FEDERATED TOTAL RETURN SERIES INC, 485APOS, 1997-09-26

FEDERATED TOTAL RETURN SERIES INC
485APOS, 1997-09-26

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1933 Act File No. 33-50773

1940 Act File No. 811-7115

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. 11 ......................... X
------- ----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

----

Amendment No. 13 ........................................ X
------ ----

FEDERATED TOTAL RETURN SERIES, INC.

(formerly, Insight Institutional Series, Inc.)

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,

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

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) on
_________________ pursuant to paragraph (b)(1)(v) 60 days after
filing pursuant to paragraph (a) (i)

X on November 30, 1997 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.

<PAGE>

Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:

filed the Notice required by that Rule on __________________ or
intends to file the Notice required by that Rule on or about
____________; or

X during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940,
and, pursuant to Rule 24f-2(b)(2), need not file the Notice.

Copies To:

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

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

<PAGE>

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of Federated Total
Return Series, Inc. (formerly,Insight Institutional Series, Inc.),
which consists of four portfolios: (1) Federated Total Return Bond
Fund (formerly, Federated Government Total Return Fund), (2) Federated
Limited Duration Fund (formerly, Federated Total Return Limited
Duration Fund), (3) Federated Government Fund, and (4) Federated
Limited Duration Government Fund and is comprised of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(RULE 404(C) CROSS REFERENCE)

Item 1. Cover Page..................................(1-4) Cover Page.
Item 2. Synopsis....................................(1-4) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-4) Performance Information.
Item 4. General Description of

Registrant.................................(1-4) General Information; (1-4) Investment

Information; (1-4) Investment Objective; (1-4)

Investment Policies; (1-4) Investment

Limitations; (1-4) Hub and Spoke Option.

Item 5. Management of the Fund......................(1-4) Fund Information; (1-4) Management of
the Corporation; (1-4) Distribution of
Institutional/ Institutional Service Shares;
(1-4) Administration of the Fund; (1-4)
Expenses of the Fund and
Institutional/Institutional Service Shares.
Item 6. Capital Stock and Other

Securities.................................(1-4) Dividends and Distributions; (1-4)

Shareholder Information; (1-4) Voting Rights;
(1-4) Tax Information; (1-4) Federal Income
Tax; (1-4) State and Local Taxes; (1-4) Other

Classes of Shares.

Item 7. Purchase of Securities Being

Offered....................................(1-4)
Net
Asset
Value;
(1-4)
Investing
in
Institutional/
Institutional
Service
Shares;
(1-4)
Share
Purchases;
(1-4)
Minimum
Investment
Required;
(1-4)
What
Shares
Cost;
(1-4)
Exchanging
Securities
for Fund
Shares;
(1-4)
Certificates
and
Confirmations.

Item 8. Redemption or Repurchase....................(1-4) Redeeming Institutional/ Institutional
Service Shares; (1-4) Telephone Redemption;
(1-4) Written Requests; (1-4) Accounts with
Low Balances.

Item 9. Pending Legal Proceedings...................None.

<PAGE>

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page..................................(1-4) Cover Page.
Item 11. Table of Contents...........................(1-4) Table of Contents.
Item 12. General Information and
History....................................(1-4) General Information About the Fund;
(1-4) About Federated Investors.

Item 13. Investment Objectives and

Policies...................................(1-4) Investment Objective and Policies; (1-4)
Investment Limitations.

Item 14. Management of the Fund (1-4) Federated Total Return Series, Inc.

Management; (1-4) Directors Compensation.

Item 15. Control Persons and Principal

Holders of Securities (1-4) Fund Ownership.
Item 16. Investment Advisory and Other

Services...................................(1-4) Investment Advisory Services; (1-4)

Distribution Plan and Shareholder Services;
(1-4) Other Services.

Item 17. Brokerage Allocation........................(1-4) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and Pricing

of Securities Being Offered.................(1-4) Purchasing Shares; (1-4) Determining Net
Asset Value; (1-4) Redeeming Shares.

Item 20. Tax Status..................................(1-4) Tax Status.
Item 21. Underwriters Not Applicable.
Item 22. Calculation of Performance
Data.......................................(1-4) Total Return; (1-4) Yield; (1-4)
Performance Comparisons.

Item 23. Financial Statements........................(1-4) To be filed by amendment.

</TABLE>

Federated Total Return Bond Fund

(formerly, Federated Government Total Return Fund)

(A Portfolio of Federated Total Return Series, Inc.)

Institutional Shares

Prospectus

The Institutional Shares of Federated Total Return Bond Fund
(formerly, Federated Government Total Return Fund) (the "Fund")
offered by this prospectus represent interests in a diversified
investment portfolio of Federated Total Return Series, Inc. (the
"Corporation"), an open-end, management investment company (a mutual
fund).

The investment objective of the Fund is to provide total return. The
Fund pursues this investment objective by seeking value among most
sectors of fixed income securities, focusing on investment grade debt
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 by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other government agency. Investment in these
shares involves investment risks, including the possible loss of
principal.

This prospectus contains the information you should read and know
before you invest in Institutional Shares of the Fund. Keep this
prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
November ___, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the
Fund at the address listed on the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS.

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES.

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES.

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. On March 21, 1995, the name of the
Corporation was changed from "Insight Institutional Series, Inc." to
"Federated Total Return Series, Inc." and the name of the Fund was
changed from "Insight U.S. Government Fund" to "Federated Government
Total Return Fund." On May 15, 1996, the name of the Fund was changed
from "Federated Government Total Return Fund" to "Federated Total
Return Bond Fund." The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. As of
the date of this prospectus, the Board of Directors (the "Directors")
has established two classes of shares for Federated Total Return Bond
Fund: Institutional Shares and Institutional Service Shares. This
prospectus relates only to Institutional Shares of Federated Total
Return Bond Fund.

Institutional Shares ("Shares") of the Fund are sold primarily to
accounts for which financial institutions act in a fiduciary or agency
capacity as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of investment grade debt
securities. A minimum initial investment of $100,000 over a 90-day
period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide total return. The
investment objective cannot be changed without approval of
shareholders. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in a
diversified portfolio of investment grade debt securities. Under
normal circumstances, the Fund will invest at least 65% of the value
of its total assets in domestic investment grade debt securities.
Investment grade debt securities are rated in the four highest rating
categories by one or more nationally recognized statistical rating
organizations ("NRSROs") (AAA, AA, A or BBB by Standard & Poor's
Ratings Group ("Standard & Poor's"), Fitch Investors Service, Inc.
("Fitch") or Duff & Phelps Rating Service Co. ("Duff & Phelps") or
Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's")), or
which are of comparable quality in the judgment of the adviser.
Downgraded securities will be evaluated on a case-by-case basis by the
adviser. The adviser will determine whether or not the security
continues to be an acceptable investment. If not, the security will be
sold. The remainder of the Fund's assets may be invested in any of the
securities discussed below. Unless indicated otherwise, the investment
policies may be changed by the Directors without the approval of
shareholders. Shareholders will be notified before any material change
in these investment policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests in a professionally managed,
diversified portfolio consisting primarily of investment grade debt
securities. The Fund may also invest in convertible securities. The
Fund may also invest in derivative instruments of such securities
(including instruments with demand features or credit enhancement and
stripped mortgage-backed securities), as well as money market
instruments and cash.

The securities in which the Fund invests principally are:

o asset-backed securities;

o domestic (i.e., issued in the United States) and foreign
issues of corporate debt obligations as well as domestic
and foreign issues of obligations of foreign governments
and/or their instrumentalities having floating or fixed
rates of interest;

o obligations issued or guaranteed as to payment of principal
and interest by the U.S. government, or its agencies or
instrumentalities;

o mortgage-backed securities;

o municipal securities;

o commercial paper which matures in 270 days or less;

o time deposits (including savings deposits and certificates
of deposit) and bankers' acceptances in commercial or
savings banks whose accounts are insured by the Bank
Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"), both of which are administered by
the Federal Deposit Insurance Corporation ("FDIC"),
including certificates of deposit issued by and other time
deposits in foreign branches of FDIC insured banks or
which have at least $100 million in capital; and

o repurchase agreements collateralized by eligible investments.

CORPORATE AND FOREIGN GOVERNMENT/AGENCY DEBT OBLIGATIONS. The Fund
invests in corporate and foreign government/agency debt obligations,
including bonds, notes, medium term notes, and debentures, which may
have floating or fixed rates of interest. The prices of fixed income
securities fluctuate inversely to the direction of interest rates.

FLOATING RATE DEBT OBLIGATIONS. The Fund expects to invest in floating
rate debt obligations, including increasing rate securities. Floating
rate securities are generally offered at an initial interest rate
which is at or above prevailing market rates. The interest rate paid
on these securities is then reset periodically (commonly every 90
days) to an increment over some predetermined interest rate index.
Commonly utilized indices include the three-month Treasury bill rate,
the six-month Treasury bill rate, the one-month or three-month London
Interbank Offered Rate (LIBOR), the prime rate of a bank, the
commercial paper rates, or the longer-term rates on U.S. Treasury
securities.

Increasing rate securities, which currently do not make up a
significant share of the market in corporate debt securities, are
generally offered at an initial interest rate which is at or above
prevailing market rates. Interest rates are reset periodically (most
commonly every 90 days) at different levels on a predetermined scale.
These levels of interest are ordinarily set at progressively higher
increments over time. Some increasing rate securities may, by
agreement, revert to a fixed rate status. These securities may also
contain features which allow the issuer the option to convert the
increasing rate of interest to a fixed rate under such terms,
conditions, and limitations as are described in each issue's
prospectus.

FIXED RATE DEBT OBLIGATIONS. The Fund will also invest in fixed rate
securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics
are long-term debt obligations but are treated in the market as having
short maturities because call features of the securities may make them
callable within a short period of time. A fixed rate security with
short-term characteristics would include a fixed income security
priced close to call or redemption price or a fixed income security
approaching maturity, where the expectation of call or redemption is
high.

Fixed rate securities tend to exhibit more price volatility during
times of rising or falling interest rates than securities with
floating rates of interest. This is because floating rate securities,
as described above, behave like short-term instruments in that the
rate of interest they pay is subject to periodic adjustments based on
a designated interest rate index. Fixed rate securities pay a fixed
rate of interest and are more sensitive to fluctuating interest rates.
In periods of rising interest rates, the value of a fixed rate
security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed
rate securities without such characteristics. Therefore, they behave
more like floating rate securities with respect to price volatility.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase
at its stated principal amount plus accrued interest. Such securities
typically bear interest at a rate that is intended to cause the
securities to trade at par. The interest rate may float or be adjusted
at regular intervals (ranging from daily to annually), and is normally
based on a published interest rate or interest rate index. Many
variable rate demand notes allow the Fund to demand the repurchase of
the security on not more than seven days prior notice. Other notes
only permit the Fund to tender the security at the time of each
interest rate adjustment or at other fixed intervals. See "Demand
Features."

U.S. GOVERNMENT SECURITIES. The Fund may invest in U.S. government
securities, which generally include direct obligations of the U.S.
Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations (including mortgage-backed securities, bonds, notes and
discount notes) issued or guaranteed by the following U.S. government
agencies or instrumentalities: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student
Loan Marketing Association. These securities are backed by: the full
faith and credit of the U.S. Treasury; the issuer's right to borrow an
amount limited to a specific line of credit from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or the credit of the
agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which are permissible
investments which may not always receive financial support from the
U.S. government are: Farm Credit System, including the National Bank
for Cooperatives, Farm Credit Banks, and Banks for Cooperatives;
Federal Home Loan Banks; Federal National Mortgage Association;
Student Loan Marketing Association; and Federal Home Loan Mortgage
Corporation.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
that directly or indirectly represent a participation in, or are
secured by and payable from, mortgage loans on real property. There
are currently four basic types of mortgage-backed securities: (i)
those issued or guaranteed by the U.S. government or one of its
agencies or instrumentalities, such as Government National Mortgage
Association ("Ginnie Mae"), the Federal National Mortgage Association
("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie
Mac"); (ii) those issued by private issuers that represent an interest
in or are collateralized by mortgage-backed securities issued or
guaranteed by the U.S. government or one of its agencies or
instrumentalities; (iii) those issued by private issuers that
represent an interest in or are collateralized by whole loans or
mortgage-backed securities without a government guarantee but usually
having some form of private credit enhancement; and (iv) privately
issued securities which are collateralized by pools of mortgages in
which each mortgage is guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S. government.

The privately issued mortgage-related securities provide for a
periodic payment consisting of both interest and/or principal. The
interest portion of these payments will be distributed by the Fund as
income, and the capital portion will be reinvested.

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS"). ARMS are pass-through
mortgage securities with adjustable rather than fixed interest rates.
The ARMS in which the Fund invests include, but are not limited to,
securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac and are
actively traded. The underlying mortgages which collateralize ARMS
issued by Ginnie Mae are fully guaranteed by the Federal Housing
Administration or Veterans Administration, while those collateralizing
ARMS issued by Fannie Mae or Freddie Mac are typically conventional
residential mortgages conforming to strict underwriting size and
maturity constraints. ARMS may also be collateralized by whole loans
or private pass-through securities.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are debt
obligations collateralized by mortgage loans or mortgage pass-through
securities. Typically, CMOs are collateralized by Ginnie Mae, Fannie
Mae or Freddie Mac certificates, but may be collateralized by whole
loans or private pass-through securities. CMOs may have fixed or
floating rates of interest.

The Fund may invest in certain CMOs which are issued by private
entities such as investment banking firms and companies related to the
construction industry. The CMOs in which the Fund may invest may be:
(i) securities which are collateralized by pools of mortgages in which
each mortgage is guaranteed as to payment of principal and interest by
an agency or instrumentality of the U.S. government; (ii) securities
which are collateralized by pools of mortgages in which payment of
principal and interest is guaranteed by the issuer and such guarantee
is collateralized by U.S. government securities; or (iii) other
securities in which the proceeds of the issuance are invested in
mortgage-backed securities and payment of the principal and interest
is supported by the credit of an agency or instrumentality of the U.S.

government.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class mortgage-backed securities which qualify
and elect treatment as such under provisions of the Internal Revenue
Code, as amended. Issuers of REMICs may take several forms, such as
trusts, partnerships, corporations, associations, or segregated pools
of mortgages. Once REMIC status is elected and obtained, the entity is
not subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.

ASSET-BACKED SECURITIES. Asset-backed securities have structural
characteristics similar to mortgage-backed securities but have
underlying assets that generally are not mortgage loans or interests
in mortgage loans. The Fund may invest in asset-backed securities
including, but not limited to, interests in pools of receivables, such
as motor vehicle installment purchase obligations and credit card
receivables, equipment leases, manufactured housing (mobile home)
leases, or home equity loans. These securities may be in the form of
pass-through instruments or asset-backed bonds. The securities are
issued by non-governmental entities and carry no direct or indirect
government guarantee.

INVESTMENT RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.
Mortgage-backed and asset-backed securities generally pay back
principal and interest over the life of the security. At the time the
Fund reinvests the payments and any unscheduled prepayments of
principal are received, the Fund may receive a rate of interest which
is actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage
loans or the collateral supporting asset-backed securities may be
prepaid without penalty or premium. Prepayment risks on
mortgage-backed securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance
their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or
elect to make unscheduled payments on their mortgages. Although
asset-backed securities generally are less likely to experience
substantial prepayments than are mortgage-backed securities, certain
factors that affect the rate of prepayments on mortgage-backed
securities also affect the rate of prepayments on many types of
asset-backed securities.

While mortgage-backed securities generally entail less risk of a
decline during periods of rapidly rising interest rates,
mortgage-backed securities may also have less potential for capital
appreciation than other similar investments (e.g., investments with
comparable maturities) because as interest rates decline, the
likelihood increases that mortgages will be prepaid. Furthermore, if
mortgage-backed securities are purchased at a premium, mortgage
foreclosures and unscheduled principal payments may result in some
loss of a holder's principal investment to the extent of the premium
paid. Conversely, if mortgage-backed securities are purchased at a
discount, both a scheduled payment of principal and an unscheduled
prepayment of principal would increase current and total returns and
would accelerate the recognition of income, which would be taxed as
ordinary income when distributed to shareholders.

Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the related collateral.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer
credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance
due. Most issuers of asset-backed securities backed by motor vehicle
installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the
holders of the related asset-backed securities. Further, if a vehicle
is registered in one state and is then re-registered because the owner
and obligor moves to another state, such re-registration could defeat
the original security interest in the vehicle in certain cases. In
addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the
trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all
of the obligations backing such receivables. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities.

FOREIGN SECURITIES. The Fund may invest in foreign securities. Foreign
securities do not include American Depository Receipts, but do include
foreign securities not publicly traded in the United States.
Investments in foreign securities involve special risks that differ
from those associated with investments in domestic securities. The
Fund may invest more than 10% in foreign securities.

Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issues; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.

CURRENCY RISKS. Foreign securities may be denominated in foreign
currencies. Therefore, the value in U.S. dollars of the Fund's assets
and income may be affected by changes in exchange rates and
regulations. Although the Fund values its assets daily in U.S.
dollars, it will not convert its holdings of foreign currencies to
U.S. dollars daily. When the Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers
realize a profit on the difference between the prices at which they
buy and sell currencies.

The Fund will engage in foreign currency exchange transactions in
connection with its investments in foreign securities. The Fund will
conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through forward contracts to purchase or sell
foreign currencies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign
currency exchange contract involves an obligation to purchase or sell
a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers. When the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may want
to establish the U.S. dollar cost or proceeds, as the case may be. By
entering into a forward contract in U.S. dollars for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction, the Fund attempts to protect itself against a
possible loss between trade and settlement dates resulting from an
adverse change in the relationship between the U.S. dollar and such
foreign currency. However, this tends to limit potential gains which
might result from a positive change in such currency relationships.

The Fund will not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts where the Fund
would be obligated to deliver an amount of foreign currency in excess
of the value of the Fund's securities or other assets denominated in
that currency or denominated in a currency or currencies that the
adviser believes will reflect a high degree of correlation with the
currency with regard to price movements. The Fund generally will not
enter into forward foreign currency exchange contracts with a term
longer than one year.

STRIPPED MORTGAGE-BACKED SECURITIES. The Fund may invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are
derivative multi-class securities which may be issued by agencies or
instrumentalities of the U.S. government, or by private originators
of, or investors in, mortgage loans, such as savings and loan
associations, mortgage banks, commercial banks, investment banks, and
special purpose subsidiaries of the foregoing organizations. The
market volatility of stripped mortgage-backed securities tends to be
greater than the market volatility of the other types of
mortgage-related securities in which the Fund invests. Principal-only
stripped mortgage-backed securities are used primarily to hedge
against interest rate risk to the capital assets of the Fund in a
changing interest rate environment. A principal-only investor is
assured of receiving cash flows in the amount of principal purchased
the unknown is when the cash flows will be received. Interest-only
investments over the life of the investment horizon may not receive
cash flows in the amount of the original investment.

MUNICIPAL SECURITIES. Municipal securities are generally issued to
finance public works, such as airports, bridges, highways, housing,
hospitals, mass transportation projects, schools, streets, and water
and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.

Municipal securities include industrial development bonds issued by or
on behalf of public authorities to provide financing aid to acquire
sites or construct and equip facilities for privately or publicly
owned corporations. The availability of this financing encourages
these corporations to locate within the sponsoring communities and
thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured
by the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. Interest on and principal
of revenue bonds, however, are payable only from the revenue generated
by the facility financed by the bond or other specified sources of
revenue. Revenue bonds do not represent a pledge of credit or create
any debt of or charge against the general revenues of a municipality
or public authority. Industrial development bonds are typically
classified as revenue bonds.

CONVERTIBLE SECURITIES Convertible securities include a spectrum of
securities which can be exchanged for or converted into common stock.
Convertible securities may include, but are not limited to:
convertible bonds or debentures; convertible preferred stock; units
consisting of usable bonds and warrants; or securities which can or
otherwise limit returns to the convertible security holder, such as
DECS (Dividend Enhanced Convertible Stock, or Debt Exchangeable for
Common Stock when issued as a debt security.), LYONS (Liquid Yield
Option Notes which are corporate bonds that are purchased at prices
below par with no coupons and are convertible into stock), PERCS
(Preferred Equity Redemption Cumulative Stock which are an equity
issue that pays a high cash dividend, has a cap price and mandatory
conversion to common stock at maturity), and PRIDES (Preferred
Redeemable Increased Dividend Securities, which are essentially the
same as DECS; the difference is little more than who initially
underwrites the issue.).

Convertible securities are often rated below investment grade or not
rated because they fall below debt obligations and just above common
equity in order of preference or priority on the issuer's balance
sheet. Hence, an issuer with investment grade senior debt may issue
convertible securities with ratings less than investment grade or not
rated. Convertible securities rated below investment grade may be
subject to some of the same risks as those inherent in junk bonds. The
Fund does not limit convertible securities by rating, and there is no
minimal acceptance rating for a convertible security to be purchased
or held in the Fund. Therefore, the Fund invests in convertible
securities irrespective of their ratings. This could result in the
Fund purchasing and holding, without limit, convertible securities
rated below investment grade by an NRSRO or in the Fund holding such
securities where they have acquired a rating below investment grade
after the Fund has purchased it.

The Fund's investments in convertible securities will not be
subject to the quality rating limit on other securities in which the
Fund invests. See "High Yield Debt Obligations."

BANK INSTRUMENTS. The Fund only invests in bank instruments either
issued by an institution that has capital, surplus and undivided
profits over $100 million or is insured by the BIF or the SAIF. Bank
instruments may include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The banks issuing these instruments are not
necessarily subject to the same regulatory requirements that apply to
domestic banks, such as reserve requirements, loan requirements, loan
limitations, examinations, accounting, auditing, and recordkeeping and
the public availability of information.

CREDIT FACILITIES. Demand notes are borrowing arrangements between a
corporation and an institutional lender (such as the Fund) payable
upon demand by either party. The notice period for demand typically
ranges from one to seven days, and the party may demand full or
partial payment.

Revolving credit facilities are borrowing arrangements in which the
lender agrees to make loans up to a maximum amount upon demand by the
borrower during a specified term. As the borrower repays the loan, an
amount equal to the repayment may be borrowed again during the term of
the facility. The Fund generally acquires a participation interest in
a revolving credit facility from a bank or other financial
institution. The terms of the participation require the Fund to make a
pro rata share of all loans extended to the borrower and entitles the
Fund to a pro rata share of all payments made by the borrower. Demand
notes and revolving facilities usually provide for floating or
variable rates of interest.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may
have been credit enhanced by a guaranty, letter of credit or
insurance. The Fund typically evaluates the credit quality and ratings
of credit enhanced securities based upon the financial condition and
ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. Generally, the Fund will treat
credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain
circumstances applicable regulations may require the Fund to treat the
securities as having been issued by both the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit
enhancer will adversely affect the quality and marketability of the
underlying security.

DEMAND FEATURES. The Fund may acquire securities that are subject to
puts and standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued interest)
within a fixed period following a demand by the Fund. The demand
feature may be issued by the issuer of the underlying securities, a
dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. The Fund uses
these arrangements to provide the Fund with liquidity and not to
protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of
the demand feature, or a default on the underlying security or other
event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand
features that are exercisable even after a payment default on the
underlying security are treated as a form of credit enhancement.

INTEREST RATE SWAPS. As one way of managing its exposure to different
types of investments, the Fund may enter into interest rate swaps,
currency swaps, and other types of swap agreements such as caps,
collars, and floors. Depending on how they are used, swap agreements
may increase or decrease the overall volatility of the Fund's
investments, its share price and yield.

Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on the Fund's performance. Swap agreements are
subject to risks related to the counterparty's ability to perform, and
may decline in value if the counterparty's creditworthiness
deteriorates. The Fund may also suffer losses if it is unable to
terminate outstanding swap agreements to reduce its exposure through
offsetting transactions. When the Fund enters into a swap agreement,
assets of the Fund equal to the value of the swap agreement will be
segregated by the Fund.

FINANCIAL AND FOREIGN CURRENCY FUTURES AND OPTIONS ON FUTURES. The
Fund may purchase and sell financial and foreign currency futures
contracts to hedge all or a portion of its portfolio against changes
in interest rates. Financial futures contracts call for the delivery
of particular debt instruments at a certain time in the future, while
foreign currency futures contracts call for the delivery of either
U.S. or foreign currency at a certain time in the future. The seller
of the contract agrees to make delivery of the type of instrument
called for in the contract and the buyer agrees to take delivery of
the instrument at the specified future time.

The Fund may also write (sell) or purchase put and call options on
financial and foreign currency futures contracts as a hedge to attempt
to protect securities in its portfolio against decreases in value.
When the Fund writes a call or put option on a futures contract, it is
undertaking the obligation of selling or purchasing, respectively, a
futures contract at a fixed price at any time during a specified
period if the option is exercised. Conversely, as purchaser of a call
or put option on a futures contract, the Fund is entitled (but not
obligated) to buy or sell, respectively, a futures contract at the
fixed price during the life of the option.

The Fund may not purchase or sell futures contracts or related options
if immediately thereafter the sum of the amount of margin deposits on
the Fund's existing futures positions and premiums paid for related
options would exceed 5% of the market value of the Fund's total
assets. When the Fund purchases a futures contract, an amount of cash
and cash equivalents, equal to the underlying commodity value of the
futures contract (less any related margin deposits), will be deposited
in a segregated account with the Fund's custodian (or the broker, if
legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged.

RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the instruments subject to
the futures contracts may not correlate perfectly with the prices of
the instruments in the Fund's portfolio. This may cause the futures
contract and any related options to react differently than the
portfolio's holdings to market changes. In addition, the Fund's
investment adviser could be incorrect in its expectations about the
direction or extent of market factors such as interest rate movements.
In these events, the Fund may lose money on the futures contract or
option. It is not certain that a secondary market for positions in
futures contracts or for options will exist at all times. Although the
investment adviser will consider liquidity before entering into
options transactions, there is no assurance that a liquid secondary
market on an exchange or otherwise will exist for any particular
futures contract or option at any particular time. The Fund's ability
to establish and close out futures and options positions depends on
this secondary market.

HIGH-YIELD DEBT OBLIGATIONS. The Fund may invest up to but not
including 35% of its assets in debt securities that are not
investment-grade but are rated BB or lower by an NRSRO (or, if
unrated, determined by the adviser to be of comparable quality). Some
of these securities may involve equity characteristics. The Fund may
invest in equity securities, including unit offerings which combine
fixed rate securities and common stock or common stock equivalents
such as warrants, rights and options. Securities which are rated BB or
lower by a nationally recognized statistical rating organization are
considered speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligations. These
securities are commonly referred to as "junk bonds." A description of
the rating categories for the permissible investments are contained in
the Appendix to this Prospectus.

