FEDERATED ARMS FUND
5800 Corporate Drive
Pittsburgh, PA 15237-7000
June 3, 1999
Dear Shareholder:
You have recently received a Proxy Statement asking you to consider and
vote on certain items pertaining to the Federated ARMS Fund (the "Trust"). The
purpose of this letter is to correct Proposal #3(k) of the Proxy Statement.
As you know, the Trust currently has the following investment policy:
"The Trust will limit its investments to those that are permitted
for purchase by federally chartered savings and loan associations
pursuant to applicable rules, regulations, or interpretations of
the Office of Thrift Supervision and by federal credit unions
under the Federal Credit Union Act and the rules, regulations,
and interpretations of the National Credit Union Administration."
Shareholders will not be asked under Proposal #3(k) to eliminate or
modify this or any other investment policy. Rather, shareholders will be asked
under revised Proposal #3(k) to approve changing the above stated policy (rather
than the policy erroneously set forth in the Proxy Statement) to non-fundamental
from fundamental. A non-fundamental policy may be changed by the Board of
Trustees without shareholder approval. The Trust, however, has no present
intention to further modify this policy.
The purpose of the requested change (like all of the proposed changes
set forth in Proposals #3(a) to #3(t) and #4(a) to #4(d) in the Proxy Statement)
is to allow the Trust greater flexibility to respond to future investment
opportunities. The requested change of the policy set forth above to
non-fundamental from fundamental is not expected to result in any current
shareholder having to withdraw its investment from the Trust.
FEDERATED ARMS FUND
