholder thereof to which such person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office
("disabling conduct").

Section 2. ADVANCES. Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he is seeking
indemnification in the manner and to fullest extent permissible under the
Maryland General Corporation Law. The person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
the person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the Corporation is
insured against losses arising by reason of the advance, or (c) a majority of a
quorum of directors of the Corporation who are neither 'interested persons' as
defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended,
nor parties to the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall be determined, based on a
review of facts readily available to the Corporation at the time the advance is
proposed to be made, that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to indemnification.

Section 3. PROCEDURE. At the request of any person claiming indemnification
under this Article, the Board of Directors shall determine, or cause to be
determined, in a manner consistent with the Maryland General Corporation Law,
whether the standards required by this Article have been met. Indemnification
shall be made only following: (a) a final decision on the merits by a court or
other body before whom the proceeding was brought

<PAGE>

[bylaws]fugs-new93

-1-

that the person to be indemnified was not liable by reason of disabling conduct
or (b) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the person to be indemnified was not liable by
reason of disabling conduct by (i) the vote of a majority of a quorum of
disinterested non-party directors or (ii) an independent legal counsel in a
written opinion.

Section 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and agents
who are not officers or directors of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940.

Section 5. OTHER RIGHTS. The Board of Directors may make further provisions
consistent with law for indemnification and advance of expenses to directors,
officers, employees and agents by resolution, agreement or otherwise. The
indemnification provided by this Article IX shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other agreement
or resolution of Shareholders or disinterested directors or otherwise.

Section 6. AMENDMENTS. References in this Article are to the Maryland
General Corporation Law and to the Investment Company Act of 1940, as from time
to time amended. No amendment of these By-Laws shall affect any right of any
person under this Article based on any event, omission or proceeding prior to
the amendment.

ARTICLE X

AMENDMENTS

Section 1. The Board of Directors shall have the power to alter, amend or
repeal any By-Laws of the Corporation and to make new By-Laws.

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 FUND FOR U.S.
GOVERNMENET SECURITIES, INC. 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 Officer March 3, 1999
- ------------------------------
William D. Dawson, III

Sworn to and subscribed before me this 3 day of MARCH, 1999
------------------ -----

/S/ CHERI S. GOOD

<PAGE>

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

Member, Pennsylvania Association of Notaries

Exhibit p(i) 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 FUND FOR U.S.
GOVERNMENT SECURITIES, INC. 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/ RICHARD J. THOMAS Treasurer 12/11/98
Richard J. Thomas (Principal Financial and
Accounting Officer)

Sworn to and subscribed before me this 11 day of DECEMBER , 1998
---- -------------

/S/ CHERI S. GOOD

<PAGE>

Notarial Seal

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

Member, Pennsylvania Association of Notaries