RISKS. Debt obligations that are not determined to be investment grade
are high-yield, high-risk bonds, typically subject to greater market
fluctuations and greater risk of loss of income and principal due to
an issuer's default. To a greater extent than investment-grade bonds,
lower-rated bonds tend to reflect short-term corporate, economic and
market developments, as well as investor perceptions of the issuer's
credit quality. In addition, lower-rated bonds may be more difficult
to dispose of or to value than higher-rated, lower-yielding bonds.

The Fund's investment adviser attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis
of each issuer as well as by monitoring broad economic trends and
corporate and legislative developments.

DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from
changes in the value of an underlying security, currency, commodity or
index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as
"derivatives." Some securities, such as stock rights, warrants and
convertible securities, although not typically referred to as
derivatives, contain options that may affect their value and
performance. Derivative contracts and securities can be used to reduce
or increase the volatility of an investment portfolio's total
performance. While the response of certain derivative contracts and
securities to market changes may differ from traditional investments,
such as stock and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in
securities that could be characterized as derivatives, it will only do
so in a manner consistent with its investment objective, policies and
limitations.

TOTAL RETURN. The "total return" sought by the Fund will consist of
interest and dividends from underlying securities, capital
appreciation reflected in unrealized increases in value of portfolio
securities (realized by the shareholder only upon selling Shares) or
realized from the purchase and sale of securities, and successful use
of futures and options, or gains from favorable changes in foreign
currency exchange rates. Generally, over the long term, the total
return obtained by a portfolio investing primarily in fixed income
securities is not expected to be as great as that obtained by a
portfolio that invests primarily in equity securities. At the same
time, the market risk and price volatility of a fixed income portfolio
is expected to be less than that of an equity portfolio.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions
sell U.S. government securities or other securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon
time and price. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities.

RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in
restricted securities. Restricted securities are any securities in
which the Fund may otherwise invest pursuant to its investment
objective and policies, but which are subject to restriction on resale
under federal securities law. The Fund will limit investments in
illiquid securities, including certain restricted securities not
determined by the Directors to be liquid, interest rate swaps,
non-negotiable time deposits, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of the value
of its net assets.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional
income, the Fund may lend portfolio securities on a short-term or
long-term basis, to broker/dealers, banks, or other institutional
borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which
the investment adviser has determined are creditworthy under
guidelines established by the Directors and will receive collateral in
the form of cash or U.S. government securities equal to at least 100%
of the value of the securities loaned at all times.

There is the risk that when lending portfolio securities, the
securities may not be available to the Fund on a timely basis and the
Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition
of the securities may be delayed pending court action.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's
failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous. Settlement dates may be a
month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of
the securities on the settlement date.

The Fund may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Fund may enter
into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Fund may realize
short-term profits or losses upon the sale of such commitments.

INVESTMENT LIMITATIONS

The Fund will not:

o borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a
portfolio instrument for a percentage of its cash value
with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund
may borrow up to one-third of the value of its total
assets and pledge its assets to secure such borrowings; or

o with respect to 75% of its total assets, invest more than
5% of the value of its total assets in securities of any
one issuer (other than cash, cash items, or securities
issued or guaranteed by the U.S. government and its
agencies or instrumentalities, and repurchase agreements
collateralized by such securities) or acquire more than
10% of the outstanding voting securities of any one
issuer.

The above investment limitations cannot be changed without shareholder
approval.

HUB AND SPOKE (R) OPTION

If the Directors determine it to be in the best interest of the Fund
and its shareholders, the Fund may in the future seek to achieve its
investment objective by investing all of its assets in another
investment company having the same investment objective and
substantially the same investment policies and restrictions as those
applicable to the Fund. It is expected that any such investment
company would be managed in substantially the same manner as the Fund.

The initial shareholder of the Fund (who is an affiliate of Federated
Securities Corp.) voted to vest authority to use this investment
structure in the sole discretion of the Directors. No further approval
of shareholders is required. Shareholders will receive at least 30
days prior notice of any such investment.

In making its determination, the Directors will consider, among other
things, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies. Although it is expected
that the Directors will not approve an arrangement that is likely to
result in higher costs, no assurance is given that costs will remain
the same or be materially reduced if this investment structure is
implemented.

NET ASSET VALUE

The Fund's net asset value per Share fluctuates. The net asset value
for Shares is determined by dividing the sum of the market value of
all securities and all other assets, less liabilities, by the number
of Shares outstanding. The net asset value for Shares may exceed that
of Institutional Service Shares 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.

INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or mail.

To purchase shares of the Fund, open an account by calling Federated
Securities Corp. Information needed to establish the account will be
taken over the telephone. The Fund reserves the right to reject any
purchase request.

BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund
before 4:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Total Return Bond Fund - Institutional Shares; Fund
Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.

BY MAIL. To purchase Shares by mail, send a check made payable to
Federated Total Return Bond Fund - Institutional Shares to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. Orders by mail are considered received when payment by
check is converted by State Street Bank and Trust Company ("State
Street Bank") into federal funds. This is normally the next business
day after State Street Bank receives the check. MINIMUM INVESTMENT
REQUIRED

The minimum initial investment in the Fund is $100,000 plus any
non-affiliated bank or broker's fee. However, an account may be opened
with a smaller amount as long as the $100,000 minimum is reached
within 90 days. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund.
Accounts established through a non-affiliated bank or broker may be
subject to a smaller minimum investment.

WHAT SHARES COST

Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.
Investors who purchase Shares through a financial intermediary may be
charged a service fee by that financial intermediary.

The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time), on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
shares are tendered for redemption and no orders to purchase shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

EXCHANGING SECURITIES FOR FUND SHARES

The Fund may accept securities in exchange for Fund Shares. The Fund
will allow such exchanges only upon the prior approval of the Fund and
a determination by the Fund and the adviser that the securities to be
exchanged are acceptable.

Any securities exchanged must meet the investment objective and
policies of the Fund, must have a readily ascertainable market value,
and must be liquid. The market value of any securities exchanged in an
initial investment, plus any cash, must be at least equal to the
minimum investment in the Fund. The Fund acquires the exchanged
securities for investment and not for resale.

Securities accepted by the Fund will be valued in the same manner as
the Fund values its assets. The basis of the exchange will depend on
the net asset value of Fund shares on the day the securities are
valued. One share of the Fund will be issued for the equivalent amount
of securities accepted.

Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the
property of the Fund, along with the securities.

If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the
investor.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are
not issued unless requested on the application or by contacting the
Fund.

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly. Distributions of any
net realized long-term capital gains will be made at least once every
twelve months. Dividends and distributions are automatically
reinvested in additional Shares of the Fund on payment dates at net
asset value, unless cash payments are requested by shareholders on the
application or by writing to Federated Securities Corp.

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for shares and
payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SHARES

The Fund redeems Shares at their net asset value next determined after
the Fund receives the redemption request. Investors who redeem Shares
through a financial intermediary may be charged a service fee by that
financial intermediary. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be
received in proper form and can be made by telephone request or by
written request.

TELEPHONE REDEMPTION

Shareholders may redeem their Shares by telephoning the Fund before
4:00 p.m. (Eastern time). The proceeds will normally be wired the
following business day, but in no event more than seven days, to the
shareholder's account at a domestic commercial bank that is a member
of the Federal Reserve System. Proceeds from redemption requests
received on holidays when wire transfers are restricted will be wired
the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on
your account statement. If at any time the Fund shall determine it
necessary to terminate or modify this method of redemption,
shareholders will be promptly notified.

An authorization form permitting the Fund to accept telephone requests
must first be completed. Authorization forms and information on this
service are available from Federated Securities Corp. Telephone
redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. In the event of
drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as "Written Requests," should be
considered.

WRITTEN REQUESTS

Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 2266-8600. If share certificates have been issued, they
should be sent unendorsed with the written request by registered or
certified mail to the address noted above.

The written request should state: Federated Total Return Bond Fund
Institutional Shares; the account name as registered with the Fund;
the account number; and the number of shares to be redeemed or the
dollar amount requested. All owners of the account must sign the
request exactly as the Shares are registered. Normally, a check for
the proceeds is mailed within one business day, but in no event more
than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a
redemption request is processed.

Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Fund may redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum
value of $100,000 due to shareholder redemptions. This requirement
does not apply, however, if the balance falls below $100,000 because
of changes in the Fund's net asset value. Before Shares are redeemed
to close an account, the shareholder is notified in writing and
allowed 30 days to purchase additional Shares to meet the minimum
requirement.

FUND INFORMATION

MANAGEMENT OF THE CORPORATION

BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The
Directors are responsible for managing the Corporation's business
affairs and for exercising all the Corporation's powers except those
reserved for the shareholders. The Executive Committee of the Board of
Directors handles the Directors' responsibilities between meetings of
the Directors.

INVESTMENT ADVISER. Investment decisions for the Fund are made by
Federated Management, the Fund's investment adviser, subject to
direction by the Directors. The adviser continually conducts
investment research and supervision for the Fund and is responsible
for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Fund.

ADVISORY FEES. The Fund's adviser receives an annual investment
advisory fee equal to .40% of the Fund's average daily net assets.
Under the investment advisory contract, which provides for voluntary
waivers of expenses by the adviser, the adviser may voluntarily waive
some or all of its fee. The adviser can terminate this voluntary
waiver of some or all of its advisory fee at any time at its sole
discretion. The adviser has also undertaken to reimburse the Fund for
operating expenses in excess of limitations established by certain
states.

ADVISER'S BACKGROUND. Federated Management, a Delaware business
trust organized on April 11, 1989, is a registered investment adviser
under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) shares of Federated
Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President
and Trustee of Federated Investors.

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$80 billion invested across more than 250 funds under management
and/or administration by its subsidiaries, as of December 31, 1995,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 1,800 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.

Both the Corporation and the adviser have adopted strict codes of
ethics governing the conduct of all employees who manage the Fund and
its portfolio securities. These codes recognize that such persons owe
a fiduciary duty to the Fund's shareholders and must place the
interests of shareholders ahead of the employees' own interests. Among
other things, the codes: require preclearance and periodic reporting
of personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Directors and could result in severe penalties.

PORTFOLIO MANAGER'S BACKGROUND. Joseph M. Balestrino is the Fund's
portfolio manager. Mr. Balestrino joined Federated Investors in
1986 and has been a Vice President of the Fund's investment
adviser since 1995. Mr. Balestrino was an

Assistant Vice President of the investment adviser from 1991
until 1995 and served as an Investment Analyst of the investment
adviser from 1989 until 1991. Mr. Balestrino is a Chartered
Financial Analyst and received his Master's Degree in Urban and
Regional Planning from the University of Pittsburgh.

Mark E. Durbiano is the Fund's sub-portfolio manager for the high
yield corporate bonds asset category. He has performed these duties
since the Fund's inception. Mr. Durbiano joined Federated Investors in
1982 and has been a Senior Vice President of the Fund's adviser since
January 1996. Mr. Durbiano was a Vice President of the Fund's adviser
from 1988 through 1995. Mr. Durbiano is a Chartered Financial Analyst
and received his M.B.A. in Finance from the University of Pittsburgh.

DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the principal distributor for
Institutional Shares. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of

Federated Investors.

State securities laws may require certain financial institutions such
as depository institutions to register as dealers.

SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of
Federated Investors, under which the Fund may make payments up to .25%
of the average daily net asset value of the Institutional Shares,
computed at an annual rate, to obtain certain personal services for
shareholders and to maintain shareholder accounts. From time to time
and for such periods as deemed appropriate, the amount stated above
may be reduced voluntarily. Under the Shareholder Services Agreement,
Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based
upon Shares owned by their clients or customers. The schedules of such
fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder
Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to
payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from
their own assets, may pay financial institutions supplemental fees for
the performance of substantial sales services, distribution-related
support services, or shareholder services. The support may include
sponsoring sales, educational and training seminars for their
employees, providing sales literature, and engineering computer
software programs that emphasize the attributes of the Fund. Such
assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of
sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund' s
investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary
to operate the Fund. Federated Services Company provides these at an
annual rate which relates to the average aggregate daily net assets of
all funds advised by subsidiaries of Federated Investors ("Federated
Funds") as specified below:

Maximum Average Aggregate Daily

Administrative Fee Net Assets of the Federated Funds

0.15% on the first $250 million

0.125% on the next $250 million

0.10% on the next $250 million

0.075% 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 choose voluntarily to waive a
portion of its fee.

EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of
Corporation and Fund expenses.

The Corporation expenses for which holders of Institutional Shares pay
their allocable portion include, but are not limited to: the cost of
organizing the Corporation and continuing its existence; registering
the Corporation with federal and state securities authorities;
Directors' fees; auditors' fees, the cost of meetings of Directors;
legal fees of the Corporation; association membership dues; and such
non-recurring and extraordinary items as may arise from time to time.

The Fund expenses for which holders of Institutional Shares pay their
allocable portion include, but are not limited to: registering the
portfolio and Institutional Shares of the portfolio; investment
advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary
items as may arise from time to time.

At present, the only expenses which are allocated specifically to
Institutional Shares as a class are expenses under the Corporation's
Shareholder Services Agreement. However, the Directors reserve the
right to allocate certain other expenses to holders of Institutional
Shares as they deem appropriate ("Class Expenses"). In any case, Class
Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of
Institutional Shares; fees under the Corporation's Shareholder
Services; printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and
proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and to state securities
commissions; expenses related to adminstrative personnel and services
as required to support holders of Institutional Shares; and Directors'
fees incurred as a result of issues relating solely to Institutional
Shares.

FEDERATED LIFETRACK(TM) PROGRAM

The Fund is a member of the Federated LifeTrack(TM) Program sold
through financial representatives. Federated LifeTrack(TM) Program is
an integrated program of investment options, plan recordkeeping, and
consultation services for 401(k) and other participant-directed
benefit and savings plans. Under the Federated LifeTrack(TM) Program,
employers or plan trustees may select a group of investment options to
be offered in a plan which also uses the Federated LifeTrack(TM)
Program for recordkeeping and administrative services. Additional fees
are charged to participating plans for these services. As part of the
Federated LifeTrack(TM) Program, exchanges may readily be made between
investment options selected by the employer or a plan trustee.

SHAREHOLDER INFORMATION

VOTING RIGHTS

As a Maryland corporation, the Fund is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for
certain changes in the Fund's operation and for the election of
Directors under certain circumstances.

Directors may be removed by a majority vote of the shareholders at a
special meeting. A special meeting of shareholders shall be called by
the Directors upon the request of shareholders owning at least 10% of
the Corporation's outstanding shares of all series entitled to vote.

TAX INFORMATION

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code, as amended, applicable to
regulated investment companies and to receive the special tax
treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and
losses realized by the Corporation's other portfolios will not be
combined for tax purposes with those realized by the Fund.

Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions, including capital
gains distributions, received. This applies whether dividends and
distributions are received in cash or as additional shares.
Distributions representing long-term capital gains, if any, will be
taxable to shareholders as long-term capital gains no matter how long
the shareholders have held their shares. Information on the tax status
of dividends and distributions is provided annually.

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Total return represents the change, over a specified period of time,
in the value of an investment in the Fund after reinvesting all income
and capital gains distributions. It is calculated by dividing that
change by the initial investment and is expressed as a percentage.

The yield of the Fund is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the maximum
offering price per share of the Fund on the last day of the period.
This number is then annualized using semi-annual compounding. The
yield does not necessarily reflect income actually earned by the Fund
and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Shares and Institutional Service Shares.

From time to time, advertisements for the Fund's Institutional Shares
may refer to ratings, rankings, and other information in certain
financial publications and/or compare the Fund's Institutional Shares
performance to certain indices.

OTHER CLASSES OF SHARES

The Fund also offers another class of shares called Institutional
Service Shares which are sold at net asset value to accounts for
financial institutions and are subject to a minimum initial investment
of $25,000 over a 90-day period.

Institutional Service Shares are distributed under a 12b-1 Plan
adopted by the Fund.

Institutional Service Shares and Institutional Shares are subject to
certain of the same expenses. Expense differences, however, between
Institutional Service Shares and Institutional Shares may affect the
performance of each class.

To obtain more information and a prospectus for Institutional Service
Shares, investors may call 1-800-341-7400.

<PAGE>

APPENDIX

Standard and Poor's Ratings Group Long-Term Debt Ratings

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 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.

CCC--Debt rated CCC has currently identifiable vulnerability to
default and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.

CC--The rating CC typically is applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed, but debt service payments are continued.

CI--The rating CI is reserved for income bonds on which no interest is
being paid.

D--Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating also will be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.

<PAGE>

Moody's Investors Service, Inc., Corporate Bond Ratings

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 some time 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.

CAA--Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.

CA--Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Fitch Investors Service, Inc., Long-Term Debt Ratings

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 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.

CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

C--Bonds are in imminent default in payment of interest or principal.

DDD, DD, AND D--Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential
for recovery on these bonds, and D represents the lowest potential for
recovery.

NR--NR indicates that Fitch does not rate the specific issue.

PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the AAA
category.

Duff & Phelps Credit Rating Co.

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- --High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.

A+, A, A- --Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- --Below-average protection factors but still
considered sufficient for prudent investment. Considerable variability
in risk during economic cycles.

BB+, BB, BB- --Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company
fortunes.

Overall quality may move up or down frequently within this category.

B+, B, B- --Below investment grade and possessing risk that obligation
will not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the rating
within this category or into a higher or lower rating grade.

CCC--Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with unfavorable
company developments.

DD--Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP-Preferred stock with dividend arrearages.

Moody's Investors Service, Inc. Commercial Paper Ratings

PRIME-1--Issuers rated Prime-1 (or related supporting institutions)
have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics:

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate
reliance on debt and ample asset protection.

o Broad margins in earning coverage of fixed financial
charges and high internal cash generation.

o Well established access to a range of financial markets
and assured sources of alternate liquidity.

PRIME-2--Issuers rated Prime-2 (or related supporting institutions)
have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is
maintained.

Standard and Poor's Ratings Group Commercial Paper Ratings

A-1--This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

Fitch Investors Service, Inc. Commercial Paper Rating Definitions

FITCH-1--(Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely
payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the
strongest issues.

<PAGE>

ADDRESSES

Federated Total Return Bond Fund

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Investment Adviser

Federated Management

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Independent Auditors

Ernst & Young LLP

One Oxford Centre

Pittsburgh, Pennsylvania 15219

<PAGE>

Federated Total Return Bond Fund
(formerly, Federated Government Total Return Fund)
Institutional Shares

Prospectus
A Diversified Portfolio of
Federated Total Return Series, Inc.
an Open-End, Management
Investment Company

Prospectus dated November ___, 1997

[LOGO]

G01721-01-IS (11/97)

Federated Total Return Bond Fund (formerly, Federated Government Total
Return Fund) (A Portfolio of Federated Total Return Series, Inc.)

Institutional Service Shares
Prospectus

The Institutional Service Shares of Federated Total Return Bond Fund
(formerly, Federated Government Total Return Fund) (the "Fund")
offered by this prospectus represent interests in a diversified
investment portfolio of Federated Total Return Series, Inc. (the
"Corporation"), an open-end, management investment company (a mutual
fund).

This prospectus contains the information you should read and know
before you invest in Institutional Service Shares of the Fund. Keep

this prospectus for future reference.

Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS.

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. On March 21, 1995, the name of the
Corporation was changed from "Insight Institutional Series, Inc." to
"Federated Total Return Series, Inc." and the name of the Fund was
changed from "Insight U.S. Government Fund" to "Federated Government
Total Return Fund." On May 15 1996, the name of the Fund was changed
from "Federated Government Total Return Fund" to "Federated Total
Return Bond Fund." The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. As of
the date of this prospectus, the Board of Directors (the "Directors")
has established two classes of shares for Federated Total Return Bond
Fund: Institutional Service Shares and Institutional Shares. This
prospectus relates only to Institutional Service Shares of Federated
Total Return Bond Fund.

Institutional Service Shares ("Shares") of the Fund are designed
primarily for retail and private banking customers of financial
institutions as a convenient means of accumulating an interst in a
professionally managed, diversified portfolio investing primarily in
investment grade debt securities. A minimum initial investment of
$25,000 over a 90-day period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The securities in which the Fund invests principally are:

o asset-backed securities;

o obligations issued or guaranteed as to payment of principal
and interest by the U.S. government, or its agencies or
instrumentalities;

o mortgage-backed securities;

o municipal securities;

o commercial paper which matures in 270 days or less;

o repurchase agreements collateralized by eligible investments.

government.

The Fund's investments in convertible securities will not be
subject to the quality rating limit on other securities in which the
Fund invests. See "High Yield Debt Obligations."

HIGH-YIELD DEBT OBLIGATIONS. The Fund may invest up to but not
including 35% of its total assets in debt securities that are not
investment-grade but are rated BB or lower by an NRSRO (or, if
unrated, determined by the adviser to be of comparable quality). Some
of these securities may involve equity characteristics. The Fund may
invest in equity securities, including unit offerings which combine
fixed rate securities and common stock or common stock equivalents
such as warrants, rights and options. Securities which are rated BB or
lower by a nationally recognized statistical rating organization are
considered speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligations. These
securities are commonly referred to as "junk bonds." A description of
the rating categories for the permissible investments are contained in
the Appendix to this Prospectus.

INVESTMENT LIMITATIONS

The Fund will not:

The above investment limitations cannot be changed without shareholder
approval.

HUB AND SPOKE (R) OPTION

NET ASSET VALUE

The Fund's net asset value per Share fluctuates. The net asset value
for Shares is determined by dividing the sum of the market value of
all securities and all other assets, less liabilities, by the number
of Shares outstanding. The net asset value for Institutional Shares
may exceed that of Shares 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.

INVESTING IN INSTITUTIONAL SERVICE SHARES

SHARE PURCHASES

To purchase Shares, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over
the telephone. The Fund reserves the right to reject any purchase
request.

BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund
before 4:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Total Return Bond Fund - Institutional Service Shares;
Fund Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.

BY MAIL. To purchase Shares by mail, send a check made payable to
Federated Total Return Bond Fund Institutional Service Shares to:
Federated Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600. Orders by mail are considered received when
payment by check is converted by State Street Bank and Trust Company
("State Street Bank") into federal funds. This is normally the next
business day after State Street Bank receives the check.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund is $25,000 plus any
non-affiliated bank or broker's fee. However, an account may be opened
with a smaller amount as long as the $25,000 minimum is reached within
90 days. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund.
Accounts established through a non-affiliated bank or broker may be
subject to a smaller minimum investment.

WHAT SHARES COST

The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time), on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
Shares are tendered for redemption and no orders to purchase Shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

EXCHANGING SECURITIES FOR FUND SHARES

Securities accepted by the Fund will be valued in the same manner as
the Fund values its assets. The basis of the exchange will depend on
the net asset value of Fund Shares on the day the securities are
valued. One Share of the Fund will be issued for the equivalent amount
of securities accepted.

If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund Shares, a gain or loss may be realized by the
investor.

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SERVICE SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

The written request should state: Federated Total Return Bond Fund
Institutional Service Shares; the account name as registered with the
Fund; the account number; and the number of Shares to be redeemed or
the dollar amount requested. All owners of the account must sign the
request exactly as the Shares are registered. Normally, a check for
the proceeds is mailed within one business day, but in no event more
than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a
redemption request is processed.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Fund may redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum
value of $25,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $25,000 because of
changes in the Fund's net asset value. Before Shares are redeemed to
close an account, the shareholder is notified in writing and allowed
30 days to purchase additional Shares to meet the minimum requirement.

FUND INFORMATION

MANAGEMENT OF THE CORPORATION

DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES

Federated Securities Corp. is the principal distributor for
Institutional Service Shares. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a
number of investment companies. Federated Securities Corp. is a

subsidiary of Federated Investors.

State securities laws may require certain financial institutions such
as depository institutions to register as dealers.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan
adopted in accordance with Rule 12b-1 under the Investment Company Act
of 1940 (the "Plan"), the distributor may be paid a fee by the Fund in
an amount computed at an annual rate of .25% of the average daily net
asset value of Institutional Service Shares of the Fund. The
distributor may select financial institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related
support services as agents for their clients or customers.

The Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the
Fund does not pay for unreimbursed expenses of the distributor,
including amounts expended by the distributor in excess of amounts
received by it from the Fund, interest, carrying or other financing
charges in connection with excess amounts expended, or the
distributor's overhead expenses. However, the distributor may be able
to recover such amounts or may earn a profit from future payments made
by the Fund under the Plan.

In addition, the Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of
Federated Investors, under which the Fund may make payments up to .25%
of the average daily net asset value of Shares to obtain certain
personal services for shareholders and to maintain shareholder
accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to
payments made pursuant to the Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from
their own assets, may pay financial institutions supplemental fees for
the performance of substantial sales services, distribution-related
support services, or shareholder services. The support may include
sponsoring sales, educational and training seminars for their
employees, providing sales literature, and engineering computer
software programs that emphasize the attributes of the Fund. Such
assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of
sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund' s
investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

Maximum Average Aggregate Daily

Administrative Fee Net Assets of the Federated Funds

0.15% on the first $250 million

0.125% on the next $250 million

0.10% on the next $250 million

0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES

Holders of Institutional Service Shares pay their allocable portion of
Corporation and Fund expenses.

The Corporation expenses for which holders of Institutional Service
Shares pay their allocable portion include, but are not limited to:
the cost of organizing the Corporation and continuing its existence;
registering the Corporation with federal and state securities
authorities; Directors' fees; auditors' fees, the cost of meetings of
Directors; legal fees of the Corporation; association membership dues;
and such non-recurring and extraordinary items as may arise from time
to time.

The Fund expenses for which holders of Institutional Service Shares
pay their allocable portion include, but are not limited to:
registering the portfolio and Institutional Service Shares of the
portfolio; investment advisory services; taxes and commissions;
custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise from time to time.

At present, the only expenses which are allocated specifically to
Institutional Service Shares as a class are expenses under the
Corporation's Distribution Plan and Shareholder Services Agreement.
However, the Directors reserve the right to allocate certain other
expenses to holders of Institutional Service Shares as they deem
appropriate ("Class Expenses"). In any case, Class Expenses would be
limited to: distribution fees; transfer agent fees as identified by
the transfer agent as attributable to holders of Institutional Service
Shares; fees under the Corporation's Shareholder Services; printing
and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and to state securities commissions; expenses related to
adminstrative personnel and services as required to support holders of
Institutional Service Shares; and Directors' fees incurred as a result
of issues relating solely to Institutional Service Shares.

