FEDERATED ARMS FUND
NSAR-B, 1996-10-30
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<PAGE>      PAGE  1
000 B000000 08/31/96
000 C000000 0000771524
000 D000000 N
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000 F000000 Y
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000 J000000 A
001 A000000 FEDERATED ARMS FUND
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001 C000000 4122886653
002 A000000 FEDERATED INVESTORS TOWER
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<PAGE>      PAGE  2
011 C040001 3779
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<PAGE>      PAGE  3
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<PAGE>      PAGE  4
022 A000008 BEAR, STEARNS & CO., INC.
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<PAGE>      PAGE  10
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SIGNATURE   S. ELLIOTT COHAN                             
TITLE       ASST. GEN. COUNSEL  
 


<TABLE> <S> <C>

                                                                               
<S>                             <C>                                            
                                                                               
<ARTICLE>                       6                                              
<SERIES>                                                                       
     <NUMBER>                   001                                            
     <NAME>                     Federated ARMs Fund                            
                                Institutional Shares                           
                                                                               
<PERIOD-TYPE>                   12-mos                                         
<FISCAL-YEAR-END>               Aug-31-1996                                    
<PERIOD-END>                    Aug-31-1996                                    
<INVESTMENTS-AT-COST>           749,261,009                                    
<INVESTMENTS-AT-VALUE>          752,270,895                                    
<RECEIVABLES>                   13,972,065                                     
<ASSETS-OTHER>                  0                                              
<OTHER-ITEMS-ASSETS>            0                                              
<TOTAL-ASSETS>                  766,242,960                                    
<PAYABLE-FOR-SECURITIES>        0                                              
<SENIOR-LONG-TERM-DEBT>         0                                              
<OTHER-ITEMS-LIABILITIES>       3,393,329                                      
<TOTAL-LIABILITIES>             3,393,329                                      
<SENIOR-EQUITY>                 0                                              
<PAID-IN-CAPITAL-COMMON>        844,256,200                                    
<SHARES-COMMON-STOCK>           67,742,265                                     
<SHARES-COMMON-PRIOR>           88,712,689                                     
<ACCUMULATED-NII-CURRENT>       39,710                                         
<OVERDISTRIBUTION-NII>          0                                              
<ACCUMULATED-NET-GAINS>         (84,456,165)                                   
<OVERDISTRIBUTION-GAINS>        0                                              
<ACCUM-APPREC-OR-DEPREC>        3,009,886                                      
<NET-ASSETS>                    653,313,362                                    
<DIVIDEND-INCOME>               0                                              
<INTEREST-INCOME>               56,629,979                                     
<OTHER-INCOME>                  0                                              
<EXPENSES-NET>                  5,139,989                                      
<NET-INVESTMENT-INCOME>         51,489,990                                     
<REALIZED-GAINS-CURRENT>        1,044,840                                      
<APPREC-INCREASE-CURRENT>       (1,656,353)                                    
<NET-CHANGE-FROM-OPS>           50,878,477                                     
<EQUALIZATION>                  0                                              
<DISTRIBUTIONS-OF-INCOME>       44,631,616                                     
<DISTRIBUTIONS-OF-GAINS>        0                                              
<DISTRIBUTIONS-OTHER>           0                                              
<NUMBER-OF-SHARES-SOLD>         5,202,156                                      
<NUMBER-OF-SHARES-REDEEMED>     27,194,052                                     
<SHARES-REINVESTED>             1,021,472                                      
<NET-CHANGE-IN-ASSETS>          (229,339,920)                                  
<ACCUMULATED-NII-PRIOR>         244,502                                        
<ACCUMULATED-GAINS-PRIOR>       (85,501,005)                                   
<OVERDISTRIB-NII-PRIOR>         0                                              
<OVERDIST-NET-GAINS-PRIOR>      0                                              
<GROSS-ADVISORY-FEES>           5,228,816                                      
<INTEREST-EXPENSE>              0                                              
<GROSS-EXPENSE>                 8,937,277                                      
<AVERAGE-NET-ASSETS>            871,225,676                                    
<PER-SHARE-NAV-BEGIN>           9.650                                          
<PER-SHARE-NII>                 0.580                                          
<PER-SHARE-GAIN-APPREC>         (0.010)                                        
<PER-SHARE-DIVIDEND>            0.580                                          
<PER-SHARE-DISTRIBUTIONS>       0.000                                          
<RETURNS-OF-CAPITAL>            0.000                                          
<PER-SHARE-NAV-END>             9.640                                          
<EXPENSE-RATIO>                 0.55                                           
<AVG-DEBT-OUTSTANDING>          0                                              
<AVG-DEBT-PER-SHARE>            0.000                                          
                                                                               

