FEDERATED ARMS FUND, 497, 1996-01-08

FEDERATED ARMS FUND
497, 1996-01-08

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FEDERATED ARMS FUND
Institutional Service Shares

SUPPLEMENT TO PROSPECTUS DATED OCTOBER 31, 1995
Please insert the following as a new section immediately following the sub-
section entitled "By Mail" on page 13:
     "EXCHANGE PRIVILEGE
     Financial institutions that maintain master accounts with an aggregate
     investment of at least $400 million in certain funds which are advised
     or distributed by affiliates of Federated Investors may exchange their
     Shares for Institutional Shares of the Trust."

                                                                 January 8, 1996












   FEDERATED SECURITIES CORP.

   Distributor                     RE
   A subsidiary of FEDERATED
   INVESTORS
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   PITTSBURGH, PA  15222-3779
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