FEDERATED LIFETRACK(TM) PROGRAM

SHAREHOLDER INFORMATION

VOTING RIGHTS

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Service Shares and Institutional Shares.

From time to time, advertisements for the Fund's Institutional Service
Shares may refer to ratings, rankings, and other information in
certain financial publications and/or compare the Fund's Institutional
Service Shares performance to certain indices.

OTHER CLASSES OF SHARES

The Fund also offers another class of shares called Institutional
Shares which are sold at net asset value to accounts for financial
institutions and are subject to a minimum initial investment of
$100,000 over a 90-day period.

Institutional Shares are distributed with no 12b-1 Plan.

Institutional Shares and Institutional Service Shares are subject to
certain of the same expenses. Expense differences, however, between
Institutional Shares and Institutional Service Shares may affect the
performance of each class.

To obtain more information and a prospectus for Institutional Shares,
investors may call 1-800-341-7400.

<PAGE>

APPENDIX

Standard and Poor's Ratings Group Long-Term Debt Ratings

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.

CC--The rating CC typically is applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt rating.

CI--The rating CI is reserved for income bonds on which no interest is
being paid.

<PAGE>

Moody's Investors Service, Inc., Corporate Bond Ratings

CAA--Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.

CA--Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Fitch Investors Service, Inc., Long-Term Debt Ratings

CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

C--Bonds are in imminent default in payment of interest or principal.

NR--NR indicates that Fitch does not rate the specific issue.

Duff & Phelps Credit Rating Co.

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- --High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.

A+, A, A- --Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- --Below-average protection factors but still
considered sufficient for prudent investment. Considerable variability
in risk during economic cycles.

Overall quality may move up or down frequently within this category.

DD--Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP-Preferred stock with dividend arrearages.

Moody's Investors Service, Inc. Commercial Paper Ratings

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate
reliance on debt and ample asset protection.

o Broad margins in earning coverage of fixed financial
charges and high internal cash generation.

o Well established access to a range of financial markets
and assured sources of alternate liquidity.

Standard and Poor's Ratings Group Commercial Paper Ratings

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

Fitch Investors Service, Inc. Commercial Paper Rating Definitions

FITCH-1--(Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely
payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the
strongest issues.

<PAGE>

ADDRESSES

Federated Total Return Bond Fund

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Investment Adviser

Federated Management

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Independent Auditors

Ernst & Young LLP

One Oxford Centre

Pittsburgh, Pennsylvania 15219

<PAGE>

Federated Total Return Bond Fund
(formerly, Federated Government Total Return Fund)

Institutional Service Shares

Prospectus

A Diversified Portfolio of

Federated Total Return Series, Inc.

an Open-End, Management

Investment Company

Prospectus dated November ___, 1997

[LOGO]

G01721-03-SS (11/97)

FEDERATED TOTAL RETURN BOND FUND
(FORMERLY, FEDERATED GOVERNMENT TOTAL RETURN FUND)

(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)
INSTITUTIONAL SHARES

INSTITUTIONAL SERVICE SHARES

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus(es) of Federated Total Return Bond Fund
(formerly, Federated Government Total Return Fund) (the
"Fund"), a portfolio of Federated Total Return Series, Inc.
(the "Corporation") dated November ___, 1997. This Statement
is not a prospectus. You may request a copy of a prospectus or
a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated November ___, 1997

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.

Cusip 31428Q101
31428Q507

G01722-02 (11/97)

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

GENERAL INFORMATION ABOUT THE FUND

Shares of the Fund are offered in two classes, known as

Institutional Shares and Institutional Service Shares (individually

and collectively referred to as "Shares," as the context may require).

This Statement

of Additional Information relates to the above-mentioned Shares of the Fund.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to provide total return. The
investment objective cannot be changed without approval of
shareholders. The investment policies stated below may be changed by
the Board of Directors ("Directors") without shareholder approval.
Shareholders will be notified before any material change in the
investment policies becomes effective.

TYPES OF INVESTMENTS

The Fund invests primarily in a diversified portfolio of debt
securities. Under normal circumstances, the Fund will invest at least
65% of the value of its total assets in domestic investment grade debt
securities.

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

The ARMS in which the Fund invests include, but are not limited to,
securities issued by Government National Mortgage Association, Federal
National Mortgage Association, and Federal Home Loan Mortgage
Corporation. Unlike conventional bonds, ARMS pay back principal over
the life of the ARMS rather than at maturity. Thus, a holder of the
ARMS, such as the Fund, would receive monthly scheduled payments of
principal and interest, and may receive unscheduled principal payments
representing payments on the underlying mortgages. At the time that a
holder of the ARMS reinvests the payments and any unscheduled
prepayments of principal that it receives, the holder may receive a
rate of interest which is actually lower than the rate of interest
paid on the existing ARMS. As a consequence, ARMS may be a less
effective means of "locking in" long-term interest rates than other
types of fixed income securities. ARMS may also be collateralized by
whole loans or private pass-through securities.

Like other fixed income securities, the market value of ARMS will
generally vary inversely with changes in market interest rates. Thus,
the market value of ARMS generally declines when interest rates rise
and generally rises when interest rates decline.

While ARMS generally entail less risk of a decline during periods of
rapidly rising rates, ARMS may also have less potential for capital
appreciation than other similar investments (e.g., investments with
comparable maturities) because, as interest rates decline, the
likelihood increases that mortgages will be prepaid. Furthermore, if
ARMS are purchased at a premium, mortgage foreclosures and unscheduled
principal payments may result in some loss of a holder's principal
investment to the extent of the premium paid. Conversely, if ARMS are
purchased at a discount, both a scheduled payment of principal and an
unscheduled prepayment of principal would increase current and total
returns and would accelerate the recognition of income, which would be
taxed as ordinary income when distributed to shareholders.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")

The following example illustrates how mortgage cash flows are
prioritized in the case of CMOs; most of the CMOs in which the Fund
invests use the same basic structure:

(2) The cash flows from the underlying mortgages are applied
first to pay interest and then to retire securities; and

Because the cash flow is distributed sequentially instead of pro rata,
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income, and the capital portion is reinvested.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS")

REMICs are offerings of multiple class mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code, as amended. Issuers of REMICs may take several
forms, such as trusts, partnerships, corporations, associations, or
segregated pools of mortgages. Once REMIC status is elected and
obtained, the entity is not subject to federal income taxation.
Instead, income is passed through the entity and is taxed to the
person or persons who hold interests in the REMIC. A REMIC interest
must consist of one or more classes of "regular interests," some of
which may offer adjustable rates of interest, and a single class of
"residual interests." To qualify as a REMIC, substantially all the
assets of the entity must be in assets directly or indirectly secured
principally by real property.

INTEREST-ONLY AND PRINCIPAL-ONLY INVESTMENTS

Some of the securities purchased by the Fund may represent an interest
solely in the principal repayments or solely in the interest payments
on mortgage-backed securities (stripped mortgage-backed securities or
"SMBSs"). SMBSs are usually structured with two classes and receive
different proportions of the interest and principal distributions on
the pool of underlying mortgage-backed securities. Due to the
possibility of prepayments on the underlying mortgages, SMBSs may be
more interest-rate sensitive than other securities purchased by the
Fund. If prevailing interest rates fall below the level at which SMBSs
were issued, there may be substantial prepayments on the underlying
mortgages, leading to the relatively early prepayments of
principal-only SMBSs (the principal-only or "PO" class) and a
reduction in the amount of payments made to holders of interest-only
SMBSs (the interest-only or "IO" class). Because the yield to maturity
of an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying
mortgage-backed securities, it is possible that the Fund might not
recover its original investment on interest-only SMBSs if there are
substantial prepayments on the underlying mortgages. The Fund's
inability to fully recoup its investments in these securities as a
result of a rapid rate of principal prepayments may occur even if the
securities are rated by an NRSRO. Therefore, interest-only SMBSs
generally increase in value as interest rates rise and decrease in
value as interest rates fall, counter to changes in value experienced
by most fixed income securities.

PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES

Privately issued mortgage-related securities generally represent an
ownership interest in federal agency mortgage pass-through securities
such as those issued by Government National Mortgage Association as
well as those issued by non-government related entities. The terms and
characteristics of the mortgage instruments may vary among
pass-through mortgage loan pools. The market for such mortgage-related
securities has expanded considerably since its inception. The size of
the primary issuance market and the active participation in the
secondary market by securities dealers and other investors makes
government-related and non-government related pools highly liquid.

RESETS OF INTEREST

To the extent that the adjusted interest rate on the mortgage security
reflects current market rates, the market value of an adjustable rate
mortgage security will tend to be less sensitive to interest rate
changes than a fixed rate debt security of the same stated maturity.
Hence, ARMS which use indices that lag changes in market rates should
experience greater price volatility than adjustable rate mortgage
securities that closely mirror the market.

CAPS AND FLOORS

The value of mortgage securities in which the Fund invests may be
affected if market interest rates rise or fall faster and farther than
the allowable caps or floors on the underlying residential mortgage
loans. Additionally, even though the interest rates on the underlying
residential mortgages are adjustable, amortization and prepayments may
occur, thereby causing the effective maturities of the mortgage
securities in which the Fund invests to be shorter than the maturities
stated in the underlying mortgages.

CONVERTIBLE SECURITIES

DECS, or similar instruments marketed under different names, offer a
substantial dividend advantage with the possibility of unlimited
upside potential if the price of the underlying common stock exceeds a
certain level. DECS convert to common stock at maturity. The amount
received is dependent on the price of the common stock at the time of
maturity. DECS contain two call options at different strike prices.
The DECS participate with the common stock up to the first call price.
They are effectively capped at that point unless the common stock
rises above a second price point, at which time they participate with
unlimited upside potential.

PERCS, or similar instruments marketed under different names, offer a
substantial dividend advantage, but capital appreciation potential is
limited to a predetermined level. PERCS are less risky and less
volatile than the underlying common stock because their superior
income mitigates declines when the common stock falls, while the cap
price limits gains when the common stock rises.

FOREIGN BANK INSTRUMENTS

Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time Deposits
("ETDs"), Yankee Certificates of Deposit ("Yankee CDs"), and Europaper
are subject to somewhat different risks than domestic obligations of
domestic issuers. Examples of these risks include international,
economic and political developments, foreign governmental restrictions
that may adversely affect the payment of principal or interest,
foreign withholdings or other taxes on interest income, difficulties
in obtaining or enforcing a judgment against the issuing bank, and the
possible impact of interruptions of the flow of international currency
transactions. Different risks may also exist for ECDs, ETDs, and
Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan requirements, loan limitations, examinations,
accounting, auditing, and recordkeeping and the public availability of
information. These factors will be carefully considered by the Fund's
adviser in selecting investments for the Fund.

FUTURES AND OPTIONS TRANSACTIONS

The Fund may attempt to hedge all or a portion of its portfolio by
buying and selling financial futures contracts, buying put options on
portfolio securities and listed put options on futures contracts, and
writing call options on futures contracts. The Fund may also write
covered call options on portfolio securities to attempt to increase
its current income. The Fund currently does not intend to invest more
than 5% of its total assets in options transactions.

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties: the
seller who agrees to make delivery of the specific type of
security called for in the contract ("going short") and the
buyer who agrees to take delivery of the security ("going long")
at a certain time in the future. In the fixed income securities
market, price moves inversely to interest rates. A rise in rates
means a drop in price. Conversely, a drop in rates means a rise
in price. In order to hedge its holdings of fixed income
securities against a rise in market interest rates, the Fund
could enter into contracts to deliver securities at a
predetermined price (i.e., "go short") to protect itself against
the possibility that the prices of its fixed income securities
may decline during the Fund's anticipated holding period. The
Fund would agree to purchase securities in the future at a
predetermined price (i.e., "go long") to hedge against a decline
in market interest rates.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase listed put options on financial futures
contracts.

The Fund would purchase put options on futures contracts to
protect portfolio securities against decreases in value
resulting from an anticipated increase in market interest rates.
Generally, if the hedged portfolio securities decrease in value
during the term of an option, the related futures contracts will
also decrease in value and the option will increase in value. In
such an event, the Fund will normally close out its option by
selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option
will be large enough to offset both the premium paid by the Fund
for the original option plus the decrease in value of the hedged
securities.

Alternatively, the Fund may exercise its put option. To do so,
it would simultaneously enter into a futures contract of the
type underlying the option (for a price less than the strike
price of the option) and exercise the option. The Fund would
then deliver the futures contract in return for payment of the
strike price. If the Fund neither closes out nor exercises an
option, the option will expire on the date provided in the
option contract, and the premium paid for the contract will be
lost.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

In other words, as the underlying futures price goes down below
the strike price, the buyer of the option has no reason to
exercise the call, so that the Fund keeps the premium received
for the option. This premium can offset the drop in value of the
Fund's fixed income portfolio which is occurring as interest
rates rise.

Prior to the expiration of a call written by the Fund, or
exercise of it by the buyer, the Fund may close out the option
by buying an identical option. If the hedge is successful, the
cost of the second option will be less than the premium received
by the Fund for the initial option. The net premium income of
the Fund will then offset the decrease in value of the hedged
securities.

The Fund will not maintain open positions in futures contracts
it has sold or call options it has written on futures contracts
if, in the aggregate, the value of the open positions (marked to
market) exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on those
open positions, adjusted for the correlation of volatility
between the hedged securities and the futures contracts. If this
limitation is exceeded at any time, the Fund will take prompt
action to close out a sufficient number of open contracts to
bring its open futures and options positions within this
limitation.

"MARGIN" IN FUTURES TRANSACTIONS

A futures contract held by the Fund is valued daily at the
official settlement price of the exchange on which it is traded.
Each day the Fund pays or receives cash, called "variation
margin," equal to the daily change in value of the futures
contract. This process is known as "marking to market."
Variation margin does not represent a borrowing or loan by the
Fund but is instead settlement between the Fund and the broker
of the amount one would owe the other if the futures contract
expired. In computing its daily net asset value, the Fund will
mark-to-market its open futures positions.

The Fund is also required to deposit and maintain margin when it
writes call options on futures contracts.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

The Fund may purchase put options on portfolio securities to
protect against price movements in particular securities in its
portfolio. A put option gives the Fund, in return for a premium,
the right to sell the underlying security to the writer (seller)
at a specified price during the term of the option.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

The Fund may also write covered call options to generate income.
As writer of a call option, the Fund has the obligation upon
exercise of the option during the option period to deliver the
underlying security upon payment of the exercise price. The Fund
may only sell call options either on securities held in its
portfolio or on securities which it has the right to obtain
without payment of further consideration (or has segregated cash
in the amount of any additional consideration).

MEDIUM TERM NOTES AND DEPOSIT NOTES

Medium term notes ("MTNs") and Deposit Notes are similar to corporate
debt obligations as described in the prospectus. MTNs and Deposit
Notes trade like commercial paper, but may have maturities from 9
months to ten years.

WEIGHTED AVERAGE PORTFOLIO MATURITY

The Fund will determine its dollar-weighted average portfolio maturity
by assigning a "weight" to each portfolio security based upon the pro
rata market value of such portfolio security in comparison to the
market value of the entire portfolio. The remaining maturity to each
portfolio security is then multiplied by its weight, and the results
are added together to determine the weighted average maturity of the
portfolio. For purposes of calculating its dollar-weighted average
portfolio maturity, the Fund will treat (a) asset-backed securites as
having a maturity equal to their estimated weighted-average maturity
and (b) variable and floating rate instruments as having a remaining
maturity commensurate with the period remaining until the next
scheduled adjustment to the instrument's interest rate. The average
maturity of asset-backed securities will be calculated based upon
assumptions established by the investment adviser as to the probable
amount of the principal prepayments weighted by the period until such
prepayments are expected to be received.

Fixed rate securities hedged with interest rate swaps or caps will be
treated as floating or variable rate securities based upon the
interest rate index of the swap or cap; floating and variable rate
securities hedged with interest rate swaps or floors will be treated
as having a maturity equal to the term of the swap or floor. In the
event that the Fund holds an interest rate swap, cap or floor that is
not hedging another portfolio security, the swap, cap or floor will be
treated as having a maturity equal to its term and a weight equal to
its notional principal amount of such term.

WEIGHTED AVERAGE PORTFOLIO DURATION

Duration is calculated by dividing the sum of the time-weighted values
of cash flows of a security or portfolio of securities, including
principal and interest payments, by the sum of the present values of
the cash flows. Certain debt securities, such as asset-backed
securities, may be subject to prepayment at irregular intervals. The
duration of these instruments will be calculated based upon
assumptions established by the investment adviser as the probable
amount and sequence of principal prepayments.

The duration of interest rate agreements, such as interest rates
swaps, caps and floors, is calculated in the same manner as other
securities. However, certain interest rate agreements have negative
durations, which the Fund may use to reduce its weighted average
portfolio duration.

Mathematically, duration is measured as follows:

Duration = PVCF1(1) + PVCF2(2) + PVCF3(3) + ... +PVCFn(n)
PVTCF PVTCF PVTCF PVTCF

where

PVCTFt = the present value of the cash flow in period t discounted at the
prevailing yield-to-maturity

t = the period when the cash flow is received

n = remaining number of periods until maturity

PVTCF = total present value of the cash flow from the bond where the
present value is determined using the prevailing yield-to-maturity.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. Settlement dates may be a
month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Fund sufficient to make
payment for the securities to be purchased are segregated on the
Fund's records at the trade date. These assets are marked to market
daily and are maintained until the transaction has been settled. The
Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more
than 20% of the total value of its assets.

LENDING OF PORTFOLIO SECURITIES

RESTRICTED AND ILLIQUID SECURITIES

The ability of the Directors to determine the liquidity of certain
restricted securities is permitted under the Securities and Exchange
Commission ("SEC") Staff position set forth in the adopting release
for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule
is a non-exclusive safe harbor for certain secondary market
transactions involving securities subject to restrictions on resale
under federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible
for resale under Rule 144A. The Fund believes that the Staff of the
SEC has left the question of determining the liquidity of all
restricted securities to the Directors. The Directors consider the
following criteria in determining the liquidity of certain restricted
securities:

o the frequency of trades and quotes for the security;

o the number of dealers willing to purchase or sell the security
and the number of other potential buyers;

o dealer undertakings to make a market in the security; and

o the nature of the security and the nature of the marketplace
trades.

REPURCHASE AGREEMENTS

The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities. In the event
that a defaulting seller files for bankruptcy or becomes insolvent,
disposition of securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally
in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such
securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions such as
broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Directors.

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. A reverse
repurchase transaction is similar to borrowing cash. In a reverse
repurchase agreement the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution, broker,
or dealer, in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future, the Fund
will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not
ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date. These
securities are marked to market daily and are maintained until the
transaction is settled.

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. It is not
anticipated that the portfolio trading engaged in by the Fund will
result in its annual rate of portfolio turnover exceeding 100%.

INVESTMENT LIMITATIONS

The following limitations are fundamental [except that no investment
limitation of the Fund shall prevent the Fund from investing
substantially all of its assets (except for assets which are not
considered "investment securities" under the Investment Company Act of
1940, or assets exempted by the Securities and Exchange Commission) in
an open-end investment company with substantially the same investment
objectives]:

SELLING SHORT OR 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
portfolio securities. The deposit or payment by the Fund of
initial or variation margin in connection with futures contracts
or related options transactions is not considered the purchase
of a security on margin.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities, except that the Fund
may borrow money directly or through reverse repurchase
agreements in amounts up to one-third of the value of its total
assets, including the amount borrowed. 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 Fund by enabling the
Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
any borrowings in excess of 5% of its total assets are
outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. For purposes of this
limitation, the following will not be deemed to be pledges of
the Fund's assets: margin deposits for the purchase and sale of
financial futures contracts and related options, and segregation
or collateral arrangements made in connection with options
activities or the purchase of securities on a when-issued basis.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its
total assets, the Fund will not purchase securities issued by
any one issuer (other than cash, cash items, or securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by
such securities) if, as a result, more than 5% of the value of
its total assets would be invested in the securities of that
issuer, and will not acquire more than 10% of the outstanding
voting securities of any one issuer.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, including
limited partnership interests, although it may invest in the
securities of companies whose business involves the purchase or
sale of real estate or in securities which are secured by real
estate or interests in real estate.

INVESTING IN COMMODITIES

The Fund will not purchase or sell commodities, commodity
contracts, or commodity futures contracts except to the extent
that the Fund may engage in transactions involving financial
futures contracts or options on financial futures contracts.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as
it may be deemed to be an underwriter under the Securities Act
of 1933 in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except portfolio
securities. This shall not prevent the Fund from purchasing or
holding U.S. government obligations, money market instruments,
variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering
into repurchase agreements, or engaging in other transactions
where permitted by the Fund's investment objective, policies,
and limitations.

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of the value of its total
assets in any one industry (other than securities issued by the
U.S. government, its agencies or instrumentalities).

The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be
changed by the Directors without shareholder approval.
Shareholders will be notified before any material change in
these limitations becomes effective.

The above limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by
the Directors without shareholder approval [except that no
investment limitation of the Fund shall prevent the Fund from
investing substantially all of its assets (except for assets
which are not considered "investment securities" under the
Investment Company Act of 1940, or assets exempted by the
Securities and Exchange Commission) in an open-end investment
company with substantially the same investment objectives].
Shareholders will be notified before any material changes in
these limitations become effective.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 10% of the value of its total
assets in securities subject to restrictions on resale under the
Securities Act of 1933, except for commercial paper issued under
Section 4(2) of the Securities Act of 1933 and certain other
restricted securities which meet the criteria for liquidity as
established by the Directors.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice,
interest rate swaps, non-negotiable fixed time deposits with
maturities over seven days, and certain restricted securities
not determined by the Directors to be liquid.

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total
assets in securities of companies, including their predecessors,
that have been in operation for less than three years. With
respect to asset-backed securities, the Fund will treat the
originator of the asset pool as the company issuing the security
for purposes of determining compliance with this limitation.

INVESTING IN MINERALS

The Fund will not purchase interests in oil, gas, or other
mineral exploration or development programs or leases, although
it may invest in the securities of issuers which invest in or
sponsor such programs.

DEALING IN PUTS AND CALLS

The Fund will not purchase puts, calls, straddles, spreads, or
any combination of them, if by reason thereof the value of such
securities would exceed 5% of its total assets.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND
DIRECTORS OF THE CORPORATION The Fund will not purchase or
retain the securities of any issuer if the officers and
Directors of the Corporation or the Fund's investment adviser,
owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's
securities.

Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of the 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 does not expect to borrow money, pledge securities or engage
in reverse repurchase agreements during the coming fiscal year.

To comply with registration requirements in certain states, the Fund
(1) will limit the aggregate value of the assets underlying covered
call options or put options written by the Fund to not more than 25%
of its net assets, (2) will limit the premiums paid for options
purchased by the Fund to 5% of its net assets, and (3) will limit the
margin deposits on futures contracts entered into by the Fund to 5% of
its net assets. (If state requirements change, these restrictions may
be revised without shareholder notification.)

For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."

FEDERATED TOTAL RETURN SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates,
present positions with Federated Total Return Series, Inc. and
principal occupations.

John F. Donahue@*

Federated Investors Tower

Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Director

Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Chief Executive Officer and
Director or Trustee of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President of the Corporation .

Thomas G. Bigley

28th Floor, One Oxford Centre

Pittsburgh, PA

Birthdate: February 3, 1934

Director

Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director or Trustee of the Funds; formerly,

Senior Partner, Ernst & Young LLP.

John T. Conroy, Jr.

Wood/IPC Commercial Department

John R. Wood and Associates, Inc., Realtors

3255 Tamiami Trail North

Naples, FL

Birthdate: June 23, 1937
Director

President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director or Trustee of the
Funds; formerly, President, Naples Property Management, Inc.

William J. Copeland

One PNC Plaza - 23rd Floor

Pittsburgh, PA

Birthdate: July 4, 1918

Director

Director and Member of the Executive Committee, Michael Baker,
Inc.; Director or Trustee of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,

Inc.

J. Christopher Donahue*

Federated Investors Tower

Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President and Director

President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder
Services Company, and Federated Shareholder Services; Director,
Federated Services Company; President or Executive Vice President of
the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Director of the Corporation.

James E. Dowd

571 Hayward Mill Road

Concord, MA

Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director or Trustee of the Funds.

Lawrence D. Ellis, M.D.*

3471 Fifth Avenue, Suite 1111

Pittsburgh, PA

Birthdate: October 11, 1932

Director

Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center
- - Downtown; Member, Board of Directors, University of Pittsburgh
Medical Center; formerly, Hematologist, Oncologist, and Internist,
Presbyterian and Montefiore Hospitals; Director or Trustee of the
Funds.

Edward L. Flaherty, Jr.@

Miller, Ament, Henny & Kochuba

205 Ross Street

Pittsburgh, PA

Birthdate: June 18, 1924

Director

Attorney-at-law; Shareholder, Miller, Ament, Henny & Kochuba;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement
Agency, Inc.; Director or Trustee of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.

Peter E. Madden

Seacliff

562 Bellevue Avenue

New port, RI

Birthdate: March 16, 1942

Director

Consultant; State Representative, Commonwealth of Massachusetts;
Director or Trustee of the Funds; formerly, President, State Street
Bank and Trust Company and State Street Boston Corporation.

Gregor F. Meyer

Miller, Ament, Henny & Kochuba

205 Ross Street

Pittsburgh, PA

Birthdate: October 6, 1926

Director

Attorney-at-law; Shareholder, Miller, Ament, Henny & Kochuba;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;

Director or Trustee of the Funds.

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

President, Duquesne University

Pittsburgh, PA

Birthdate: December 20, 1932

Director

President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director or Trustee of the Funds.

Wesley W. Posvar

1202 Cathedral of Learning

University of Pittsburgh

Pittsburgh, PA

Birthdate: September 14, 1925

Director

Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director or Trustee of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National
Advisory Council for Environmental Policy and Technology and Federal
Emergency Management Advisory Board.

Marjorie P. Smuts

4905 Bayard Street

Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public relations/marketing consultant; Conference Coordinator,
Non-profit entities; Director or Trustee of the Funds.

Glen R. Johnson

Federated Investors Tower

Pittsburgh, PA

Birthdate: May 2, 1929

President

Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.

Edward C. Gonzales

Federated Investors Tower

Pittsburgh, PA

Birthdate: October 22, 1930

Executive Vice President

Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.

John W. McGonigle

Federated Investors Tower

Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds.