</TABLE>

<TABLE> <S> <C>

                                                                               
<S>                             <C>                                            
                                                                               
<ARTICLE>                       6                                              
<SERIES>                                                                       
     <NUMBER>                   002                                            
     <NAME>                     Federated ARMs Fund                            
                                Institutional Service Shares                   
                                                                               
<PERIOD-TYPE>                   12-mos                                         
<FISCAL-YEAR-END>               Aug-31-1996                                    
<PERIOD-END>                    Aug-31-1996                                    
<INVESTMENTS-AT-COST>           749,261,009                                    
<INVESTMENTS-AT-VALUE>          752,270,895                                    
<RECEIVABLES>                   13,972,065                                     
<ASSETS-OTHER>                  0                                              
<OTHER-ITEMS-ASSETS>            0                                              
<TOTAL-ASSETS>                  766,242,960                                    
<PAYABLE-FOR-SECURITIES>        0                                              
<SENIOR-LONG-TERM-DEBT>         0                                              
<OTHER-ITEMS-LIABILITIES>       3,393,329                                      
<TOTAL-LIABILITIES>             3,393,329                                      
<SENIOR-EQUITY>                 0                                              
<PAID-IN-CAPITAL-COMMON>        844,256,200                                    
<SHARES-COMMON-STOCK>           11,358,003                                     
<SHARES-COMMON-PRIOR>           14,054,028                                     
<ACCUMULATED-NII-CURRENT>       39,710                                         
<OVERDISTRIBUTION-NII>          0                                              
<ACCUMULATED-NET-GAINS>         (84,456,165)                                   
<OVERDISTRIBUTION-GAINS>        0                                              
<ACCUM-APPREC-OR-DEPREC>        3,009,886                                      
<NET-ASSETS>                    109,536,269                                    
<DIVIDEND-INCOME>               0                                              
<INTEREST-INCOME>               56,629,979                                     
<OTHER-INCOME>                  0                                              
<EXPENSES-NET>                  5,139,989                                      
<NET-INVESTMENT-INCOME>         51,489,990                                     
<REALIZED-GAINS-CURRENT>        1,044,840                                      
<APPREC-INCREASE-CURRENT>       (1,656,353)                                    
<NET-CHANGE-FROM-OPS>           50,878,477                                     
<EQUALIZATION>                  0                                              
<DISTRIBUTIONS-OF-INCOME>       7,063,166                                      
<DISTRIBUTIONS-OF-GAINS>        0                                              
<DISTRIBUTIONS-OTHER>           0                                              
<NUMBER-OF-SHARES-SOLD>         1,125,713                                      
<NUMBER-OF-SHARES-REDEEMED>     4,002,502                                      
<SHARES-REINVESTED>             180,764                                        
<NET-CHANGE-IN-ASSETS>          (229,339,920)                                  
<ACCUMULATED-NII-PRIOR>         244,502                                        
<ACCUMULATED-GAINS-PRIOR>       (85,501,005)                                   
<OVERDISTRIB-NII-PRIOR>         0                                              
<OVERDIST-NET-GAINS-PRIOR>      0                                              
<GROSS-ADVISORY-FEES>           5,228,816                                      
<INTEREST-EXPENSE>              0                                              
<GROSS-EXPENSE>                 8,937,277                                      
<AVERAGE-NET-ASSETS>            871,225,676                                    
<PER-SHARE-NAV-BEGIN>           9.650                                          
<PER-SHARE-NII>                 0.550                                          
<PER-SHARE-GAIN-APPREC>         (0.010)                                        
<PER-SHARE-DIVIDEND>            0.550                                          
<PER-SHARE-DISTRIBUTIONS>       0.000                                          
<RETURNS-OF-CAPITAL>            0.000                                          
<PER-SHARE-NAV-END>             9.640                                          
<EXPENSE-RATIO>                 0.80                                           
<AVG-DEBT-OUTSTANDING>          0                                              
<AVG-DEBT-PER-SHARE>            0.000                                          
                                                                               

</TABLE>


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