Richard B. Fisher
Federated Investors Tower

Pittsburgh, PA

Birthdate: May 17, 1923

Vice President

Executive Vice President and Trustee, Federated Investors; Chairman
and Director, Federated Securities Corp.; President or Vice President
of some of the Funds; Director or Trustee of some of the Funds.

* This Directors is deemed to be an "interested person" as defined in
the Investment Company Act of 1940. @ Member of the Executive
Committee. The Executive Committee of the Board of Directors handles
the responsibilities of the Board between meetings of the Board. As
used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Government Money Trust; Blanchard Group
of Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II;
Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMS Fund; Federated Equity
Funds; Federated Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated
Tax-Free Trust;, Federated U.S. Government Bond Fund; Federated U. S.
Government Securities Fund: 1-3 Years; Federated U.S. Government
Securities Fund: 5-10 Years; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income
Securities, Inc,; High Yield Cash Trust; Federated Insurance Series;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market Trust;
Liberty Term Trust, Inc.-1999; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.; Targeted Duration
Trust; Tax-Free Instruments Trust; Trust for Financial Institutions;
Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligation; The Virtus
Funds; and World Investment Series, Inc.

FUND OWNERSHIP

Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.

As of September 15, 1997, Anbee & Company, Aurora, IL owned
approximately 79,674 (5.02%), Union Planters National Bank, Memphis,
TN owned approximately 326,605 (20.56%), Sunbank and Co., Sunbury, PA
owned approximately 245,264 (15.44%), Grand Old Co., Zanesville, OH
owned approximately 238,169 (15%), and First Mar & Co., Marquette, MI
owned approximately 226,820 (14.28%) of the Institutional Shares of
the Fund. As of September 15, 1997, Federal Savings Bank, Rogers, AR
owned approximately 6,931 (5.02%) and Ambee & Company, Aurora, IL
owned approximately 121,336 (87.80%) of the Institutional Service
Shares of the Fund.

DIRECTORS' COMPENSATION

AGGREGATE

NAME , COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION* FROM FUND COMPLEX +

JOHN F. DONAHUE, $ 0 $0 FOR THE CORPORATION AND
CHAIRMAN AND DIRECTOR 68 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

THOMAS G. BIGLEY,++ $750 $20,688 FOR THE CORPORATION AND
DIRECTOR 49 OTHER INVESTMENT COMPANIES IN THE

FUND COMPLEX

JOHN T. CONROY, JR., $825 $117,202 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

WILLIAM J. COPELAND, $825 $117,202 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

J. CHRISTOPHER DONAHUE, $ 0 $0 FOR THE CORPORATION AND
DIRECTOR 68 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

JAMES E. DOWD, $825 $117,202 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

LAWRENCE D. ELLIS, M.D., $750 $106,460 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

EDWARD L. FLAHERTY, JR., $825 $117,202 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

PETER E. MADDEN, $750 $90,563 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE

FUND COMPLEX

GREGOR F. MEYER, $750 $106,460 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

JOHN E. MURRAY, JR., $750 $0 FOR THE CORPORATIONAND
DIRECTOR 69 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

WESLEY W. POSVAR, $750 $106,460 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

MARJORIE P. SMUTS, $750 $106,460 FOR THE CORPORATION AND
DIRECTOR 64 OTHER INVESTMENT COMPANIES IN THE
FUND COMPLEX

</TABLE>

*Information is furnished for the fiscal year ended September 30, 1995.

+The information is provided for the last calendar year.

DIRECTOR LIABILITY

The Corporation's Articles of Incorporation provide that the Directors
will not be liable for errors of judgment or mistakes of fact or law.
However, they are not protected against any liability to which they
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved
in the conduct of their office.

INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND

The Fund's investment adviser is Federated Management (the "Adviser").
It is a subsidiary of Federated Investors. All of the voting
securities of Federated Investors are owned by a trust, the trustees
of which are John F. Donahue, his wife, and his son, J.

Christopher Donahue.

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

ADVISORY FEES

For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus.

STATE EXPENSE LIMITATION

The Adviser has undertaken to comply with the expense limitation
established by certain states for investment companies whose
shares are registered for sale in those states. If the Fund's
normal operating expenses (including the investment advisory
fee, but not including brokerage commissions, interest, taxes,
and extraordinary expenses) exceed 2- 1/2% per year of the first
$30 million of average net assets, 2% per year of the next $70
million of average net assets, and 1- 1/2% per year of the
remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.

If the Fund's monthly projected operating expenses exceed this
expense limitation, the investment advisory fee paid will be
reduced by the amount of the excess, subject to an annual
adjustment. If the expense limitation is exceeded, the amount to
be waived by the Adviser will be limited, in any single fiscal
year, by the amount of the investment advisory fee.

This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.

OTHER SERVICES

FUND ADMINISTRATION

Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus.

CUSTODIAN AND PORTFOLIO ACCOUNTANT

Transfer Agent

Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based upon the size, type and number of accounts and transactions

made by shareholders.

Independent Auditors

The independent auditors for the Fund are Ernst & Young LLP,
Pittsburgh, Pennsylvania.

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. In working with dealers, 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 makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Directorss.

The adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the
Fund or to the adviser and 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 provided by brokers and dealers may be used by the
adviser or by affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant 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 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.

Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in
a manner believed by the adviser to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the
benefit of the Fund.

PURCHASING SHARES

Except under certain circumstances described in the prospectus, shares
are sold at their net asset value on days the New York Stock Exchange
is open for business. The procedure for purchasing shares of the Fund
is explained in the prospectus under "Investing in the Fund."

DISTRIBUTION PLAN (INSTITUTIONAL SERVICE SHARES ONLY) AND SHAREHOLDER SERVICES

By adopting the Plan, the Directors expect that the Fund will be able
to achieve a more predictable flow of cash for investment purposes and
to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objectives.
By identifying potential investors whose needs are served by the
Fund's objectives, and properly servicing these accounts, it may be
possible to curb sharp fluctuations in rates of redemptions and sales.

Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.

For the fiscal year ended September 30, 1995, the Fund paid no fees
under a Distribution Plan. In addition, for the fiscal year ended
September 30, 1995, the Fund paid no shareholder service fees.

DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which net
asset value is calculated by the Fund are described in the prospectus.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's securities, other than options, are
determined as follows:

o as provided by an independent pricing service;

o for short-term obligations, according to the mean bid and
asked prices, as furnished by an independent pricing
service, or for short-term obligations with remaining
maturities of 60 days or less at the time of purchase, at
amortized cost unless the Directors determine this is not
fair value; or

o at fair value as determined in good faith by the Directors.

The Fund will value futures contracts, options and put options on
financial futures at their market values established by the exchanges
at the close of option trading on such exchanges unless the Directors
determine in good faith that another method of valuing option
positions is necessary.

VALUING MUNICIPAL BONDS

The Directors use an independent pricing service to value municipal
bonds. The independent pricing service takes into consideration yield,
stability, risk, quality, coupon rate, maturity, type of issue,
trading characteristics, special circumstances of a security or
trading market, and any other factors or market data it considers
relevant in determining valuations for normal institutional size
trading units of debt securities and does not rely exclusively on
quoted prices.

USE OF AMORTIZED COST

REDEEMING SHARES

The Fund redeems shares at the next computed net asset value after the
Fund receives the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming Shares." Although State
Street Bank does not charge for telephone redemptions, it reserves the
right to charge a fee for the cost of wire-transferred redemptions of
less than $5,000.

REDEMPTION IN KIND

The Corporation has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940, under which a Fund is obligated to
redeem shares for any one shareholder solely in cash only up to the
lesser of $250,000 or 1% of the Fund's net asset value during any
90-day period.

Any redemption beyond this amount will also be in cash unless the
Directors determine that payments should be in kind. In such a case,
the Fund will pay all or a portion of the remainder of the redemption
in portfolio instruments, valued in the same way that net asset value
is determined. The portfolio instruments will be selected in a manner
that the Directors deem fair and equitable.

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

TAX STATUS

THE FUND'S TAX STATUS

The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies. To qualify for this
treatment, the Fund must, among other requirements:

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends and
capital gains received as cash or additional shares. No portion of any
income dividend paid by the Fund is eligible for the dividends
received deduction available to corporations.

CAPITAL GAINS

Shareholders will pay federal tax at capital gains rates on
long-term capital gains distributed to them regardless of how
long they have held the Fund shares.

TOTAL RETURN

YIELD

The yield of the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the
offering price per share of the Fund on the last day of the period.
This value is annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is
reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be
reduced for those shareholders paying those fees.

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates and market value of portfolio securities;

o changes in the Fund expenses; and

o various other factors.

Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any 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 RUSSELL ACTIVE SECTOR ROTATION ACCOUNTS UNIVERSE includes
portfolios that change interest rate exposure relative to
the Lehman Brothers Aggregate Bond Index or other broad
market indexes, with changes in portfolio interest rate
sensitivity limited to approximately plus or minus 20%
index duration. Durations have typically been 3.5 to 6
years. Primary emphasis is on selecting undervalued
sectors or issues. Includes separate accounts, pooled
funds, or mutual funds managed by investment advisors,
banks or insurance companies.

o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
capital gains distributions and income dividends and takes
into account any change in offering price over a specific
period of time. From time to time, the Fund will quote its
Lipper ranking in the "Intermediate Investment Grade Debt
" category in advertising and sales literature.

o LEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX is
comprised of approximately 5,000 issues, which include:
non-convertible bonds publicly issued by the U.S.
government or its agencies; corporate bonds guaranteed by
the U.S. government and quasi-federal corporations; and
publicly issued, fixed rate, non-convertible domestic
bonds of companies in industry, public utilities, and
finance. The average maturity of these bonds approximates
nine years. Tracked by Lehman Brothers, Inc., the index
calculates total returns for one-month, three-month,
twelve-month, and ten-year periods and year-to-date.

o LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX is an unmanaged index comprised of all the bonds
issued by the Lehman Brothers Government/Corporate Bond
Index with maturities between 1 and 9.99 years. Total
return is based on price appreciation/depreciation and
income as a percentage of the original investment. Indices
are rebalanced monthly by market capitalization.

o LEHMAN BROTHERS AGGREGATE BOND INDEX is composed of
securities from Lehman Brothers Government/Corporate Bond
Index, Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. Total return comprises
price appreciation/depreciation and income as a percentage
of the original investment. Indices are rebalanced monthly
by market capitalization.

Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION

ABOUT FEDERATED INVESTORS

Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making--structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.

The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.

J. Thomas Madden, Executive Vice President, oversees Federated's
equity and high yield corporate bond management while William D.
Dawson, Executive Vice President, oversees Federated's domestic fixed
income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated's international portfolios.

MUTUAL FUND MARKET

Twenty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.*

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

INSTITUTIONAL CLIENTS

Federated Investors meets the needs of more than 4,000
institutional clients nationwide by managing and servicing
separate accounts and mutual funds for a variety of
applications, 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 advisors. The marketing
effort to these institutional clients is headed by John B.
Fisher, President, Institutional Sales Division.

TRUST ORGANIZATIONS

Other institutional clients include close relationships with
more than 1,500 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 Mark R. Gensheimer,
Executive Vice President, Bank Marketing & Sales.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated funds are available to consumers through major
brokerage firms nationwide--including 200 New York Stock
Exchange firms--supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial
professionals and institutions has earned it high rankings in
several DALBAR Surveys. The marketing effort to these firms is
headed by James F. Getz, President, Broker/Dealer Division.

- ------
*source: Investment Company Institute

Federated Limited Duration Fund

Federated Total Return Limited Duration Fund)

(A Portfolio of Federated Total Return Series, Inc.)

Institutional Shares

Prospectus

The Institutional Shares of Federated Limited Duration Fund (the
"Fund") offered by this prospectus represent interests in a
diversified investment portfolio of Federated Total Return Series,
Inc. (the "Corporation"), an open-end, management investment company
(a mutual fund).

The investment objective of the Fund is to provide total return. The
Fund pursues this investment objective by seeking value among most
sectors of fixed income securities.

This prospectus contains the information you should read and know
before you invest in Institutional Shares of the Fund. Keep this
prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
November ___, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the
Fund at the address listed on the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. On March 21, 1995, the name of the
Corporation was changed from "Insight Institutional Series, Inc." to
"Federated Total Return Series, Inc." On May 14, 1997, the Board of
Directors (the "Directors") approved the Fund's name change from
Federated Total Return Limited Duration Fund to Federated Limited
Duration Fund. The Articles of Incorporation permit the Corporation to
offer separate portfolios and classes of shares. As of the date of
this prospectus, the Board of Directors (the "Directors") has
established two classes of shares for Federated Limited Duration Fund:
Institutional Shares and Institutional Service Shares. This prospectus
relates only to the Institutional Shares of Federated Limited Duration
Fund.

Institutional Shares ("Shares") of the Fund are sold primarily to
accounts for which financial institutions act in a fiduciary or agency
capacity as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of fixed income
securities. A minimum initial investment of $100,000 over a 90-day
period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in a
diversified portfolio of fixed income securities. Under normal
circumstances, the Fund will invest at least 65% of the value of its
total assets in domestic investment grade debt securities. Investment
grade debt securities are rated in the four highest rating categories
by one or more nationally recognized statistical rating organizations
("NRSROs") (AAA, AA, A or BBB by Standard & Poor's Ratings Group
("Standard & Poor's"), Fitch Investors Service, Inc. ("Fitch") or Duff
& Phelps Rating Service Co. ("Duff & Phelps") or Aaa, Aa, A or Baa by
Moody's Investors Service, Inc. ("Moody's")), or which are of
comparable quality in the judgment of the adviser. Downgraded
securities will be evaluated on a case-by-case basis by the adviser.
The adviser will determine whether or not the security continues to be
an acceptable investment. If not, the security will be sold. The
remainder of the Fund's assets may be invested in any of the
securities discussed below. The Fund's weighted-average portfolio
duration will at all times be limited to three years or less. (See the
section entitled "Average Portfolio Duration" in this Prospectus.)
Unless indicated otherwise, the investment policies may be changed by
the Directors without the approval of shareholders. Shareholders will
be notified before any material change in these investment policies
becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests in a professionally managed,
diversified portfolio consisting primarily of corporate debt
obligations, U.S. and foreign government obligations, and
mortgage-backed and asset-backed securities. The Fund may also invest
in convertible securities. The Fund may also invest in derivative
instruments of such securities (including instruments with demand
features or credit enhancement and stripped mortgage-backed
securities), as well as money market instruments and cash.

The securities in which the Fund invests principally are:

o obligations issued or guaranteed as to payment of
principal and interest by the U.S. government, or its
agencies or instrumentalities;

o mortgage-backed securities;

o asset-backed securities;

o municipal securities;

o commercial paper which matures in 270 days or less;

o repurchase agreements collateralized by eligible investments.

government.

The Fund's investments in convertible securities will not be
subject to the quality rating limit on other securities in which the
Fund invests. See "High Yield Debt Obligations."

BANK INSTRUMENTS. The Fund only invests in bank instruments either
issued by an institution that has capital, surplus and undivided
profits over $100 million or is insured by the BIF or the SAIF. Bank
instruments may include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The banks issuing these instruments are not
necessarily subject to the same regulatory requirements that apply to
domestic banks, such as reserve requirements, loan requirements, loan
limitations, examinations, accounting, auditing, recordkeeping and the
public availability of information.

AVERAGE PORTFOLIO DURATION. Although the Fund will not maintain a
stable net asset value, the adviser will seek to limit, to the extent
consistent with the Fund's investment objective of total return, the
magnitude of fluctuations in the Fund's net asset value by limiting
the dollar-weighted average duration of the Fund's portfolio. Duration
is a commonly used measure of the potential volatility of the price of
a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with shorter durations
generally have less volatile prices than securities of comparable
quality with longer durations. The Fund should be expected to maintain
a higher average duration during periods of lower expected market
volatility, and a lower average duration during periods of higher
expected market volatility. In any event, the Fund's dollar-weighted
average duration will not exceed three years.

TOTAL RETURN. The "total return" sought by the Fund will consist of
interest and dividends from underlying securities, capital
appreciation reflected in unrealized increases in value of portfolio
securities (realized by the shareholder only upon selling shares) or
realized from the purchase and sale of securities, and successful use
of futures and options, or gains from favorable changes in foreign
currency exchange rates. Generally, over the long term, the total
return obtained by a portfolio investing primarily in fixed income
securities is not expected to be as great as that obtained by a
portfolio that invests primarily in equity securities. At the same
time, the market risk and price volatility of a fixed income portfolio
is expected to be less than that of an equity portfolio.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES.. The Fund may
invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be
noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by the Fund in shares
of other investment companies may be subject to such duplicate
expenses.

INVESTMENT LIMITATIONS

The Fund will not:

The above investment limitations cannot be changed without shareholder
approval.

HUB AND SPOKE (R) OPTION

NET ASSET VALUE

INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call
the Fund before 4:00 p.m. (Eastern time) to place an order. The order
is considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Limited Duration Fund Institutional Shares; Fund Number
(this number can be found on the account statement or by contacting
the Fund); Group Number or Order Number; Nominee or Institution Name;
ABA Number 011000028. Shares cannot be purchased by wire on holidays
when wire transfers are restricted. Questions on wire purchases should
be directed to your shareholder services representative at the
telephone number listed on your account statement.

BY MAIL. To purchase shares of the Fund by mail, send a check made
payable to Federated Limited Duration Fund - Institutional Shares to:
Federated Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600. Orders by mail are considered received when
payment by check is converted by State Street Bank and Trust Company
("State Street Bank") into federal funds. This is normally the next
business day after State Street Bank receives the check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

EXCHANGING SECURITIES FOR FUND SHARES

Any securities exchanged must meet the investment objective and
policies of the Fund and must have a readily ascertainable market
value. The market value of any securities exchanged in an initial
investment, plus any cash, must be at least equal to the minimum
investment in the Fund. The Fund acquires the exchanged securities for
investment and not for resale.

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

The written request should state: Federated Limited Duration Fund
Institutional Shares; the account name as registered with the Fund;
the account number; and the number of shares to be redeemed or the
dollar amount requested. All owners of the account must sign the
request exactly as the Shares are registered. Normally, a check for
the proceeds is mailed within one business day, but in no event more
than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a
redemption request is processed.

ACCOUNTS WITH LOW BALANCES

FUND INFORMATION

MANAGEMENT OF THE CORPORATION

ADVISORY FEES. The Fund's adviser receives an annual investment
advisory fee equal to .40% of the Fund's average daily net assets.
Under the investment advisory contract, which provides for voluntary
waivers of expenses by the adviser, the adviser may voluntarily waive
some or all of its fee. The Adviser can terminate this voluntary
waiver of some or all of its advisory fee at any time at its sole
discretion.

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across more than 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide.

PORTFOLIO MANAGER'S BACKGROUND. Randall S. Bauer is the Fund's
portfolio manager. Mr. Bauer joined Federated Investors in 1989 and
has been a Vice President of the Fund's investment adviser since 1994.
Mr. Bauer was an Assistant Vice President of the Fund's investment
adviser from 1989 to 1993. Mr. Bauer is a Chartered Financial Analyst
and received his M.B.A. in Finance from Pennsylvania State University.

Robert K. Kinsey has been the Fund's portfolio manager since May,
1997. Mr. Kinsey joined Federated in 1995 as a Vice President of a
Federated advisory subsidiary. He has been a Vice President of the
Fund's adviser since March, 1997. From 1992 to 1995, he served as a
Portfolio Manager for Harris Investment Management Co., Inc. Mr.
Kinsey received his M.B.A. in Finance from U.C.L.A.

Mark E. Durbiano is the Fund's portfolio manager for the high
yield corporate bonds asset category. Mr. Durbiano joined Federated
Investors in 1982 and has been a Senior Vice President of the Fund's
adviser since January 1996. Mr. Durbiano was a Vice President of the
Fund's adviser from 1988 through 1995. Mr. Durbiano is a Chartered
Financial Analyst and received his M.B.A. in Finance from the
University of Pittsburgh.

DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the principal distributor for shares of
the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors. SHAREHOLDER SERVICES. The Fund has entered into a
Shareholder Services Agreement with Federated Shareholder Services, a
subsidiary of Federated Investors, under which the Fund may make
payments up to .25% of the average daily net asset value of the
Institutional Shares, computed at an annual rate, to obtain certain
personal services for shareholders and to maintain shareholder
accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.

ADMINISTRATION OF THE FUND

<PAGE>

Maximum Average Aggregate Daily

Administrative Fee Net Assets of the Federated Funds

0.15% on the first $250 million

0.125% on the next $250 million

0.10% on the next $250 million

0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of
Corporation and Fund expenses.

At present, the only expenses which are allocated specifically to
Institutional Shares as a class are expenses under the Corporation's
Shareholder Services Agreement. However, the Directors reserve the
right to allocate certain other expenses to holders of Institutional
Shares as they deem appropriate ("Class Expenses"). In any case, Class
Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of
Institutional Shares; fees under the Corporation's Shareholder
Services; printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and
proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and to state securities
commissions; expenses related to administrative personnel and services
as required to support holders of Institutional Shares; and Directors'
fees incurred as a result of issues relating solely to Institutional
Shares.

SHAREHOLDER INFORMATION

VOTING RIGHTS

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Shares and Institutional Service Shares.

OTHER CLASSES OF SHARES

Institutional Service Shares are distributed under a 12b-1 Plan
adopted by the Fund.

To obtain more information and a prospectus for Institutional Service
Shares, investors may call 1-800-341-7400.

<PAGE>

APPENDIX

Standard and Poor's Ratings Group Long-Term Debt Ratings

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.

CC--The rating CC typically is applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt rating.

CI--The rating CI is reserved for income bonds on which no interest is
being paid.

<PAGE>

Moody's Investors Service, Inc., Corporate Bond Ratings

CAA--Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.

CA--Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Fitch Investors Service, Inc., Long-Term Debt Ratings

CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

C--Bonds are in imminent default in payment of interest or principal.

NR--NR indicates that Fitch does not rate the specific issue.

Duff & Phelps Credit Rating Co.

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- --High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.

A+, A, A- --Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- --Below-average protection factors but still
considered sufficient for prudent investment. Considerable variability
in risk during economic cycles.

Overall quality may move up or down frequently within this category.

DD--Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP-Preferred stock with dividend averages.

Moody's Investors Service, Inc. Commercial Paper Ratings

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate
reliance on debt and ample asset protection.

o Broad margins in earning coverage of fixed financial
charges and high internal cash generation.

o Well established access to a range of financial markets
and assured sources of alternate liquidity.

Standard and Poor's Ratings Group Commercial Paper Ratings

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

Fitch Investors Service, Inc. Commercial Paper Rating Definitions

FITCH-1--(Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely
payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the
strongest issues.

<PAGE>

ADDRESSES

Federated Limited Duration Fund

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Investment Adviser

Federated Management

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Independent Auditors

Ernst & Young LLP

One Oxford Centre

Pittsburgh, Pennsylvania 15219

<PAGE>

Federated Limited Duration Fund

(Formerly Federated Total Return Limited Duration Fund)

Institutional Shares

Prospectus

A Diversified Portfolio of Federated Total Return
Series, Inc. an Open-End, Management Investment
Company

Prospectus dated November ____, 1997

[LOGO]

G01744-01-IS (11/97)

Federated Limited Duration Fund

(Formerly Federated Total Return Limited Duration Fund)

(A Portfolio of Federated Total Return Series, Inc.)

Institutional Service Shares

Prospectus

The Institutional Service Shares of Federated Limited Duration Fund
(the "Fund") offered by this prospectus represent interests in a
diversified investment portfolio of Federated Total Return Series,
Inc. (the "Corporation"), an open-end, management investment company
(a mutual fund).

The investment objective of the Fund is to provide total return. The
Fund pursues this investment objective by seeking value among most
sectors of fixed income securities.

This prospectus contains the information you should read and know
before you invest in Institutional Service Shares of the Fund. Keep

this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
November ____, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the
Fund at the address listed on the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

Prospectus dated November ____, 1997

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. On March 21, 1995, the name of the
Corporation was changed from "Insight Institutional Series, Inc." to
"Federated Total Return Series, Inc." On May 14, 1997, the Board of
Directors (the "Directors") approved the Fund's name change from
Federated Total Return Limited Duration Fund to Federated Limited
Duration Fund. The Articles of Incorporation permit the Corporation to
offer separate portfolios and classes of shares. As of the date of
this prospectus, the Board of Directors (the "Directors") has
established two classes of shares for Federated Limited Duration Fund:
Institutional Service Shares and Institutional Shares. This prospectus
relates only to the Institutional Service Shares of Federated Limited
Duration Fund.

Institutional Service Shares ("Shares") of the Fund are designed
primarily for retail and private banking customers of financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing primarily in
fixed income securities. A minimum initial investment of $25,000 over
a 90-day period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

<PAGE>

The securities in which the Fund invests principally are:

o obligations issued or guaranteed as to payment of principal
and interest by the U.S. government, or its agencies or
instrumentalities;

o mortgage-backed securities;

o asset-backed securities;

o municipal securities;

o commercial paper which matures in 270 days or less;

o repurchase agreements collateralized by eligible investments.

government.

RISKS. The risks associated with investments in foreign securities
relate to political and economic developments abroad, as well as those
that result from the differences between the regulation of domestic
securities and issuers and foreign securities and issuers. These risks
may include, but are not limited to, expropriation, confiscatory
taxation, currency fluctuations, withholding taxes on interest,
limitations on the use or transfer of assets, political or social
instability, ability to obtain or enforce court judgments abroad and
adverse diplomatic developments. Moreover, individual foreign
economies may differ favorably or unfavorably from the domestic
economy in such respects as growth of gross national product, the rate
of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. Additional differences exist between
investing in foreign and domestic securities. Examples of such
differences include: less publicly available information about foreign
issuers; credit risks associated with certain foreign governments; the
lack of uniform financial accounting standards applicable to foreign
issuers; less readily available market quotations on foreign issues;
the likelihood that securities of foreign issuers may be less liquid
or more volatile; generally higher foreign brokerage commissions; and
unreliable mail service between countries.

The Fund's investments in convertible securities will not be subject to the
quality rating limit on other securities in which the Fund invests. See "High

Yield Debt Obligations."

BANK INSTRUMENTS. The Fund only invests in bank instruments either
issued by an institution that has capital, surplus and undivided
profits over $100 million or is insured by the BIF or the SAIF. Bank
instruments may include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The banks issuing these instruments are not
necessarily subject to the same regulatory requirements that apply to
domestic banks, such as reserve requirements, loan requirements, loan
limitations, examinations, accounting, auditing, recordkeeping and the
public availability of information.

The Fund may also write (sell) or purchase put and call options on
financial and foreign currency futures contracts as a hedge to attempt
to protect securities in its portfolio against decreases in value.
When the Fund writes a call or put option on a futures contract, it is
undertaking the obligation of selling or purchasing, respectively, a
futures contract at a fixed price at any time during a specified
period if the option is exercised. Conversely, as purchaser of a call
or put option on a futures contract, the Fund is entitled (but not
obligated) to but or sell, respectively, a futures contract at the
fixed price during the life of the option.

TOTAL RETURN. The "total return" sought by the Fund will consist of
interest and dividends from underlying securities, capital
appreciation reflected in unrealized increases in value of portfolio
securities (realized by the shareholder only upon selling shares) or
realized from the purchase and sale of securities, and successful use
of futures and options, or gains from favorable changes in foreign
currency exchange rates. Generally, over the long term, the total
return obtained by a portfolio investing primarily in fixed income
securities is not expected to be as great as that obtained by a
portfolio that invests primarily in equity securities. At the same
time, the market risk and price volatility of a fixed income portfolio
is expected to be less than that of an equity portfolio.

INVESTMENT LIMITATIONS

The Fund will not:

The above investment limitations cannot be changed without shareholder
approval.

HUB AND SPOKE (R) OPTION

NET ASSET VALUE

The Fund's net asset value per Share fluctuates. The net asset value
for Shares is determined by dividing the sum of the market value of
all securities and all other assets, less liabilities, by the number
of Shares outstanding. The net asset value for Institutional Shares
may exceed that of Shares 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.

INVESTING IN INSTITUTIONAL SERVICE SHARES

SHARE PURCHASES

BY WIRE. To purchase Shares of the Fund by Federal Reserve wire, call
the Fund before 4:00 p.m. (Eastern time) to place an order. The order
is considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Limited Duration Fund - Institutional Service Shares;
Fund Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.

BY MAIL. To purchase shares of the Fund by mail, send a check made
payable to Federated Limited Duration Fund - Institutional Service
Shares to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank &
Trust Company ("State Street Bank") into federal funds. This is
normally the next business day after State Street Bank receives the
check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time), on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
Shares are tendered for redemption and no orders to purchase Shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

EXCHANGING SECURITIES FOR FUND SHARES

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SERVICE SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

The written request should state: Federated Limited Duration Fund
Institutional Service Shares; the account name as registered with the
Fund; the account number; and the number of Shares to be redeemed or
the dollar amount requested. All owners of the account must sign the
request exactly as the Shares are registered. Normally, a check for
the proceeds is mailed within one business day, but in no event more
than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a
redemption request is processed.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Fund may redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum
value of $25,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $25,000 because of
changes in the Fund's net asset value. Before Shares are redeemed to
close an account, the shareholder is notified in writing and allowed
30 days to purchase additional shares to meet the minimum requirement.

FUND INFORMATION

MANAGEMENT OF THE CORPORATION

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across more than 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide.

DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES

subsidiary of Federated Investors.

ADMINISTRATION OF THE FUND

Maximum Average Aggregate Daily

Administrative Fee Net Assets of the Federated Funds

0.15% on the first $250 million

0.125% on the next $250 million

0.10% on the next $250 million

0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES

Holders of Institutional Service Shares pay their allocable portion of
Corporation and Fund expenses.

At present, the only expenses which are allocated specifically to
Institutional Service Shares as a class are expenses under the
Corporation's Distribution Plan and Shareholder Services Agreement.
However, the Directors reserve the right to allocate certain other
expenses to holders of Institutional Service Shares as they deem
appropriate ("Class Expenses"). In any case, Class Expenses would be
limited to: distribution fees; transfer agent fees as identified by
the transfer agent as attributable to holders of Institutional Service
Shares; fees under the Corporation's Shareholder Services; printing
and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and to state securities commissions; expenses related to
administrative personnel and services as required to support holders
of Institutional Service Shares; and Directors' fees incurred as a
result of issues relating solely to Institutional Service Shares.

SHAREHOLDER INFORMATION

VOTING RIGHTS

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

<PAGE>

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Service Shares and Institutional Shares.

OTHER CLASSES OF SHARES

Institutional Shares are distributed with no 12b-1 Plan.

To obtain more information and a prospectus for Institutional Shares,
investors may call 1-800-341-7400.

<PAGE>

APPENDIX

Standard and Poor's Ratings Group Long-Term Debt Ratings

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.

CC--The rating CC typically is applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt rating.

CI--The rating CI is reserved for income bonds on which no interest is
being paid.

<PAGE>

Moody's Investors Service, Inc., Corporate Bond Ratings

CAA--Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.

CA--Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Fitch Investors Service, Inc., Long-Term Debt Ratings

CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

C--Bonds are in imminent default in payment of interest or principal.

NR--NR indicates that Fitch does not rate the specific issue.

Duff & Phelps Credit Rating Co.

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- --High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.

A+, A, A- --Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- --Below-average protection factors but still
considered sufficient for prudent investment. Considerable variability
in risk during economic cycles.

Overall quality may move up or down frequently within this category.

DD--Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP-Preferred stock with dividend averages.

Moody's Investors Service, Inc. Commercial Paper Ratings

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate
reliance on debt and ample asset protection.

o Broad margins in earning coverage of fixed financial
charges and high internal cash generation.

o Well established access to a range of financial markets
and assured sources of alternate liquidity.

Standard and Poor's Ratings Group Commercial Paper Ratings

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

Fitch Investors Service, Inc. Commercial Paper Rating Definitions

FITCH-1--(Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely
payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the
strongest issues.

<PAGE>

ADDRESSES

Federated Limited Duration Fund

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Investment Adviser

Federated Management

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company

P.O. Box 8600

Boston, Massachusetts 02266-8600

Independent Auditors

Ernst & Young LLP

One Oxford Centre

Pittsburgh, Pennsylvania 15219

<PAGE>

Federated Limited Duration Fund

(Formerly Federated Total Return Limited Duration Fund)

Institutional Service Shares

Prospectus

A Diversified Portfolio of Federated Total Return Series, Inc. an
Open-End, Management Investment Company

Prospectus dated November ___, 1997

[LOGO]

G01744-02-SS (11/97)

FEDERATED LIMITED DURATION FUND
(FORMERLY, FEDERATED TOTAL RETURN LIMITED DURATION FUND)

(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)
INSTITUTIONAL SHARES

INSTITUTIONAL SERVICE SHARES

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus(es) of Federated Limited Duration Fund (the "Fund"),
a portfolio of Federated Total Return Series, Inc. (the
"Corporation") dated November ____, 1997. This Statement is not
a prospectus. You may request a copy of a prospectus or a paper
copy of this Statement, if you have received it electronically,
free of charge by calling 1-800-341-7400.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated November ___, 1997

[GRAPHIC OMITTED]

Cusip 31428Q408
Cusip 31428Q309

G01744-03 (11/97)

<PAGE>

TABLE OF CONTENTS

TABLE OF CONTENTS
to be filed by amendment

<PAGE>

GENERAL INFORMATION ABOUT THE FUND

The Fund is a portfolio of Federated Total Return Series, Inc. (the
"Corporation"). The Corporation was incorporated under the laws of the
State of Maryland on October 11, 1993. On March 21, 1995, the name of
the Corporation was changed from "Insight Institutional Series, Inc."
to "Federated Total Return Series, Inc." On May 14, 1997 the Board of
Directors ("Directors") approved the Fund's name change from Federated
Total Return Limited Duration Fund to Federated Limited Duration Fund.
The Articles of Incorporation permit the Corporation to offer separate
portfolios and classes of shares. Shares of the Fund are offered in
two classes, known as Institutional Shares and Institutional Service
Shares (individually and collectively referred to as "Shares," as the
context may require). This Statement of Additional Information relates
to the above-mentioned Shares of the Fund.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to provide total return. The
investment objective cannot be changed without approval of
shareholders. The investment policies stated below may be changed by
the Directors without shareholder approval. Shareholders will be
notified before any material change in the investment policies becomes
effective.

TYPES OF INVESTMENTS

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")

The following example illustrates how mortgage cash flows are
prioritized in the case of CMOs; most of the CMOs in which the Fund
invests use the same basic structure:

(2) The cash flows from the underlying mortgages are applied first to pay
interest and then to retire securities; and

(3) The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bond). When those securities are completely retired, all principal
payments are then directed to the next shortest-maturity security (or
B bond). This process continues until all of the classes have been
paid off. Because the cash flow is distributed sequentially instead of
pro rata, as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive no
principal paydowns. The interest portion of these payments is
distributed by the Fund as income, and the capital portion is
reinvested.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS")

INTEREST-ONLY AND PRINCIPAL-ONLY INVESTMENTS

PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES

RESETS OF INTEREST

To the extent that the adjusted interest rate on the mortgage security
reflects current market rates, the market value of an adjustable rate
mortgage security will tend to be less sensitive to interest rate
changes than a fixed rate debt security of the same stated maturity.
Hence, ARMS, which use indices that lag changes in market rates should
experience greater price volatility than adjustable rate mortgage
securities that closely mirror the market.

CAPS AND FLOORS

These payment caps may result in negative amortization.

CONVERTIBLE SECURITIES

FOREIGN BANK INSTRUMENTS

FUTURES AND OPTIONS TRANSACTIONS

FINANCIAL FUTURES CONTRACTS

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase listed put options on financial futures
contracts.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

"MARGIN" IN FUTURES TRANSACTIONS

The Fund is also required to deposit and maintain margin when it
writes call options on futures contracts.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

MEDIUM TERM NOTES AND DEPOSIT NOTES

WEIGHTED AVERAGE PORTFOLIO MATURITY

The Fund will determine its dollar-weighted average portfolio maturity
by assigning a `weight" to each portfolio security based upon the pro
rata market value of such portfolio security in comparison to the
market value of the entire portfolio. The remaining maturity to each
portfolio security is then multiplied by its weight, and the results
are added together to determine the weighted average maturity of the
portfolio. For purposes of calculating its dollar-weighted average
portfolio maturity, the Fund will treat (a) asset-backed securites as
having a maturity equal to their estimated weighted-average maturity
and (b) variable and floating rate instruments as having a remaining
maturity commensurate with the period remaining until the next
scheduled adjustment to the instrument's interest rate. The average
maturity of asset-backed securities will be calculated based upon
assumptions established by the investment adviser as to the probable
amount of the principal prepayments weighted by the period until such
prepayments are expected to be received.

WEIGHTED AVERAGE PORTFOLIO DURATION

Duration = PVCF1(1) + PVCF2(2) + PVCF3(3) + ... + PVCFn(n)
PVTCF PVTCF PVTCF PVTCF

where

PVCTFt = the present value of the cash flow in period t discounted
at the prevailing yield-to-maturity

t = the period when the cash flow is received
n = remaining number of periods until maturity
PVTCF = total present value of the cash flow from the bond where

the present value is determined using the prevailing
yield-to-maturity.

<PAGE>

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

LENDING OF PORTFOLIO SECURITIES

RESTRICTED AND ILLIQUID SECURITIES

The ability of the Directors to determine the liquidity of certain
restricted securities is permitted under the Securities and Exchange
Commission ("SEC") Staff position set forth in the adopting release
for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule
is a non- exclusive safe harbor for certain secondary market
transactions involving securities subject to restrictions on resale
under federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible
for resale under Rule 144A. The Fund believes that the Staff of the
SEC has left the question of determining the liquidity of all
restricted securities to the Directors. The Directors consider the
following criteria in determining the liquidity of certain restricted
securities:

o the frequency of trades and quotes for the security;

o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;

o dealer undertakings to make a market in the security; and

o the nature of the security and the nature of the marketplace trades.

REPURCHASE AGREEMENTS

REVERSE REPURCHASE AGREEMENTS

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. It is not
anticipated that the portfolio trading engaged in by the Fund will
result in its annual rate of portfolio turnover exceeding 100%. For
the period from October 1, 1996 (start of performance) to March 31,
1997, the portfolio turnover rate was 91%. The portfolio turnover rate
is representative of only 6 months of activity.

INVESTMENT LIMITATIONS

The following limitations are fundamental [except that no investment
limitation of the Fund shall prevent the Fund from investing
substantially all of its assets (except for assets which are not
considered "investment securities"under the Investment Company Act of
1940, or assets exempted by the Securities and Exchange Commission) in
an open-end investment company with substantially the same investment
objectives]:

SELLING SHORT OR BUYING ON MARGIN

ISSUING SENIOR SECURITIES AND BORROWING MONEY

PLEDGING ASSETS

DIVERSIFICATION OF INVESTMENTS

INVESTING IN REAL ESTATE

INVESTING IN COMMODITIES

UNDERWRITING

LENDING CASH OR SECURITIES

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of the value of its total
assets in any one industry (other than securities issued by the
U.S. government, its agencies or instrumentalities).

The above limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Directors
without shareholder approval [except that no investment limitation of
the Fund shall prevent the Fund from investing substantially all of
its assets (except for assets which are not considered "investment
securities" under the Investment Company Act of 1940, or assets
exempted by the Securities and Exchange Commission) in an open-end
investment company with substantially the same investment objectives].
Shareholders will be notified before any material changes in these
limitations become effective.

INVESTING IN ILLIQUID SECURITIES

The Fund does not expect to borrow money, pledge securities or engage
in reverse repurchase agreements during the coming fiscal year.

FEDERATED TOTAL RETURN SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates,
present positions with Federated Total Return Series, Inc., and
principal occupations.

John F. Donahue@*
Federated Investors Tower

Pittsburgh, PA
Birthdate: July 28, 1924

Chairman and Director

Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Chief Executive Officer and
Director or Trustee of the Funds.Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President and

Director of the Corporation.

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Director

Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.

John T. Conroy, Jr.
Wood/IPC Commercial Department

John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North

Naples, FL
Birthdate: June 23, 1937

Director

President, Investment Properties Corporation; Senior
Vice-President, John R. Wood and Associates, Inc., Realtors; Partner
or Inc. and Northgate Village Development Corporation; Director or

Trustee of the Funds.ples Property Management,

William J. Copeland
One PNC Plaza - 23rd Floor

Pittsburgh, PA
Birthdate: July 4, 1918

Director

Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.

J. Christopher Donahue *
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 11, 1949

Executive Vice President and Director

James E. Dowd
571 Hayward Mill Road

Concord, MA
Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111

Pittsburgh, PA
Birthdate: October 11, 1932

Director

Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street

Pittsburgh, PA
Birthdate: June 18, 1924

Director

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N
Park Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A.,
Western Region; Director or Trustee of the Funds.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942

Director

Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of

the Funds.

Gregor F. Meyer
Boca Grande Club
Boca Grande, FL

Birthdate: October 6, 1926

Director

Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or

Trustee of the Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University

Pittsburgh, PA
Birthdate: December 20, 1932

Director

President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director or Trustee of the Funds.

<PAGE>

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh

Pittsburgh, PA
Birthdate: September 14, 1925

Director

Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University, U.S. Space
Foundation and Czech Management Center; President Emeritus, University
of Pittsburgh; Founding Chairman, National Advisory Council for
Environmental Policy Board and Czech Management Center; Director or
Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director

or Trustee of the Funds.

Glen R. Johnson
Federated Investors Tower

Pittsburgh, PA
Birthdate: May 2, 1929

President

Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930

Executive Vice President

<PAGE>

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Funds; Treasurer of some of the Funds
Vice President and Secretary of the

*THIS DIRECTOR IS DEEMED TO BE AN "INTERESTED PERSON" AS
DEFINED IN THE INVESTMENT COMPANY ACT OF 1940.

@Member of the Executive Committee. The Executive Committee of the
Board of Directors handles the responsibilities of the Board
between meetings of the Board.

THE FUNDS

111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc. ; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated 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 Investment Portfolios;
Federated Investment Trust; 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.; First
Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Term Trust, Inc.
- - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; The Planters Funds; The Starburst Funds; The
Starburst Funds II; The Virtus Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc.

FUND OWNERSHIP

Officers and Directors as a group own less than 1% of the Fund's
outstanding shares.

As of September 15, 1997, Anbee & Company, Aurora, IL owned
approximately 251,013 (96.40%) of the Institutional Service Shares of
the Fund.

DIRECTORS' COMPENSATION

AGGREGATE
NAME,

COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
COMPANY CORPORATION *# FROM FUND COMPLEX +

John F. Donahue, $0 $0 for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex

J. Christopher Donahue, $0 $0 for the Fund and
Executive Vice President and Director 18 other investment companies in the Fund Complex

Thomas G. Bigley, $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John T. Conroy, Jr., $1109.11 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

William J. Copeland, $1109.11 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

James E. Dowd, $1109.11 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Lawrence D. Ellis, M.D., $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Edward L Flaherty, Jr., $1109.11 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Peter E. Madden, $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Gregor F. Meyer, Jr., $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John E. Murray, Jr., $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Wesley W. Posvar, $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Marjorie P. Smuts, $1008.14 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

</TABLE>

*Information is furnished for the fiscal year ended September 30, 1997.

#The aggregate compensation is provided for the Corporation which is comprised
of four portfolios.

The information is provided for the last calendar year.

DIRECTOR LIABILITY

<PAGE>

INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND

Christopher Donahue.

ADVISORY FEES

For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the period
from October 1, 1996 (start of performance) to March 31, 1997, the
Fund's Adviser earned $10,080, all of which was voluntarily waived.

OTHER SERVICES
FUND ADMINISTRATION

Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. For the period from October 1, 1996,
(start of performance) to March 31, 1997, the Fund incurred costs for
administrative services of $77,500, all of which was voluntarily
waived.

CUSTODIAN AND PORTFOLIO ACCOUNTANT

TRANSFER AGENT

made by shareholders.

INDEPENDENT AUDITORS

The independent auditors for the Fund are Ernst & Young LLP,
Pittsburgh, Pennsylvania.

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. In working with dealers, 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 makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Directors.

PURCHASING SHARES

DISTRIBUTION PLAN (INSTITUTIONAL SERVICE SHARES ONLY) AND SHAREHOLDER SERVICES

These arrangements permit the payment of fees to financial
institutions, the distributor, and Federated Shareholder Services, to
stimulate distribution activities and to cause services to be provided
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include, but are not limited to: marketing efforts;
providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations and addresses. By adopting the Plan, the Directors expect
that the Fund will be able to achieve a more predictable flow of cash
for investment purposes and to meet redemptions. This will facilitate
more efficient portfolio management and assist the Fund in pursuing
its investment objectives. By identifying potential investors whose
needs are served by the Fund's objectives, and properly servicing
these accounts, it may be possible to curb sharp fluctuations in rates
of redemptions and sales.

For the period from October 1, 1996 (start of performance) to March
31, 1997, payments in the amount of $14 were made to financial
institutions by Institutional Service Shares, pursuant to the
Distribution Plan, of which $11 was voluntarily waived. In addition,
for the period from October 1, 1996 (start of performance) to March
31, 1997, payments in the amount of $6,286 and $14 were made pursuant
to the Shareholder Services Agreement for Institutional Shares and
Institutional Service Shares, respectively, of which all and $0,
respectively, were voluntarily waived.

DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which net
asset value is calculated by the Fund are described in the prospectus.

<PAGE>

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's securities, other than options, are
determined as follows:

o as provided by an independent pricing service;

o for short-term obligations, according to the mean bid and asked
prices, as furnished by an independent pricing service, or for
short- term obligations with remaining maturities of 60 days or
less at the time of purchase, at amortized cost unless the
Directors determine this is not fair value; or

o at fair value as determined in good faith by the Directors.

VALUING MUNICIPAL BONDS

USE OF AMORTIZED COST

REDEEMING SHARES

REDEMPTION IN KIND

TAX STATUS
THE FUND'S TAX STATUS

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

SHAREHOLDERS' TAX STATUS

CAPITAL GAINS

Shareholders will pay federal tax at capital gains rates on
long-term capital gains distributed to them regardless of how
long they have held the Fund shares.

TOTAL RETURN

Cumulative total return reflects the Fund's total performance over a
specified period of time. The Fund's cumulative total return is
reflective of 6 months of Fund activity since the Fund's date of
initial public offering. The Fund's cumulative total returns for the
period from October 1, 1996 (start of performance) to March 31, 1997,
were 3.08% for Institutional Shares and 3.07% for Institutional
Service Shares.

YIELD

The yield of the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the
offering price per share of the Fund on the last day of the period.
This value is annualized using semi- annual compounding. This means
that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is
reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be
reduced for those shareholders paying those fees.

The Fund's yield for the thirty-day period ended March 31, 1997, was
6.64% for Institutional Shares and 6.48% for Institutional Service
Shares.

<PAGE>

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates and market value of portfolio securities;

o changes in the Fund expenses; and

o various other factors.

o MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an unmanaged index
tracking short-term U.S. government securities between 1 and 2.99
years. The index is produced by Merrill Lynch, Pierce, Fenner &
Smith, Inc.

o MERRILL LYNCH 1-3 YEAR CORPORATE INDEX is a market
capitalization weighted index including fixed-coupon domestic
investment grade corporate bonds with at least $100 million par
amount outstanding. Both interest and price return are
calculated daily based on an accrued schedule and trader
pricing. Quality range is BBB3-AAA. Maturities for all bonds are
more than one year and less than three years. Yankees,
Canadians, and all Structured Notes are excluded. Advertisements
and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These
total returns represent the historic change in the value of an
investment in the Fund based on monthly reinvestment of
dividends over a specified period of time.

o LEHMAN BROTHERS HIGH YIELD INDEX covers the universe of fixed
rate, publicly issued, noninvestment grade debt registered with
the SEC. All bonds included in the High Yield Index must be
dollar-denominated and nonconvertible and have at least one year
remaining to maturity and an outstanding par value of at least
$100 million. Generally securities must be rated Ba1 or lower by
Moody's Investors Service, including defaulted issues. If no
Moody's rating is available, bonds must be rated BB+ or lower by
S&P; and if no S&P rating is available, bonds must be rated
below investment grade by Fitch Investor's Service. A small
number of unrated bonds is included in the index; to be eligible
they must have previously held a high yield rating or have been
associated with a high yield issuer, and must trade accordingly.

ECONOMIC AND MARKET INFORMATION

Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and their
views and analysis on how such developments could affect the Fund. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute ("ICI"). For example, according to the ICI, 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 $3.5 trillion to the more than 6,000
funds available.

ABOUT FEDERATED INVESTORS

Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.

In the government sector, as of December 31, 1996, Federated Investors
managed 9 mortgage-backed, 5 government/agency and 17 government money
market mutual funds, with assets approximating $6.3 billion, $1.7
billion and $23.6 billion, respectively. Federated trades
approximately $309 million in U.S. government and mortgage-backed
securities daily and places $17 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 nearly $30 billion in government funds
within these maturity ranges.

In the corporate bond sector, as of December 31, 1996, Federated
Investors managed 12 money market funds and 17 bond funds with assets
approximating $17.2 billion and $4.0 billion, respectively.
Federated's corporate bond decision making--based on intensive,
diligent credit analysis--is backed by over 21 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 $200 billion.

portfolios.

MUTUAL FUND MARKET

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

INSTITUTIONAL CLIENTS

BANK MARKETING

Other institutional clients include close relationships with
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 Mark R. Gensheimer,
Executive 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 2,000 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, Federated Securities
Corp.

* Source: Investment Company Institute.

FEDERATED GOVERNMENT FUND

(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)
INSTITUTIONAL SHARES

PROSPECTUS

The Institutional Shares of Federated Government Fund (the "Fund")
offered by this prospectus represent interests in a diversified
investment portfolio of Federated Total Return Series, Inc. (the
"Corporation"), an open-end, management investment company (a mutual
fund).

The investment objective of the Fund is to provide total return. The
Fund pursues this investment objective by investing primarily in a
portfolio of U.S. government 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 BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.

This prospectus contains the information you should read and know
before you invest in Institutional Shares of the Fund. Keep this
prospectus for future reference.

<PAGE>

Table of Contents

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. As of
the date of this prospectus, the Board of Directors (the "Directors")
has established two classes of shares for the Fund: Institutional
Shares and Institutional Service Shares. This prospectus relates only
to Institutional Shares of the Fund.

Institutional Shares ("Shares") of the Fund are sold primarily to
accounts for which financial institutions act in a fiduciary or agency
capacity as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of U.S. government
securities. A minimum initial investment of $100,000 over a 90-day
period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The "total return" sought by the Fund will consist of interest and
dividends from underlying securities, or capital appreciation
reflected in unrealized increases in value of portfolio securities
(realized by the shareholder only upon selling shares) or realized
from the purchase and sale of securities, and successful use of
futures and options. Generally, over the long term, the total return
obtained by a portfolio investing primarily in fixed income securities
is not expected to be as great as that obtained by a portfolio that
invests primarily in equity securities. At the same time, the market
risk and price volatility of a fixed income portfolio is expected to
be less than that of an equity portfolio.

INVESTMENT POLICIES

The Fund pursues this investment objective by investing in U.S.
government securities, including mortgage-backed securities and
non-U.S. government mortgage-backed securities and asset-backed
securities. Under normal circumstances, the Fund will invest at least
65% of the value of its total assets in securities that are issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The remainder of the Fund's assets may be invested in any of the
securities discussed below. Unless indicated otherwise, the investment
policies may be changed by the Directors without the approval of
shareholders. Shareholders will be notified before any material change
in these investment policies becomes effective.

ACCEPTABLE INVESTMENTS. The securities in which the Fund invests
principally are:

- direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes, and bonds;

- notes, bonds, discount notes and mortgage-backed securities
issued or guaranteed by U.S. government agencies and instrumentalities
supported by the full faith and credit of the United States;

- notes, bonds, discount notes and mortgage-backed securities of
U.S. government agencies or instrumentalities which receive or have
access to federal funding;

- notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities; and

- asset-backed securities and commercial mortgage securities
rated BBB or better by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Ratings Group ("Standard & Poor's"), or Fitch
Investors Service, Inc. ("Fitch"), or which are of comparable quality
in the judgment of the adviser.

The prices of fixed income securities fluctuate inversely to the
direction of interest rates.

GOVERNMENT SECURITIES. Some obligations issued or guaranteed by
agencies or instrumentalities of the U.S. government are backed by the
full faith and credit of the U.S. Treasury. No assurances can be given
that the U.S. government will provide financial support to other
agencies or instrumentalities, since it is not obligated to do so. The

instrumentalities are supported by:

- the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;

- discretionary authority of the U.S. government to purchase
certain obligations of an agency or instrumentality; or

- the credit of the agency or instrumentality.

MORTGAGE-BACKED SECURITIES. The Fund may purchase mortgage-backed
securities issued by government and non-government entities such as
banks, mortgage lenders, or other financial institutions. A
mortgage-backed security is an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying
pool of mortgages. Some mortgage-backed securities, such as
collateralized mortgage obligations ("CMOs"), make payments of both
principal and interest at a variety of intervals; others make
semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those
on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and
the Fund may invest in them if the investment adviser determines they
are consistent with the Fund's investment objective and policies.

The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers. In addition, regulatory or tax
changes may adversely affect the mortgage securities market as a
whole. Non-government mortgage-backed securities may offer higher
yields than those issued by government entities, but also may be
subject to greater price changes than government issues.
Mortgage-backed securities are subject to prepayment risk. Prepayment,
which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS"). ARMS are pass-through
mortgage securities with adjustable rather than fixed interest rates.
The ARMS in which the Fund invests generally are issued by Ginnie Mae,
Fannie Mae, and Freddie Mac and are actively traded. The underlying
mortgages which collateralize ARMS issued by Ginnie Mae are fully
guaranteed by the Federal Housing Administration or Veterans
Administration, while those collateralizing ARMS issued by Fannie Mae
or Freddie Mac are typically conventional residential mortgages
conforming to strict underwriting size and maturity constraints.

COLLATERALIZED MORTGAGE OBLIGATIONS. CMOs are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or
Freddie Mac certificates, but may be collateralized by whole loans or
private pass-through securities. CMOs may have fixed or floating rates
of interest.

The Fund will invest only in CMOs that are rated A or better by a
nationally recognized statistical rating organization. The Fund may
also invest in certain CMOs which are issued by private entities such
as investment banking firms and companies related to the construction
industry. The CMOs in which the Fund may invest may be: (i) securities
which are collateralized by pools of mortgages in which each mortgage
is guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (ii) securities which are
collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; (iii) collateralized by
pools of mortgages in which payment of principal and interest is
dependent upon the underlying pool of mortgages with no U.S.
government guarantee; or (iv) other securities in which the proceeds
of the issuance are invested in mortgage-backed securities and payment
of the principal and interest is supported by the credit of an agency
or instrumentality of the U.S. government.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class mortgage-backed securities which qualify
and elect treatment as such under provisions of the Internal Revenue
Code. Issuers of REMICs may take several forms, such as trusts,
partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity is
not subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.

STRIPPED MORTGAGE-BACKED SECURITIES. The Fund may invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are
derivative multiclass securities which may be issued by agencies or
instrumentalities of the U.S. government, or by private originators
of, or investors in, mortgage loans, such as savings associations,
mortgage banks, commercial banks, investment banks, and special
purpose subsidiaries of the foregoing organizations. The market
volatility of stripped mortgage-backed securities tends to be greater
than the market volatility of the other types of mortgage-related
securities in which the Fund invests. Principal-only stripped
mortgage-backed securities are used primarily to hedge against
interest rate risk to the capital assets of the Fund in a changing
interest rate environment. Interest-only stripped mortgage-backed
securities yield to maturity is extremely sensitive to the rate of
principal payments (including prepayments) on the related underlying
mortgage-backed securities. It is possible that the Fund might not
recover its original investment on interest-only stripped
mortgage-backed securities if there are substantial prepayments on the
underlying mortgages. Interest-only stripped mortgage- backed
securities generally increase in value as interest rates rise and
decrease in value as interest rates fall, counter to changes in value
experienced by most fixed income securities.

INVESTMENT RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.
Mortgage-backed and asset-backed securities generally pay back
principal and interest over the life of the security. At the time the
Fund reinvests the payments and any unscheduled prepayments of
principal received, the Fund may receive a rate of interest which is
actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage
loans or the collateral supporting asset-backed securities may be
prepaid without penalty or premium. Prepayment risks on
mortgage-backed securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance
their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or
elect to make unscheduled payments on their mortgages. Although
asset-backed securities generally are less likely to experience
substantial prepayments than are mortgage-backed securities, certain
factors that affect the rate of prepayments on mortgage-backed
securities also affect the rate of prepayments on asset-backed
securities.

While mortgage-backed securities generally entail less risk of a
decline during periods of rising interest rates, mortgage-backed
securities may also have less potential for capital appreciation than
other similar investments (e.g., investments with comparable
maturities) because as interest rates decline, the likelihood
increases that mortgages will be prepaid. Furthermore, if
mortgage-backed securities are purchased at a premium, mortgage
foreclosures and unscheduled principal payments may result in some
loss of a holder's principal investment to the extent of the premium
paid. Conversely, if mortgage-backed securities are purchased at a
discount, both a scheduled payment of principal and an unscheduled
prepayment of principal would increase current and total returns and
would accelerate the recognition of income, which would be taxed as
ordinary income when distributed to shareholders.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may
have been credit-enhanced by a guaranty, letter of credit or
insurance. The Fund typically evaluates the credit quality and ratings
of credit-enhanced securities based upon the financial condition and
ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. Generally, the Fund will not treat
credit-enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain
circumstances applicable regulations may require the Fund to treat the
securities as having been issued by both the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit
enhancer will adversely affect the quality and marketability of the
underlying security.

FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and
sell financial futures contracts to hedge all or a portion of its
portfolio against changes in interest rates. Financial futures
contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make
delivery of the type of instrument called for in the contract and the
buyer agrees to take delivery of the instrument at the specified
future time.

The Fund may also write call options and purchase put options on
financial futures contracts as a hedge to attempt to protect
securities in its portfolio against decreases in value. When the Fund
writes a call option on a futures contract, it is undertaking the
obligation of selling a futures contract at a fixed price at any time
during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled
(but not obligated) to sell a futures contract at the fixed price
during the life of the option.

RISKS. When the Fund uses financial futures and options on financial
futures as hedging devices, there is a risk that the prices of the
securities subject to the futures contracts may not correlate
perfectly with the prices of the securities in the Fund's portfolio.
This may cause the futures contract and any related options to react
differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its
expectations about the direction or extent of market factors such as
interest rate movements. In these events, the Fund may lose money on
the futures contract or option. It is not certain that a secondary
market for positions in futures contracts or for options will exist at
all times. Although the investment adviser will consider liquidity
before entering into options transactions, there is no assurance that
a liquid secondary market on an exchange or otherwise will exist for
any particular futures contract or option at any particular time. The
Fund's ability to establish and close out futures and options
positions depends on this secondary market.

DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from
changes in the value of an underlying security, currency, commodity or
index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as
"derivatives." Some securities, such as stock rights, warrants and
convertible securities, although not typically referred to as
derivatives, contain options that may affect their value and
performance. Derivative contracts and securities can be used to reduce
or increase the volatility of an investment portfolio's total
performance. While the response of certain derivative contracts and
securities to market changes may differ from traditional investments,
such as stocks and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in
securities that could be characterized as derivatives, it will only do
so in a manner consistent with its investment objective, policies and
limitations.

LEVERAGE AND BORROWING. The Fund is authorized to borrow money from
banks or otherwise in an amount up to 33 1/3% of the Fund's total
assets (including the amount borrowed), less all liabilities and
indebtedness other than the bank or other borrowing. This limitation
may not be changed without the approval of shareholders. The Fund is
also authorized to borrow an additional 5% of its total assets without
regard to the foregoing limitation for temporary purposes such as
clearance of portfolio transactions and share repurchases. The Fund
will only borrow when there is an expectation that it will benefit the
Fund after taking into account considerations such as interest income
and possible gains or losses upon liquidation. The Fund also may
borrow in order to effect share purchases and tender offers.

Borrowing by the Fund creates an opportunity for increased net income
but, at the same time, creates special risk considerations. For
example, leveraging may exaggerate changes in the net asset value of
the Fund shares and in the yield on the Fund's portfolio. Although the
principal of such borrowings will be fixed, the Fund's assets may
change in value during the time the borrowing is outstanding.
Borrowing will create interest expenses for the Fund which can exceed
the income from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the interest the
Fund will have to pay, the Fund's net income will be greater than if
borrowing were not used. Conversely, if the income from the assets
retained with borrowed funds is not sufficient to cover the cost of
borrowing, the net income of the Fund will be less than if borrowing
were not used, and therefore the amount available for distribution to
shareholders as dividends will be reduced. The Fund may also borrow
for emergency purposes, for the payment of dividends for share
repurchases or for the clearance of transactions.

The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but does not ensure this result. When effecting reverse repurchase
agreements, liquid assets of the Fund, in a dollar amount sufficient
to make payment for the obligations to be purchased, are: segregated
on the Trust's records at the trade date; marked to market daily; and
maintained until the transaction is settled.

The Fund may enter into "dollar rolls" in which the Fund sells
securities for delivery in the current month and simultaneously
contracts to purchase substantially similar (same type, coupon and
maturity) securities on a specified future date. During the roll
period, the Fund foregoes principal and interest paid on the
securities. The Fund is compensated by the difference between the
current sales price and the lower forward price for the future
purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. A "covered dollar
roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which
matures on or before the forward settlement date of the dollar roll
transaction. To the extent that dollar rolls are not covered rolls,
they will be included in the 33 1/3% borrowing limit.

The Fund expects that some of its borrowings may be made on a secured
basis. In such situations, either the custodian will segregate the
pledged assets for the benefit of the lender or arrangements will be
made with (i) the lender to act as a subcustodian if the lender is a
bank or otherwise qualifies as a custodian of investment company
assets or (ii) a suitable subcustodian. Because few or none of its
assets will consist of margin securities, the Fund does not expect to
borrow on margin.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may
invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be
noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by the Fund in shares
of other investment companies may be subject to such duplicate
expenses. LENDING OF PORTFOLIO SECURITIES. In order to generate
additional income, the Fund may lend portfolio securities on a
short-term or long-term basis, to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into
loan arrangements with broker/dealers, banks, or other institutions
which the investment adviser has determined are creditworthy and will
receive collateral in the form of cash or U.S. government securities
equal to at least 100% of the value of the securities loaned.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
U.S. government obligations on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Fund to
miss a price yield considered to be advantageous. Settlement dates may
be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase
prices.

The Fund may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Fund may enter
in transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Fund may realize
short-term profits or losses upon the sale of such commitments.

PORTFOLIO TURNOVER

The Fund does not attempt to set or meet any specific portfolio
turnover rate, since turnover is incidental to transactions undertaken
in an attempt to achieve the Fund's investment objective. High
turnover rates may result in higher brokerage commissions and capital
gains. See "Tax Information" in this prospectus.

HUB AND SPOKE(R) OPTION

The initial shareholder of the Fund (which is an affiliate of
Federated Securities Corp.) voted to vest authority to use this
investment structure in the sole discretion of the Directors. No
further approval of shareholders is required. Shareholders will
receive at least 30 days prior notice of any such investment.

NET ASSET VALUE

INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund
before 4:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Government Fund--Institutional Shares; Fund Number (this
number can be found on the account statement or by contacting the
Fund); Group Number or Order Number; Nominee or Institution Name; ABA
Number 011000028. Shares cannot be purchased by wire on holidays when
wire transfers are restricted.

Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.

BY MAIL. To purchase Shares by mail, send a check made payable to
Federated Government Fund-- Institutional Shares to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. Orders by mail are considered received when payment by
check is converted by State Street Bank and Trust Company ("State

Street Bank") into federal funds.

This is normally the next business day after State Street Bank
receives the check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

EXCHANGING SECURITIES FOR FUND SHARES

The Fund may accept securities in exchange for Shares. The Fund will
allow such exchanges only upon the prior approval of the Fund and a
determination by the Fund and the adviser that the securities to be
exchanged are acceptable.

Any securities exchanged must meet the investment objective and
policies of the Fund, and must have a readily ascertainable market
value. The market value of any securities exchanged in an initial
investment, plus any cash, must be at least equal to the minimum
investment in the Fund. The Fund acquires the exchanged securities for
investment and not for resale.

Securities accepted by the Fund will be valued in the same manner as
the Fund values its assets. The basis of the exchange will depend on
the net asset value of Shares on the day the securities are valued.
One Share will be issued for the equivalent amount of securities
accepted.

If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Shares, a gain or loss may be realized by the investor.

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly. Distributions of any
net realized long-term capital gains will be made at least once every
twelve months. Dividends and distributions are automatically
reinvested in additional Shares on payment dates at net asset value,
unless cash payments are requested by shareholders on the application
or by writing to Federated Securities Corp.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600. If share certificates have been issued, they
should be sent unendorsed with the written request by registered or
certified mail to the address noted above.

The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of Shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the Shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.

ACCOUNTS WITH LOW BALANCES

FUND INFORMATION

MANAGEMENT OF THE FUND

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.

Kathleen M. Foody-Malus has been the Fund's portfolio manager
since inception. Ms. Foody-Malus joined Federated Investors in 1983
and has been a Vice President of the Fund's investment adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the
investment adviser from 1990 until 1992. Ms. Foody-Malus received her
M.B.A. in Accounting/Finance from the University of Pittsburgh.

Edward J. Tiedge has been the Fund's portfolio manager since
inception. Mr. Tiedge joined Federated Investors in 1993 and has been
a Vice President of the Fund's investment adviser since January 1996.
He served as an Assistant Vice President of the Fund's investment
adviser in 1995, and an Investment Analyst during 1993 and 1994. Mr.
Tiedge served as Director of Investments at Duquesne Light Company
from 1990 to 1993. Mr. Tiedge is a Chartered Financial Analyst and
received his M.S.I.A.

concentrating in Finance from Carnegie Mellon University.

Donald T. Ellenberger has been the Fund's portfolio manager since
inception. Mr. Ellenberger joined Federated Investors in 1996 as a
Vice President of a Federated advisory subsidiary. He has been a Vice
President of the Fund's investment adviser since March, 1997. From
1986 to 1996, he served as a Trader/Portfolio Manager for Mellon Bank,
N.A. Mr. Ellenberger received his M.B.A. in Finance from Stanford
University.

DISTRIBUTION OF INSTITUTIONAL SHARES

subsidiary of Federated Investors.

ADMINISTRATION OF THE FUND

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS

0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of
Corporation and Fund expenses.

The Corporation expenses for which holders of Shares pay their
allocable portion include, but are not limited to the cost of:
organizing the Corporation and continuing its existence; registering
the Corporation with federal and state securities authorities;
Directors' fees; auditors' fees, meetings of Directors and
shareholders and proxy solicitations therefor; legal fees of the
Corporation; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.

The Fund expenses for which holders of Shares pay their allocable
portion include, but are not limited to: registering the portfolio and
Shares of the portfolio; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and
such non-recurring and extraordinary items as may arise from time to
time.

At present, the only expenses which would be allocated specifically to
Shares as a class are expenses under the Corporation's Shareholder
Services Agreement. However, the Directors reserve the right to
allocate certain other expenses to holders of Shares as they deem
appropriate ("Class Expenses"). In any case, Class Expenses would be
limited to: distribution fees; transfer agent fees as identified by
the transfer agent as attributable to holders of Shares; printing and
postage expenses related to preparing and distributing materials such
as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and to state securities commissions; expenses related to
administrative personnel and services as required to support holders
of Shares; and Directors' fees incurred as a result of issues relating
solely to Shares.

SHAREHOLDER INFORMATION

VOTING RIGHTS

Each Share of the Fund is entitled to one vote at all meetings of
shareholders. All shares of all portfolios in the Corporation have
equal voting rights except that in matters affecting only a particular
portfolio or class of shares, only shares of that portfolio or class
of shares are entitled to vote. As of September 15, 1997, Federated
Securities Corp. who was the record owner of 405,525 (80.47%) of the
Institutional Shares and Federated Services Company, acting in various
capacities for numerous accounts was the record owner of 19 (66.24%)
and Federated Management was the record owner of 10 (33.76%) of the
Institutional Service Shares of the Fund, may for certain purposes be
deemed to control the Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders. The Fund is
not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Fund's operation and
for the election of Directors under certain circumstances.

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Shares and Institutional Service Shares.

OTHER CLASSES OF SHARES

Institutional Service Shares are distributed under a 12b-1 Plan
adopted by the Fund and are also subject to shareholder services fees.

To obtain more information and a prospectus for Institutional Service
Shares, investors may call 1-800-341-7400.

ADDRESSES

Federated Government Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Federated Management
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company
c/o Federated Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Independent Auditors
Ernst & Young LLP
One Oxford Centre

Pittsburgh, Pennsylvania 15219

FEDERATED

GOVERNMENT FUND
INSTITUTIONAL SHARES

PROSPECTUS

A Diversified Portfolio of
Federated Total Return Series, Inc.,
an Open-End, Management
Investment Company

Prospectus dated November ___, 1997

LOGO

G01922-01-IS (11/97)

FEDERATED GOVERNMENT FUND

(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)
INSTITUTIONAL SERVICE SHARES

PROSPECTUS

The Institutional Service Shares of Federated Government Fund (the
"Fund") offered by this prospectus represent interests in a
diversified investment portfolio of Federated Total Return Series,
Inc. (the "Corporation"), an open-end, management investment company
(a mutual fund).

The investment objective of the Fund is to provide total return. The
Fund pursues this investment objective by investing primarily in a
portfolio of U.S. government securities.

This prospectus contains the information you should read and know
before you invest in Institutional Service Shares of the Fund. Keep

this prospectus for future reference.

Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS - INSTITUTIONAL SERVICE SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. As of
the date of this prospectus, the Board of Directors (the "Directors")
has established two classes of shares for the Fund: Institutional
Service Shares and Institutional Shares. This prospectus relates only
to Institutional Service Shares of the Fund.

Institutional Service Shares ("Shares") of the Fund are designed
primarily for retail and private banking customers of financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing primarily in
U.S. government securities. A minimum initial investment of $25,000
over a 90-day period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

ACCEPTABLE INVESTMENTS. The securities in which the Fund invests
principally are:

- direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes, and bonds;

- notes, bonds, discount notes and mortgage-backed securities
issued or guaranteed by U.S. government agencies and instrumentalities
supported by the full faith and credit of the United States;

- notes, bonds, discount notes and mortgage-backed securities of
U.S. government agencies or instrumentalities which receive or have
access to federal funding;

- notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities; and

The prices of fixed income securities fluctuate inversely to the
direction of interest rates.

instrumentalities are supported by:

- the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;

- discretionary authority of the U.S. government to purchase
certain obligations of an agency or instrumentality; or

- - the credit of the agency or instrumentality.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class mortgage-backed securities which qualify
and elect treatment as such under provisions of the Internal Revenue
Code. Issuers of REMICs may take several forms, such as trusts,
partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity is
not subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.

INVESTMENT RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.
Mortgage-backed and asset-backed securities generally pay back
principal and interest over the life of the security. At the time the
Fund reinvests the payments and any unscheduled prepayments of
principal received, the Fund may receive a rate of interest which is
actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage
loans or the collateral supporting asset-backed securities may be
prepaid without penalty or premium. Prepayment risks on
mortgage-backed securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance
their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or
elect to make unscheduled payments on their mortgages. Although
asset-backed securities generally are less likely to experience
substantial prepayments than are mortgage-backed securities, certain
factors that affect the rate of prepayments on mortgage-backed
securities also affect the rate of prepayments on asset-backed
securities.

DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from
changes in the value of an underlying security, currency, commodity or
index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as
"derivatives." Some securities, such as stock rights, warrants and
convertible securities, although not typically referred to as
derivatives, contain options that may affect their value and
performance. Derivative contracts and securities can be used to reduce
or increase the volatility of an investment portfolio's total
performance. While the response of certain derivative contracts and
securities to market changes may differ from traditional investments,
such as stocks and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in
securities that could be characterized as derivatives, it will only do
so in a manner consistent with its investment objective, policies and
limitations.

PORTFOLIO TURNOVER

HUB AND SPOKE(R) OPTION

will receive at least 30 days prior notice of any such investment.

NET ASSET VALUE

The Fund's net asset value per Share fluctuates. The net asset value
for Shares is determined by dividing the sum of the market value of
all securities and all other assets, less liabilities, by the number
of Shares outstanding. The net asset value for Institutional Shares
may exceed that of Shares 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.

INVESTING IN INSTITUTIONAL SERVICE SHARES

SHARE PURCHASES

BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund
before 4:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Government Fund--Institutional Service Shares; Fund
Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted.

Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.

BY MAIL. To purchase Shares by mail, send a check made payable to
Federated Government Fund-- Institutional Service Shares to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. Orders by mail are considered received when payment by
check is converted by State Street Bank and Trust Company ("State

Street Bank") into federal funds.

This is normally the next business day after State Street Bank
receives the check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time), on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
Shares are tendered for redemption and no orders to purchase Shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

EXCHANGING SECURITIES FOR FUND SHARES

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly. Distributions of any
net realized long-term capital gains will be made at least once every
twelve months. Dividends and distributions are automatically
reinvested in additional Shares on payment dates at net asset value,
unless cash payments are requested by shareholders on the application
or by writing to Federated Securities Corp.

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SERVICE SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Fund may redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum
value of $25,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $25,000 because of
changes in the Fund's net asset value. Before Shares are redeemed to
close an account, the shareholder is notified in writing and allowed
30 days to purchase additional Shares to meet the minimum requirement.

FUND INFORMATION

MANAGEMENT OF THE FUND

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.

concentrating in Finance from Carnegie Mellon University.

DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES

Corp. is a subsidiary of Federated Investors.

ADMINISTRATION OF THE FUND

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS

0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES

Holders of Institutional Service Shares pay their allocable portion of
Corporation and Fund expenses.

The Corporation expenses for which holders of Shares pay their
allocable portion include, but are not limited to the cost of:
organizing the Corporation and continuing its existence; registering
the Corporation with federal and state securities authorities;
Directors' fees; auditors' fees; meetings of Directors and
shareholders and proxy solicitations therefor; legal fees of the
Corporation; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.

At present, the only expenses which are allocated specifically to
Shares as a class are expenses under the Corporation's Distribution
Plan and Shareholder Services Agreement. However, the Directors
reserve the right to allocate certain other expenses to holders of
Shares as they deem appropriate ("Class Expenses"). In any case, Class
Expenses would be limited to: transfer agent fees as identified by the
transfer agent as attributable to holders of Shares; printing and
postage expenses related to preparing and distributing materials such
as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and to state securities commissions; expenses related to
administrative personnel and services as required to support holders
of Shares; and Directors' fees incurred as a result of issues relating
solely to Shares.

SHAREHOLDER INFORMATION

VOTING RIGHTS

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Service Shares and Institutional Shares.

OTHER CLASSES OF SHARES

Institutional Shares are distributed with no 12b-1 Plan and may be
subject to shareholder services fees.

To obtain more information and a prospectus for Institutional Shares,
investors may call 1-800-341-7400.

ADDRESSES

Federated Government Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Federated Management
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company
c/o Federated Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Independent Auditors
Ernst & Young LLP
One Oxford Centre

Pittsburgh, Pennsylvania 15219

FEDERATED

GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES

PROSPECTUS

A Diversified Portfolio of
Federated Total Return Series, Inc.,
an Open-End, Management
Investment Company

Prospectus dated November ___, 1997

LOGO

G01922-02-SS (11/97)

FEDERATED GOVERNMENT FUND
(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)

INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus(es) of Federated Government Fund (the "Fund"),
a portfolio of Federated Total Return Series, Inc. (the
"Corporation") dated November____, 1997. This Statement is not
a prospectus. You may request a copy of a prospectus or a
paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated November ___, 1997

[GRAPHIC OMITTED]

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.

Cusip 31428Q887
31428Q804

G01922-03(11/97)

<PAGE>

TABLE OF CONTENTS

TABLE OF CONTENTS
to be filed by amendment

<PAGE>

GENERAL INFORMATION ABOUT THE FUND

The Fund is a portfolio of Federated Total Return Series, Inc. The
Corporation was incorporated under the laws of the State of Maryland
on October 11, 1993. On March 21, 1995, the name of the Corporation
was changed from "Insight Institutional Series, Inc." to "Federated
Total Return Series, Inc." The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. Shares
of the Fund are offered in two classes, known as Institutional Shares
and Institutional Service Shares (individually and collectively
referred to as "Shares," as the context may require). This Statement
of Additional Information relates to the above-mentioned Shares of the
Fund. INVESTMENT OBJECTIVE AND POLICIES The investment objective of
the Fund is to provide total return. The investment objective cannot
be changed without approval of shareholders. The investment policies
stated below may be changed by the Board of Directors ("Directors")
without shareholder approval. Shareholders will be notified before any
material change in the investment policies becomes effective. TYPES OF
INVESTMENTS

Under normal circumstances, the Fund will invest at least 65% of
the value of its total assets in securities that are issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The Fund may also invest in the securities described below and in the
prospectus. ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

The ARMS in which the Fund invests generally will be issued by
Government National Mortgage Association, Federal National Mortgage
Association, and Federal Home Loan Mortgage Corporation. Unlike
conventional bonds, ARMs pay back principal over the life of the ARMS
rather than at maturity. Thus, a holder of the ARMS, such as the Fund,
would receive monthly scheduled payments of principal and interest,
and may receive unscheduled principal payments representing payments
on the underlying mortgages. At the time that a holder of the ARMS
reinvests the payments and any unscheduled prepayments of principal
that it receives, the holder may receive a rate of interest which is
actually lower than the rate of interest paid on the existing ARMS. As
a consequence, ARMS may be a less effective means of "locking in"
long-term interest rates than other types of U.S.

government securities.

Like other U.S. government securities, the market value of ARMS will
generally vary inversely with changes in market interest rates. Thus,
the market value of ARMS generally declines when interest rates rise
and generally rises when interest rates decline. While ARMS generally
entail less risk of a decline during periods of rising rates, ARMS may
also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because, as
interest rates decline, the likelihood increases that mortgages will
be prepaid. Furthermore, if ARMS are purchased at a premium, mortgage
foreclosures and unscheduled principal payments may result in some
loss of a holder's principal investment to the extent of the premium
paid. Conversely, if ARMS are purchased at a discount, both a
scheduled payment of principal and an unscheduled prepayment of
principal would increase current and total returns and would
accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders. COLLATERALIZED MORTGAGE
OBLIGATIONS ("CMOS")

The following example illustrates how mortgage cash flows are
prioritized in the case of CMOs; most of the CMOs in which the Fund
invests use the same basic structure:

(1) Several classes of securities are issued against a pool of
mortgage collateral. The most common structure contains four classes
of securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date, and the final class
(Z bond) typically receives any excess income from the underlying
investments after payments are made to the other classes and receives
no principal or interest payments until the shorter maturity classes
have been retired, but then receives all remaining principal and
interest payments; (2) The cash flows from the underlying mortgages
are applied first to pay interest and then to retire securities; and
(3) The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bond). When those securities are completely retired, all principal
payments are then directed to the next shortest-maturity security (or
B bond). This process continues until all of the classes have been
paid off. Because the cash flow is distributed sequentially instead of
pro rata, as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive no
principal paydowns. The interest portion of these payments is
distributed by the Fund as income, and the capital portion is
reinvested. REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS")

RESETS OF INTEREST

The interest rates paid on the ARMS, CMOs, and REMICs in which the
Fund invests generally are readjusted at intervals of one year or less
to an increment over some predetermined interest rate index. There are
two main categories of indices: those based on U.S. Treasury
securities and those derived from a calculated measure, such as a cost
of funds index or a moving average of mortgage rates. Commonly
utilized indices include the one-year and five-year constant maturity
Treasury Note rates, the three-month Treasury Bill rate, the 180-day
Treasury Bill rate, rates on longer-term Treasury securities, the
National Median Cost of Funds, the one-month or three-month London
Interbank Offered Rate (LIBOR), the prime rate of a specific bank, or
commercial paper rates. Some indices, such as the one-year constant
maturity Treasury Note rate, closely mirror changes in market interest
rate levels. To the extent that the adjusted interest rate on the
mortgage security reflects current market rates, the market value of
an adjustable rate mortgage security will tend to be less sensitive to
interest rate changes than a fixed rate debt security of the same
stated maturity. Hence, ARMS which use indices that lag changes in
market rates should experience greater price volatility than
adjustable rate mortgage securities that closely mirror the market.

CAPS AND FLOORS

The underlying mortgages which collateralize the ARMS, CMOs, and
REMICs in which the Fund invests will frequently have caps and floors
which limit the maximum amount by which the loan rate to the
residential borrower may change up or down: (1) per reset or
adjustment interval, and (2) over the life of the loan. Some
residential mortgage loans restrict periodic adjustments by limiting
changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may
result in negative amortization. The value of mortgage securities in
which the Fund invests may be affected if market interest rates rise
or fall faster and farther than the allowable caps or floors on the
underlying residential mortgage loans. Additionally, even though the
interest rates on the underlying residential mortgages are adjustable,
amortization and prepayments may occur, thereby causing the effective
maturities of the mortgage securities in which the Fund invests to be
shorter than the maturities stated in the underlying mortgages.

FUTURES AND OPTIONS TRANSACTIONS

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties: the
seller who agrees to make delivery of the specific type of
security called for in the contract ("going short") and the
buyer who agrees to take delivery of the security ("going
long") at a certain time in the future. In the fixed income
securities market, price moves inversely to interest rates. A
rise in rates means a drop in price. Conversely, a drop in
rates means a rise in price. In order to hedge its holdings
of fixed income securities against a rise in market interest
rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its
fixed income securities may decline during the Fund's
anticipated holding period. The Fund would agree to purchase
securities in the future at a predetermined price (i.e., "go
long") to hedge against a decline in market interest rates.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase listed put options on financial futures
contracts.

Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set
date at a specified price, the purchase of a put option on a
futures contract entitles (but does not obligate) its
purchaser to decide on or before a future date whether to
assume a short position at the specified price. The Fund
would purchase put options on futures contracts to protect
portfolio securities against decreases in value resulting
from an anticipated increase in market interest rates.
Generally, if the hedged portfolio securities decrease in
value during the term of an option, the related futures
contracts will also decrease in value and the option will
increase in value. In such an event, the Fund will normally
close out its option by selling an identical option. If the
hedge is successful, the proceeds received by the Fund upon
the sale of the second option will be large enough to offset
both the premium paid by the Fund for the original option
plus the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option. To do
so, it would simultaneously enter into a futures contract of
the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Fund
would then deliver the futures contract in return for payment
of the strike price. If the Fund neither closes out nor
exercises an option, the option will expire on the date
provided in the option contract, and the premium paid for the
contract will be lost.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

In addition to purchasing put options on futures, the Fund
may write listed call options on futures contracts to hedge
its portfolio against an increase in market interest rates.
When the Fund writes a call option on a futures contract, it
is undertaking the obligation of assuming a short futures
position (selling a futures contract) at the fixed strike
price at any time during the life of the option if the option
is exercised. As market interest rates rise, causing the
prices of futures to go down, the Fund's obligation under a
call option on a future (to sell a futures contract) costs
less to fulfill, causing the value of the Fund's call option
position to increase. In other words, as the underlying
futures price goes down below the strike price, the buyer of
the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium
can offset the drop in value of the Fund's fixed income
portfolio which is occurring as interest rates rise. Prior to
the expiration of a call written by the Fund, or exercise of
it by the buyer, the Fund may close out the option by buying
an identical option. If the hedge is successful, the cost of
the second option will be less than the premium received by
the Fund for the initial option. The net premium income of
the Fund will then offset the decrease in value of the hedged
securities. The Fund will not maintain open positions in
futures contracts it has sold or call options it has written
on futures contracts if, in the aggregate, the value of the
open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for
the correlation of volatility between the hedged securities
and the futures contracts. If this limitation is exceeded at
any time, the Fund will take prompt action to close out a
sufficient number of open contracts to bring its open futures
and options positions within this limitation.

"MARGIN" IN FUTURES TRANSACTIONS

Unlike the purchase or sale of a security, the Fund does not
pay or receive money upon the purchase or sale of a futures
contract. Rather, the Fund is required to deposit an amount
of "initial margin" in cash or U.S. Treasury bills with its
custodian (or the broker, if legally permitted). The nature
of initial margin in futures transactions is different from
that of margin in securities transactions in that futures
contract initial margin does not involve the borrowing of
funds by the Fund to finance the transactions. Initial margin
is in the nature of a performance bond or good faith deposit
on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied. A futures contract held by
the Fund is valued daily at the official settlement price of
the exchange on which it is traded. Each day the Fund pays or
receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is
known as "marking to market." Variation margin does not
represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one
would owe the other if the futures contract expired. In
computing its daily net asset value, the Fund will
mark-to-market its open futures positions. The Fund is also
required to deposit and maintain margin when it writes call
options on futures contracts.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

The Fund may purchase put options on portfolio securities to
protect against price movements in particular securities in
its portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the
writer (seller) at a specified price during the term of the
option.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

The Fund may also write covered call options to generate
income. As writer of a call option, the Fund has the
obligation upon exercise of the option during the option
period to deliver the underlying security upon payment of the
exercise price. The Fund may only sell call options either on
securities held in its portfolio or on securities which it
has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any
additional consideration).

LEVERAGING

Leveraging exaggerates the effect on the net asset value of any
increase or decrease in the market value of the portfolio. Money
borrowed for leveraging will be limited to 33 1/3% of the value of the
Fund's total assets. These borrowings will be subject to interest
costs which may or may not be recovered by appreciation of the
securities purchased; in certain cases, interest costs may exceed the
return received on the securities purchased. LEVERAGE THROUGH
BORROWING

For the borrowings for investment purposes, the Investment Company Act
of 1940 requires the Fund to maintain continuous asset coverage (i.e.,
total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the required coverage
should decline as a result of market fluctuations or other reason, the
Fund may be required to sell some of its portfolio holdings within 3
days to reduce the debt and restore the 300% coverage, even though it
may be disadvantageous from an investment standpoint to sell at that
time. The Fund also may be required to maintain minimum average
balances in connection with such borrowings or to pay a commitment fee
to maintain a line of credit; either of those requirements would
increase the cost of borrowings over the stated rate. To the extent
the Fund enters into a reverse repurchase agreement, the Fund will
maintain in a segregated custodial account cash or U.S. governement
securities or other high quality liquid debt securities at least equal
to the aggregate amount of its reverse repurchase obligations, plus
accrued interest in certain cases, in accordance with releases
promulgated by the SEC. The SEC views reverse repurchase transactions
as collateralized borrowings by the Fund.

<PAGE>

MEDIUM TERM NOTES AND DEPOSIT NOTES

Medium Term Notes ("MTNs") and Deposit Notes are similar to
corporate debt obligations as described in the prospectus. MTNs and
Deposit Notes trade like commercial paper, but may have maturities
from 9 months to ten years. AVERAGE LIFE

Average Life, as applicable to asset-backed securities, is computed by
multiplying each principal repayment by the time of payment (months or
years from the evaluation date), summing these products, and dividing
the sum by the total amount of principal repaid. The weighted-average
life is calculated by multiplying the maturity of each security in a
given pool by its remaining balance, summing the products, and
dividing the result by the total remaining balance. WEIGHTED AVERAGE
PORTFOLIO DURATION

Duration is a commonly used measure of the potential volatility of the
price of a debt security, or the aggregate market value of a portfolio
of debt securities, prior to maturity. Duration measures the magnitude
of the change in the price of a debt security relative to a given
change in the market rate of interest. The duration of a debt security
depends upon three primary variables: the security's coupon rate,
maturity date and the level of market interest rates for similar debt
securities. Generally, debt securities with lower coupons or longer
maturities will have a longer duration than securities with higher
coupons or shorter maturities. Duration is calculated by dividing the
sum of the time-weighted present values of cash flows of a security or
portfolio of securities, including principal and interest payments, by
the sum of the present values of the cash flows. The duration of
interest rate agreements, such as interest rates swaps, caps and
floors, is calculated in the same manner as other securities. However,
certain interest rate agreements have negative durations, which the
Fund may use to reduce its weighted average portfolio duration.
Mathematically, duration is measured as follows: Duration = PVCF1(1) +
PVCF2(2) + PVCF3(3) + ... + PVCFn(n)

PVTCF PVTCF PVTCF PVTCF

where

PVCTFt = the present value of the cash flow in period t discounted
at the prevailing yield-to-maturity t = the period when the
cash flow is received n = remaining number of periods until
maturity

PVTCF = total present value of the cash flow from the bond
where the present value is determined using the
prevailing yield-to-maturity.

Certain debt securities, such as mortgage-backed and asset-backed
securities, may be subject to prepayment at irregular intervals. The
duration of these instruments will be calculated based upon
assumptions established by the investment adviser as the probable
amount and sequence of principal prepayments. Duration calculated in
this manner, commonly referred to as "effective duration," allows for
changing prepayment rates as interest rates change and expected future
cash flows are affected. The calculation of effective duration will
depend upon the investment adviser's assumed prepayment rate. LENDING
OF PORTFOLIO SECURITIES

The collateral received when the Fund lends portfolio securities must
be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the borrower. The
Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower
or placing broker. The Fund does not have the right to vote securities
on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment. There
is the risk that when lending portfolio securities, the securities may
not be available to the Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities
may be delayed pending court action.

<PAGE>

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.
These assets are marked to market daily and are maintained until the
transaction has been settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets. REPURCHASE AGREEMENTS

The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities. In the event
that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Directors. REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. This
transaction is similar to borrowing cash. In a reverse repurchase
agreement the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not
ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time. When effecting reverse
repurchase agreements, liquid assets of the Fund, in a dollar amount
sufficient to make payment for the obligations to be purchased, are
segregated at the trade date. These securities are marked to market
daily and maintained until the transaction is settled. 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. Portfolio
securities will be sold when the adviser believes it is appropriate,
regardless of how long those securities have been held. The adviser
does not anticipate that the Fund's portfolio turnover rate will
exceed 100%. INVESTMENT LIMITATIONS The following limitations are
fundamental [except that no investment limitation of the Fund shall
prevent the Fund from investing substantially all of its assets
(except for assets which are not considered "investment securities"
under the Investment Company Act of 1940, or assets exempted by the
Securities and Exchange Commission) in an open-end investment company
with substantially the same investment objectives]: 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 portfolio securities.

BORROWING MONEY

The Fund will not borrow money, except to the extent permitted under
the 1940 Act (which currently limits borrowings to no more than 33
1/3% of the value of the Fund's total assets). For purposes of this
investment restriction, the entry into options, forward contracts,
futures contracts, including those related to indices, options on
futures contracts or indices, and dollar roll transactions shall not
constitute borrowing. CONCENTRATION OF INVESTMENTS

The Fund will not invest more than 25% of its total assets in
securities of issuers having their principal business activities in
the same industry. DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities) if, as a result, more
than 5% of the value of its total assets would be invested in the
securities of that issuer, and will not acquire more than 10% of the
outstanding voting securities of any one issuer.

PLEDGING ASSETS

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

The Fund will not lend any assets except portfolio securities.
(This will not prevent the purchase or holding of bonds, debentures,
notes, certificates of indebtedness or other debt securities of an
issuer, repurchase agreements or other transactions which are
permitted by the Fund's investment objective and policies or Articles
of Incorporation). ISSUING SENIOR SECURITIES

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

The above limitations cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Directors
without shareholder approval [except that no investment limitation of
the Fund shall prevent the Fund from investing substantially all of
its assets (except for assets which are not considered "investment
securities" under the Investment Company Act of 1940, or assets
exempted by the Securities and Exchange Commission) in an open-end
investment company with substantially the same investment objectives].
Shareholders will be notified before any material changes in this
limitation become effective. INVESTING IN RESTRICTED AND ILLIQUID
SECURITIES

The Fund will not invest more than 15% of its net assets in illiquid
securities, including certain restricted securities (except for
Section 4(2) commercial paper and certain other restricted securities
which meet the criteria for liquidity as established by the
Directors), non-negotiable time deposits, and 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. FEDERATED TOTAL RETURN
SERIES, INC. MANAGEMENT Officers and Directors are listed with their
addresses, birthdates, present positions with Federated Total Return
Series, Inc. and principal occupations.

John F. Donahue@*
Federated Investors Tower

Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director

and Director of the Corporation .

<PAGE>

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934
Director

John T. Conroy, Jr.
Wood/IPC Commercial Department

John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North

Naples, FL
Birthdate: June 23, 1937
Director

William J. Copeland
One PNC Plaza - 23rd Floor

Pittsburgh, PA
Birthdate: July 4, 1918
Director

Inc.

J. Christopher Donahue*
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 11, 1949

Executive Vice President and Director

Donahue, Chairman and Director of the Corporation.

James E. Dowd
571 Hayward Mill Road

Concord, MA
Birthdate: May 18, 1922
Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director or Trustee of the Funds.

<PAGE>

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111

Pittsburgh, PA
Birthdate: October 11, 1932
Director

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street

Pittsburgh, PA
Birthdate: June 18, 1924
Director

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N
Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director or Trustee of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942
Director

Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of

the Funds.

Gregor F. Meyer
Boca Grande Club
Boca Grande, FL

Birthdate: October 6, 1926
Director

Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or

Trustee of the Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University

Pittsburgh, PA
Birthdate: December 20, 1932
Director

President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director or Trustee of the Funds.

<PAGE>

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh

Pittsburgh, PA
Birthdate: September 14, 1925
Director

Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University, U.S. Space
Foundation and Czecho Management Center; President Emeritus,
University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management
Advisory Board and Czech Management Center; Director or Trustee of the
Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935
Director

or Trustee of the Funds.

Glen R. Johnson
Federated Investors Tower

Pittsburgh, PA
Birthdate: May 2, 1929
President

Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President

<PAGE>

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

* This Directors is deemed to be an "interested person" as
defined in the Investment Company Act of 1940.

@ Member of the Executive Committee. The Executive Committee of
the Board of Directorss handles the responsibilities of the Board
between meetings of the Board.

As used in the table above, "The Funds" and "Funds" mean the
following investment companies: 111 Corcoran Funds; Arrow Funds;
Automated Government Money Trust; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated 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 Investment Portfolios; Federated Investment Trust;
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.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; Wesmark Funds; and World Investment Series, Inc.

FUND OWNERSHIP

Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.

As of September 15, 1997, Colonial Trust Co., Personal Division,
Pheonix, AZ owned approximately 52,858 (10.49%) and Federated
Securities Corp., Pittsburgh, PA owned approximately 405,525 (80.47%)
of the Institutional Shares of the Fund. As of the same date,
Federated Services Company, Pittsburgh, PA, acting in numerous
capacities for various accounts owned approximately 19 (66.24%) and
Federated Management, Pittsburgh, PA owned approximately 10 (33.76%)
of the Institutional Service Shares of the Fund.

<PAGE>

DIRECTORS' COMPENSATION

AGGREGATE

NAME , COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION* FROM FUND COMPLEX +
<S> <C> <C>

John F. Donahue, $ 0 $0 for the Corporation and
Chairman and Director 54 other investment companies in the Fund Complex

Thomas G. Bigley++ $1,008.14 $86,331 for the Corporation and
Director 54 other investment companies in the Fund Complex

John T. Conroy, Jr., $1,109.11 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex

William J. Copeland, $1,109.11 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex

J. Christopher Donahue, $ 0 $0 for the Corporation and
Executive Vice President 16 other investment companies in the Fund Complex
andDirector

James E. Dowd, $1,109.11 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex

Lawrence D. Ellis, M.D., $1,008.14 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex

Edward L. Flaherty, Jr., $1,109.11 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex

Peter E. Madden, $1,008.14 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex

Gregor F. Meyer, $1,008.14 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex

John E. Murray, Jr., $1,008.14 $104,898 for the Corporationand
Director 54 other investment companies in the Fund Complex

Wesley W. Posvar, $1,008.14 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex

Marjorie P. Smuts, $1,008.14 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex

</TABLE>

* Information is furnished for the fiscal year ended September 30,
1996 and the Corporation was comprised of 2 portfolios.

+ The information is provided for the last calendar year.

++ Mr. Bigley served on 39 investment companies in the Federated
Funds Complex from January 1 through September 30, 1995. On
October 1, 1995, he was appointed a Trustee on 15 additional
Federated

Funds.

DIRECTOR LIABILITY

The Fund's investment adviser is Federated Management (the
"Adviser"). It is a subsidiary of Federated Investors. All of the
voting securities of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, his wife, and his son, J.

Christopher Donahue.

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

For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. 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. In working with dealers,
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 makes
decisions on portfolio transactions and selects brokers and dealers
subject to guidelines established by the Directors. The Adviser may
select brokers and dealers who offer brokerage and research services.
These services may be furnished directly to the Fund or to the Adviser
and 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 provided by brokers and dealers may be
used by the Adviser or by affiliates in advising the Fund and other
accounts. To the extent that receipt of these services may supplant
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 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. Although investment
decisions for the Fund are made independently from those of the other
accounts managed by the Adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one
or more other accounts managed by the Adviser are prepared to invest
in, or desire to dispose of, the same security, available investments
or opportunities for sales will be allocated in a manner believed by
the Adviser to be equitable to each. In some cases, this procedure may
adversely affect the price paid or received by the Fund or the size of
the position obtained or disposed of by the Fund. In other cases,
however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.

OTHER SERVICES FUND ADMINISTRATION

Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus.

CUSTODIAN AND PORTFOLIO ACCOUNTANT

TRANSFER AGENT Federated Services Company, through its registered
transfer agent, Federated Shareholder Services Company, maintains all
necessary shareholder records. For its services, the transfer agent
receives a fee based upon the size, type and number of accounts and
transactions made by shareholders.

INDEPENDENT AUDITORS

The independent auditors for the Fund are Ernst & Young LLP,
Pittsburgh, Pennsylvania.

PURCHASING SHARES Except under certain

circumstances described in the prospectus, Shares are sold at their
net asset value on days the New York Stock Exchange is open for
business. The procedure for purchasing Shares of the Fund is explained
in each Share's prospectus under "Investing in the Institutional
Shares" or "Investing in Institutional Service Shares." DISTRIBUTION
PLAN (INSTITUTIONAL SERVICE SHARES ONLY) AND SHAREHOLDER SERVICES

As explained in the respective prospectuses, with respect to Shares of
the Fund, the Fund has adopted a Shareholder Services Agreement, and,
with respect to Institutional Service Shares, the Fund has adopted a
Distribution Plan. These arrangements permit the payment of fees to
financial institutions, the distributor, and Federated Shareholder
Services, to stimulate distribution activities and to cause services
to be provided to shareholders by a representative who has knowledge
of the shareholder's particular circumstances and goals. These
activities and services may include, but are not limited to: marketing
efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as
necessary or beneficial to establish and maintain shareholder accounts
and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering
routine client inquiries; and assisting clients in changing dividend
options, account designations and addresses. By adopting the Plan, the
Directors expect that the Fund will be able to achieve a more
predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management
and assist the Fund in pursuing its investment objectives. By
identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible
to curb sharp fluctuations in rates of redemptions and sales. Other
benefits, which may be realized under either arrangement, may include:
(1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their
accounts. DETERMINING NET ASSET VALUE Net asset value generally
changes each day. The days on which net asset value is calculated by
the Fund are described in the prospectus. DETERMINING MARKET VALUE OF
SECURITIES

Market values of the Fund's securities, other than options, are
determined as follows:

o as provided by an independent pricing service;

o for short-term obligations, according to the mean bid and
asked prices, as furnished by an independent pricing service,
or for short-term obligations with remaining maturities of 60
days or less at the time of purchase, at amortized cost
unless the Directors determine this is not fair value; or

o at fair value as determined in good faith by the Directors.

Prices provided by independent pricing services may be determined
without relying exclusively on quoted prices. Pricing services may
consider: yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data. The Fund will value
futures contracts, options and put options on financial futures at
their market values established by the exchanges at the close of
option trading on such exchanges unless the Directors determine in
good faith that another method of valuing option positions is
necessary. USE OF AMORTIZED COST

The Directors have decided that the fair value of debt securities
authorized to be purchased by the Fund with remaining maturities of 60
days or less at the time of purchase shall be their amortized cost
value, unless the particular circumstances of the security indicate
otherwise. Under this method, portfolio instruments and assets are
valued at the acquisition cost as adjusted for amortization of premium
or accumulation of discount rather than at current market value. The
Executive Committee continually assesses this method of valuation and
recommends changes where necessary to assure that the Fund's portfolio
instruments are valued at their fair value as determined in good faith
by the Directors. REDEEMING SHARES The Fund redeems Shares at the next
computed net asset value after the Fund Instituional Shares" or
"Redeeming Institutional Service Shares." Although State Street Bank
does not charge for telephone redemptions, it reserves the right to
charge a fee for the cost of wire-transferred redemptions of less than
$5,000. REDEMPTION IN KIND

The Fund is obligated to redeem shares for any one shareholder solely
in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period. Any redemption beyond this
amount will also be in cash unless the Directors determine that
payments should be in kind. In such a case, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments,
valued in the same way that net asset value is determined. The
portfolio instruments will be selected in a manner that the Directors
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders receiving
their securities and selling them before their maturity could receive
less than the redemption value of their securities and could incur
certain transaction costs. TAX STATUS THE FUND'S TAX STATUS

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

SHAREHOLDERS' TAX STATUS

CAPITAL GAINS

Shareholders will pay federal tax at capital gains rates on
long-term capital gains distributed to them regardless of how
long they have held the Fund Shares.

TOTAL RETURN

The average annual total return for the Fund 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 net asset value 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, adjusted over the period by any additional
shares, assuming the monthly reinvestment of all dividends and
distributions. YIELD The yield of the Fund is determined by dividing
the net investment income per share (as defined by the Securities and
Exchange Commission) earned by the Fund over a thirty-day period by
the offering price per share of the Fund on the last day of the
period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period
is assumed to be generated each month over a 12-month period and is
reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be
reduced for those shareholders paying those fees. PERFORMANCE
COMPARISONS The Fund's performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates and market value of portfolio securities;

o changes in the Fund expenses; and

o various other factors.

The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation
of yield and total return. Investors may use financial publications
and/or indices to obtain a more complete view of the Fund's
performance. When comparing performance, investors should consider all
relevant factors such as the composition of any index used, prevailing
market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in
advertising may include:

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

o LEHMAN BROTHERS MORTGAGE BACKED SECURITIES INDEX is composed
of all fixed rate, securitized mortgage pools by Federal Home
Loan Mortgage Corp. (Freddie Mac), Federal National Mortgage
Association (Fannie Mae), and Government National Mortgage
Association (GNMA), including GNMA Graduated Payment
Mortgages. 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. Indexes are unmanaged and rebalanced
monthly by market capitalization.

Investments cannot be made in an index.

Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These
total returns represent the historic change in the value of an
investment in the Fund based on monthly reinvestment of dividends over
a specified period of time. Advertising and other promotional
literature may include charts, graphs and other illustrations using
the Fund's returns, or returns in general, that demonstrate basic
investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare
its performance, or performance for the types of securities in which
it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION

ABOUT FEDERATED INVESTORS Federated Investors is dedicated to meeting
investor needs which is reflected in its investment decision
making--structured, straightforward, and consistent. This has resulted
in a history of competitive performance with a range of competitive
investment products that have gained the confidence of thousands of
clients and their customers. The company's disciplined security
selection process is firmly rooted in sound methodologies backed by
fundamental and technical research. Investment decisions are made and
executed by teams of portfolio managers, analysts, and traders
dedicated to specific market sectors. These traders handle trillions
of dollars in annual trading volume. In the government sector, as of
December 31, 1996, Federated Investors managed 9 mortgage-backed, 5
government/agency and 17 government money market mutual funds, with
assets approximating $6.3 billion, $1.7 billion and $23.6 billion,
respectively. Federated trades approximately $309 million in U.S.
government and mortgage-backed securities daily and places
approximately $17 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 nearly $30 billion in government funds within these
maturity ranges. J. Thomas Madden, Executive Vice President, oversees
Federated Investors' equity and high yield corporate bond management
while William D. Dawson, Executive Vice President, oversees Federated
Investors' domestic fixed income management. Henry A. Frantzen,
Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.

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 $3.5 trillion to the
more than 6,000 funds available.* Federated Investors, through its
subsidiaries, distributes mutual funds for a variety of investment
applications. Specific markets include:

INSTITUTIONAL CLIENTS

Federated Investors meets the needs of more than 4,000
institutional clients nationwide by managing and servicing separate
accounts and mutual funds for a variety of applications, 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 advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.

BANK MARKETING

Other institutional clients include close relationships with
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 Mark R. Gensheimer, Executive 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
rankings 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 Division.

- ------
*source: Investment Company Institute

FEDERATED LIMITED DURATION GOVERNMENT FUND
(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)

INSTITUTIONAL SHARES

PROSPECTUS

The Institutional Shares of Federated Limited Duration Government Fund
(the "Fund") offered by this prospectus represent interests in a
diversified investment portfolio of Federated Total Return Series,
Inc. (the "Corporation"), an open-end, management investment company
(a mutual fund).

The investment objective of the Fund is to provide total return
consistent with current income. The Fund pursues this investment
objective by investing primarily in securities which are guaranteed as
to payment of principal and interest by the U.S. government or U.S.

government agencies or instrumentalities.

This prospectus contains the information you should read and know
before you invest in Institutional Shares of the Fund. Keep this
prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
November ___, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the
Fund at the address listed on the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov). THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

Institutional Shares ("Shares") of the Fund are sold primarily to
accounts for which financial institutions act in a fiduciary or agency
capacity as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of U.S. government
securities. A minimum initial investment of $100,000 over a 90-day
period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide total return
consistent with current income. The investment objective cannot be
changed without approval of shareholders. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in
U.S. government securities. Under normal circumstances, the Fund will
invest at least 65% of the value of its total assets in securities
that are issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Fund's dollar weighted-average duration will at
all times be limited to three years or less. (See the section entitled
"Average Portfolio Duration" in this Prospectus.) Unless indicated
otherwise, the investment policies may be changed by the Directors
without the approval of shareholders.

ACCEPTABLE INVESTMENTS. The Fund invests primarily in U.S.
government securities, including mortgage-backed securities. These
instruments are either issued or guaranteed by the U.S. government,
its agencies, or instrumentalities. These

securities include, but are not limited to:

- - direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes, and bonds;

- - notes, bonds, discount notes and mortgage-backed securities
issued or guaranteed by U.S. government agencies and
instrumentalities supported by the full faith and credit of the
United States;

- - notes, bonds, discount notes and mortgage-backed securities of
U.S. government agencies or instrumentalities which receive or
have access to federal funding;

- - notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities; and

- - asset-backed securities and commercial mortgage securities rated BBB
or better by Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Group ("Standard & Poor's"), or Fitch Investors
Service, Inc. ("Fitch"), or which are of comparable quality in the
judgment of the adviser. As a matter of investment policy, which may
be changed by the Directors without shareholder approval, the Fund
does not intend to invest in asset-backed securities and commercial
mortgage securities, but reserves the right to invest in these
securities in the future. Shareholders will receive at least 30 days
prior notice of any such investment.

The prices of fixed income securities fluctuate inversely to the
direction of interest rates.

instrumentalities are supported by:

- - the issuer's right to borrow an amount limited to a specific line
of credit from the U.S. Treasury;

- - discretionary authority of the U.S. government to purchase
certain obligations of an agency or instrumentality; or

- - the credit of the agency or instrumentality.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class mortgage-backed securities which qualify
and elect treatment as such under provisions of the Internal Revenue
Code. Issuers of REMICs may take several forms, such as trusts,
partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity is
not subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.

STRIPPED MORTGAGE-BACKED SECURITIES. The Fund may invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are
derivative multiclass securities which may be issued by agencies or
instrumentalities of the U.S. government, or by private originators
of, or investors in, mortgage loans, such as savings and loan
associations, mortgage banks, commercial banks, investment banks, and
special purpose subsidiaries of the foregoing organizations. The
market volatility of stripped mortgage-backed securities tends to be
greater than the market volatility of the other types of
mortgage-related securities in which the Fund invests. Principal-only
stripped mortgage-backed securities are used primarily to hedge
against interest rate risk to the capital assets of the Fund in a
changing interest rate environment. Interest-only stripped
mortgage-backed securities yield to maturity is extremely sensitive to
the rate of principal payments (including prepayments) on the related
underlying mortgage-backed securities. It is possible that the Fund
might not recover its original investment on interest-only stripped
mortgage-backed securities if there are substantial prepayments on the
underlying mortgages. Interest-only stripped mortgage-backed
securities generally increase in value as interest rates rise and
decrease in value as interest rates fall, counter to changes in value
experienced by most fixed income securities.

INVESTMENT RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.
Mortgage-backed and asset-backed securities generally pay back
principal and interest over the life of the security. At the time the
Fund reinvests the payments and any unscheduled prepayments of
principal received, the Fund may receive a rate of interest which is
actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage
loans or the collateral supporting asset-backed securities may be
prepaid without penalty or premium. Prepayment risks on
mortgage-backed securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance
their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or
elect to make unscheduled payments on their mortgages. Although
asset-backed securities generally are less likely to experience
substantial prepayments than are mortgage-backed securities, certain
factors that affect the rate of prepayments on mortgage-backed
securities also affect the rate of prepayments on asset-backed
securities.

Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the related collateral.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer
credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance
due. Most issuers of asset- backed securities backed by motor vehicle
installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the
holders of the related asset-backed securities. Further, if a vehicle
is registered in one state and is then re-registered because the owner
and obligor moves to another state, such re-registration could defeat
the original security interest in the vehicle in certain cases. In
addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the
trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all
of the obligations backing such receivables. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities.

DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from
changes in the value of an underlying security, currency, commodity or
index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as
"derivatives." Some securities, such as stock rights, warrants and
convertible securities, although not typically referred to as
derivatives, contain options that may affect their value and
performance. Derivative contracts and securities can be used to reduce
or increase the volatility of an investment portfolio's total
performance. While the response of certain derivative contracts and
securities to market changes may differ from traditional investments,
such as stocks and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in
securities that could be characterized as derivatives, it will only do
so in a manner consistent with its investment objective, policies and
limitations.

AVERAGE PORTFOLIO DURATION. Although the Fund will not maintain a
stable net asset value, the adviser will seek to limit, to the extent
consistent with the Fund's investment objective of total return, the
magnitude of fluctuations in the Fund's net asset value by limiting
the dollar-weighted average duration of the Fund's portfolio. Duration
is a commonly used measure of the potential volatility of the price of
a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with shorter durations
generally have less volatile prices than securities of comparable
quality with longer durations. The Fund should be expected to maintain
a higher average duration during periods of falling interest rates,
and a lower average duration during periods of rising interest rates.
In any event, the Fund's dollar-weighted average duration will not
exceed three years.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
U.S. government securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Fund to
miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase
prices.

PORTFOLIO TURNOVER. The Fund does not attempt to set or meet any
specific portfolio rate, since turnover is incidental to transactions
undertaken in an attempt to achieve the Fund's investment objective.
High turnover rates may result in higher brokerage commissions and
capital gains. See "Tax Information" in this prospectus.

INVESTMENT LIMITATIONS

The following limitation may be changed by the Directors without
shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.

The Fund will not invest more than 15% of the value of its net assets
in securities which are illiquid, including repurchase agreements
providing for settlement in more than seven days after notice.

HUB AND SPOKE(R) OPTION

will receive at least 30 days prior notice of any such investment.

NET ASSET VALUE

INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call
the Fund before 4:00 p.m. (Eastern time) to place an order. The order
is considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Limited Duration Government Fund--Institutional Shares;
Fund Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.

BY MAIL. To purchase shares of the Fund by mail, send a check made
payable to Federated Limited Duration Government Fund--Institutional
Shares to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank and
Trust Company ("State Street Bank") into federal funds. This is
normally the next business day after State Street Bank receives the
check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

EXCHANGING SECURITIES FOR FUND SHARES

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly. Distributions of any
net realized long-term capital gains will be made at least once every
twelve months. Dividends and distributions are automatically
reinvested in additional Shares on payment dates at net asset value,
unless cash payments are requested by shareholders on the application
or by writing to Federated Securities Corp.

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution,"as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.

ACCOUNTS WITH LOW BALANCES

FUND INFORMATION

MANAGEMENT OF THE FUND

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.

Susan M. Nason has been the Fund's portfolio manager since
inception. Ms. Nason joined Federated Investors in 1987 and has been a
Senior Vice President of the Fund's investment adviser since April
1997. Ms. Nason served as a Vice President of the investment adviser
from 1993 to 1997, and as an Assistant Vice President of the
investment adviser from 1990 until 1992. Ms. Nason is a Chartered
Financial Analyst and received her M.S.I.A. concentrating in Finance
from Carnegie Mellon University.

Todd A. Abraham has been the Fund's portfolio manager since
inception. Mr. Abraham joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the
Fund's investment adviser since 1995. Mr. Abraham served as a
Portfolio Analyst at Ryland Mortgage Co. from 1992 to 1993. Mr.
Abraham received his M.B.A. in Finance from Loyola College.

Robert J. Ostrowski has been the Fund's portfolio manager since
inception. Mr. Ostrowski joined Federated Investors in 1987 as an
Investment Analyst and has been a Vice President of the Fund's
investment adviser since 1993. From 1990 to 1992, he served as an
Assistant Vice President. Mr. Ostrowski is a Chartered Financial
Analyst. He received his M.S.I.A. concentrating in Finance from
Carnegie Mellon University.

DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the principal distributor for
Institutional Shares of the Fund. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a
number of investment companies. Federated

Securities Corp. is a subsidiary of Federated Investors.

ADMINISTRATION OF THE FUND

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS

0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of
Corporation and Fund expenses.

SHAREHOLDER INFORMATION

VOTING RIGHTS

Each Share of the Fund is entitled to one vote at all meetings of
shareholders. All shares of all portfolios in the Corporation have
equal voting rights except that in matters affecting only a particular
portfolio or class of shares, only shares of that portfolio or class
of shares are entitled to vote. As of September 15, 1997, Edgewood
Services, Inc. who was the record owner of 153,386 (30.65%), and
Federated Management Co. who was the record owner of 292,386 (58.42%)
of the Institutional Shares and Federated Services Company, acting in
various capacities for numerous accounts was the record owner of 19
(66.25%) and Federated Management was the record owner of 10 (33.75%)
of the Institutional Service Shares of the Fund, may for certain
purposes be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.

The Fund is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain
circumstances.

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Shares and Institutional Service Shares.

OTHER CLASSES OF SHARES

Institutional Service Shares are distributed under a 12b-1 Plan
adopted by the Fund and are also subject to shareholder services fees.

To obtain more information and a prospectus for Institutional Service
Shares, investors may call 1-800-341-7400.

ADDRESSES

Federated Limited Duration Government Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Federated Management
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company
c/o Federated Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Independent Auditors
Ernst & Young LLP
One Oxford Centre

Pittsburgh, Pennsylvania 15219

FEDERATED LIMITED
DURATION GOVERNMENT

FUND

INSTITUTIONAL SHARES

PROSPECTUS

A Diversified Portfolio of
Federated Total Return Series, Inc.,
an Open-End, Management
Investment Company

Prospectus dated November ___, 1997,

LOGO

G01923-01-IS (11/97)

FEDERATED LIMITED DURATION GOVERNMENT FUND
(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)

INSTITUTIONAL SERVICE SHARES

PROSPECTUS

The Institutional Service Shares of Federated Limited Duration
Government Fund (the "Fund") offered by this prospectus represent
interests in a diversified investment portfolio of Federated Total
Return Series, Inc. (the "Corporation"), an open-end, management
investment company (a mutual fund).

government agencies or instrumentalities.

This prospectus contains the information you should read and know
before you invest in Institutional Service Shares of the Fund. Keep

this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
November ___, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the
Fund at the address listed on the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov). THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. Prospectus dated November ___, 1997

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

SUMMARY OF FUND EXPENSES

to be filed by amendment

<PAGE>

FINANCIAL HIGHLIGHTS - INSTITUTIONAL SERVICE SHARES

to be filed by amendment

<PAGE>

GENERAL INFORMATION

The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993. The Articles of Incorporation permit the
Corporation to offer separate portfolios and classes of shares. As of
the date of this prospectus, the Board of Directors (the "Directors")
has established two classes of shares for the Fund: Institutional
Service Shares and Institutional Shares. This prospectus relates only
to the Institutional Service Shares of the Fund.

Institutional Service Shares ("Shares") of the Fund are designed
primarily for retail and private banking customers of financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing primarily in
U.S. government securities. A minimum initial investment of $25,000
over a 90-day period is required.

Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

securities include, but are not limited to:

- direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes, and bonds;

- notes, bonds, discount notes and mortgage-backed securities
issued or guaranteed by U.S. government agencies and instrumentalities
supported by the full faith and credit of the United States;

- notes, bonds, discount notes and mortgage-backed securities of
U.S. government agencies or instrumentalities which receive or have
access to federal funding;

- notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities; and

The prices of fixed income securities fluctuate inversely to the
direction of interest rates.

instrumentalities are supported by:

- the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;

- discretionary authority of the U.S. government to purchase
certain obligations of an agency or instrumentality; or

- the credit of the agency or instrumentality.

MORTGAGE-BACKED SECURITIES. The Fund may purchase mortgage-backed
securities issued by government and non-government entities such as
banks, mortgage lenders, or other financial institutions. A
mortgage-backed security is an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying
pool of mortgages. Some mortgage-backed securities, such as
collateralized mortgage obligations (" CMOs"), make payments of both
principal and interest at a variety of intervals; others make
semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those
on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and
the Fund may invest in them if the investment adviser determines they
are consistent with the Fund's investment objective and policies.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class mortgage-backed securities which qualify
and elect treatment as such under provisions of the Internal Revenue
Code. Issuers of REMICs may take several forms, such as trusts,
partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity is
not subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.

STRIPPED MORTGAGE-BACKED SECURITIES. The Fund may invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are
derivative multiclass securities which may be issued by agencies or
instrumentalities of the U.S. government, or by private originators
of, or investors in, mortgage loans, such as savings and loan
associations, mortgage banks, commercial banks, investment banks, and
special purpose subsidiaries of the foregoing organizations. The
market volatility of stripped mortgage-backed securities tends to be
greater than the market volatility of the other types of
mortgage-related securities in which the Fund invests. Principal-only
stripped mortgage-backed securities are used primarily to hedge
against interest rate risk to the capital assets of the Fund in a
changing interest rate environment. Interest-only stripped
mortgage-backed securities yield to maturity is extremely sensitive to
the rate of principal payments (including prepayments) on the related
underlying mortgage-backed securities. It is possible that the Fund
might not recover its original investment on interest-only stripped
mortgage-backed securities if there are substantial prepayments on the
underlying mortgages. Interest-only stripped mortgage-backed
securities generally increase in value as interest rates rise and
decrease in value as interest rates fall, counter to changes in value
experienced by most fixed income securities.

INVESTMENT RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES.
Mortgage-backed and asset-backed securities generally pay back
principal and interest over the life of the security. At the time the
Fund reinvests the payments and any unscheduled prepayments of
principal received, the Fund may receive a rate of interest which is
actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage
loans or the collateral supporting asset-backed securities may be
prepaid without penalty or premium. Prepayment risks on
mortgage-backed securities tend to increase during periods of
declining mortgage interest rates because many borrowers refinance
their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other
factors, such as the frequency with which people sell their homes or
elect to make unscheduled payments on their mortgages. Although
asset-backed securities generally are less likely to experience
substantial prepayments than are mortgage-backed securities, certain
factors that affect the rate of prepayments on mortgage-backed
securities also affect the rate of prepayments on asset-backed
securities.

DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from
changes in the value of an underlying security, currency, commodity or
index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as
"derivatives." Some securities, such as stock rights, warrants and
convertible securities, although not typically referred to as
derivatives, contain options that may affect their value and
performance. Derivative contracts and securities can be used to reduce
or increase the volatility of an investment portfolio's total
performance. While the response of certain derivative contracts and
securities to market changes may differ from traditional investments,
such as stocks and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in
securities that could be characterized as derivatives, it will only do
so in a manner consistent with its investment objective, policies and
limitations.

AVERAGE PORTFOLIO DURATION. Although the Fund will not maintain a
stable net asset value, the adviser will seek to limit, to the extent
consistent with the Fund's investment objective of total return, the
magnitude of fluctuations in the Fund's net asset value by limiting
the dollar-weighted average duration of the Fund's portfolio. Duration
is a commonly used measure of the potential volatility of the price of
a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with shorter durations
generally have less volatile prices than securities of comparable
quality with longer durations. The Fund should be expected to maintain
a higher average duration during periods of falling interest rates,
and a lower average duration during periods of rising interest rates.
In any event, the Fund's dollar-weighted average duration will not
exceed three years.

INVESTMENT LIMITATIONS

The following limitation may be changed by the Directors without
shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.

The Fund will not invest more than 15% of the value of its net assets
in securities which are illiquid, including repurchase agreements
providing for settlement in more than seven days after notice.

HUB AND SPOKE(R) OPTION

NET ASSET VALUE

The Fund's net asset value per Share fluctuates. The net asset value
for Shares is determined by dividing the sum of the market value of
all securities and all other assets, less liabilities, by the number
of Shares outstanding. The net asset value for Institutional Shares
may exceed that of Shares 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.

INVESTING IN INSTITUTIONAL SERVICE SHARES

SHARE PURCHASES

BY WIRE. To purchase Shares of the Fund by Federal Reserve wire, call
the Fund before 4:00 p.m. (Eastern time) to place an order. The order
is considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o State Street Bank and
Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Federated Limited Duration Government Fund--Institutional Service
Shares; Fund Number (this number can be found on the account statement
or by contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.

BY MAIL. To purchase Shares of the Fund by mail, send a check made
payable to Federated Limited Duration Government Fund--Institutional
Service Shares to: Federated Shareholder Services Company, P.O. Box
8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank &
Trust Company ("State Street Bank") into federal funds. This is
normally the next business day after State Street Bank receives the
check.

MINIMUM INVESTMENT REQUIRED

WHAT SHARES COST

The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time), on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
Shares are tendered for redemption and no orders to purchase Shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

EXCHANGING SECURITIES FOR FUND SHARES

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid
during the month.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly. Distributions of any
net realized long-term capital gains will be made at least once every
twelve months. Dividends and distributions are automatically
reinvested in additional Shares on payment dates at net asset value,
unless cash payments are requested by shareholders on the application
or by writing to Federated Securities Corp.

Dividends are declared just prior to determining net asset value. If
an order for Shares is placed on the preceding business day, Shares
purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, shares begin earning
dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted,
upon instruction of the transfer agent, into federal funds.

Shares earn dividends through the business day that proper redemption
instructions are received by State Street Bank.

REDEEMING INSTITUTIONAL SERVICE SHARES

TELEPHONE REDEMPTION

WRITTEN REQUESTS

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the
Fund may redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum
value of $25,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $25,000 because of
changes in the Fund's net asset value. Before Shares are redeemed to
close an account, the shareholder is notified in writing and allowed
30 days to purchase additional shares to meet the minimum requirement.

FUND INFORMATION

MANAGEMENT OF THE FUND

INVESTMENT ADVISER. Investment decisions for the Fund are made by
Federated Managment, the Fund's investment adviser, subject to
direction by the Directors. The adviser continually conducts
investment research and supervision for the Fund and is responsible
for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Fund.

Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.

DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES

Corp. is a subsidiary of Federated Investors.

ADMINISTRATION OF THE FUND

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS

0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million

EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES

Holders of Institutional Service Shares pay their allocable portion of
Corporation and Fund expenses.

The Corporation expenses for which holders of Shares pay their
allocable portion include, but are not limited to the cost of:
organizing the Corporation and continuing its existence; registering
the Corporation with federal and state securities authorities;
Directors' fees; auditors' fees; meetings of Directors and
shareholders and proxy solicitations therefor; legal fees of the
Corporation; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.

SHAREHOLDER INFORMATION

VOTING RIGHTS

Each Share of the Fund is entitled to one vote at all meetings of
shareholders. All shares of all portfolios in the Corporation have
equal voting rights except that in matters affecting only a particular
portfolio or class of shares, only shares of that portfolio or class
of shares are entitled to vote. As of September 15, 1997, Edgewood
Services, Inc. who was the record owner of 153,386 (30.65%), and
Federated Management Co. who was the record owner of 292,386 (58.42%)
of the Institutional Shares and Federated Services Company, acting in
various capacities for numerous accounts was the record owner of 19
(66.25%) and Federated Management was the record owner of 10 (33.75%)
of the Institutional Service Shares of the Fund, may for certain
purposes be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.
The Fund is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain
circumstances.

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield.

Shares are sold without any sales charge or other similar
non-recurring charges.

Total return and yield will be calculated separately for Institutional
Service Shares and Institutional Shares.

OTHER CLASSES OF SHARES

Institutional Shares are distributed with no 12b-1 Plan and are also
subject to shareholder services fees.

To obtain more information and a prospectus for Institutional Shares,
investors may call 1-800-341-7400.

ADDRESSES

Federated Limited Duration Government Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor

Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Federated Management
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

Custodian

State Street Bank and Trust Company
c/o Federated Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

Independent Auditors
Ernst & Young LLP
One Oxford Centre

Pittsburgh, Pennsylvania 15219

FEDERATED LIMITED
DURATION GOVERNMENT

FUND

INSTITUTIONAL SERVICE SHARES

PROSPECTUS

A Diversified Portfolio of
Federated Total Return Series, Inc.,
an Open-End, Management
Investment Company

Prospectus dated November ___, 1997,

LOGO

G01923-02-SS (11/97)

FEDERATED LIMITED DURATION GOVERNMENT FUND
(A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.)

INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus(es) of Federated Limited Duration Government
Fund (the "Fund"), a portfolio of Federated Total Return
Series, Inc. (the "Corporation") dated November ___, 1997.
This Statement is not a prospectus. You may request a copy of
a prospectus or a paper copy of this Statement, if you have
received it electronically, free of charge by calling
1-800-341-7400.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated November ___, 1997

[GRAPHIC OMITTED]

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.

Cusip 31428Q705
31428Q606

G01923-03(11/97)

<PAGE>

TABLE OF CONTENTS

to be filed by amendment

<PAGE>

GENERAL INFORMATION ABOUT THE FUND

The Fund is a portfolio of Federated Total Return Series, Inc. (the
"Corporation"). The Corporation was incorporated under the laws of the
State of Maryland on October 11, 1993. On March 21, 1995, the name of
the Corporation was changed from "Insight Institutional Series, Inc."
to "Federated Total Return Series, Inc." The Articles of Incorporation
permit the Corporation to offer separate portfolios and classes of
shares. Shares of the Fund are offered in two classes, known as
Institutional Shares and Institutional Service Shares (individually
and collectively referred to as "Shares," as the context may require).
This Statement of Additional Information relates to the
above-mentioned Shares of the Fund. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide total return
consistent with current income. The investment objective cannot be
changed without approval of shareholders. The investment policies
stated below may be changed by the Board of Directors ("Directors")
without shareholder approval. Shareholders will be notified before any
material change in the investment policies becomes effective. TYPES OF
INVESTMENTS

The Fund invests primarily in U.S. government securities. The Fund's
weighted-average portfolio duration will at all times be limited to
three years or less.

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

The ARMS in which the Fund invests generally will be issued by
Government National Mortgage Association, Federal National Mortgage
Association, and Federal Home Loan Mortgage Corporation. Unlike
conventional bonds, ARMS pay back principal over the life of the ARMS
rather than at maturity. Thus, a holder of the ARMS, such as the Fund,
would receive monthly scheduled payments of principal and interest,
and may receive unscheduled principal payments representing payments
on the underlying mortgages. At the time that a holder of the ARMS
reinvests the payments and any unscheduled prepayments of principal
that it receives, the holder may receive a rate of interest which is
actually lower than the rate of interest paid on the existing ARMS. As
a consequence, ARMS may be a less effective means of "locking in"
long-term interest rates than other types of U.S.

government securities.

The following example illustrates how mortgage cash flows are
prioritized in the case of CMOs; most of the CMOs in which the Fund
invests use the same basic structure:

RESETS OF INTEREST

CAPS AND FLOORS

FUTURES AND OPTIONS TRANSACTIONS

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties: the
seller who agrees to make delivery of the specific type of
security called for in the contract ("going short") and the
buyer who agrees to take delivery of the security ("going
long") at a certain time in the future. In the fixed income
securities market, price moves inversely to interest rates. A
rise in rates means a drop in price. Conversely, a drop in
rates means a rise in price. In order to hedge its holdings
of fixed income securities against a rise in market interest
rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its
fixed income securities may decline during the Fund's
anticipated holding period. The Fund would agree to purchase
securities in the future at a predetermined price (i.e., "go
long") to hedge against a decline in market interest rates.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase listed put options on financial futures
contracts.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

"MARGIN" IN FUTURES TRANSACTIONS

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

The Fund may purchase put options on portfolio securities to
protect against price movements in particular securities in
its portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the
writer (seller) at a specified price during the term of the
option.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

The Fund may also write covered call options to generate
income. As writer of a call option, the Fund has the
obligation upon exercise of the option during the option
period to deliver the underlying security upon payment of the
exercise price. The Fund may only sell call options either on
securities held in its portfolio or on securities which it
has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any
additional consideration).

LEVERAGING

PVTCF PVTCF PVTCF PVTCF

where

PVCTFt = the present value of the cash flow in period t discounted
at the prevailing yield-to-maturity t = the period when the
cash flow is received n = remaining number of periods until
maturity

PVTCF = total present value of the cash flow from the bond
where the present value is determined using the
prevailing yield-to-maturity.

These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund`s records at the trade date.
These assets are marked to market daily and are maintained until the
transaction has been settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets. REPURCHASE AGREEMENTS

The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities. In the event
that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Directors. REVERSE REPURCHASE AGREEMENTS

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. Portfolio
securities will be sold when the adviser believes it is appropriate,
regardless of how long those securities have been held. The adviser
does not anticipate that the Fund's portfolio turnover rate will
exceed 150%. INVESTMENT LIMITATIONS The following limitations are
fundamental [except that no investment limitation of the Fund shall
prevent the Fund from investing substantially all of its assets
(except for assets which are not considered "investment securities"
under the Investment Company Act of 1940, or assets exempted by the
Securities and Exchange Commission) in an open-end investment company
with substantially the same investment objectives]: SELLING SHORT AND
BUYING ON MARGIN

The Fund will not acquire more than 25% of its total assets in
securities of issuers having their principal business

activities in the same industry.

BORROWING MONEY

With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities) if, as a result, more
than 5% of the value of its total assets would be invested in the
securities of that issuer, and will not acquire more than 10% of the
outstanding voting securities of any one issuer.

PLEDGING ASSETS

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

The Fund will not invest more than 15% of its net assets in illiquid
securities, including certain restricted securities (except for
Section 4(2) commercial paper and certain other restricted securities
which meet the criteria for liquidity as established by the
Directors), non-negotiable time deposits, and 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. As a matter of operating
policy, the Fund will not purchase any securities while borrowings in
excess of 5% of its total assets are outstanding. FEDERATED TOTAL
RETURN SERIES, INC. MANAGEMENT Officers and Directors are listed with
their addresses, birthdates, present positions with Federated Total
Return Series, Inc. and principal occupations.

John F. Donahue@*
Federated Investors Tower

Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director

and Director of the Corporation .

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934
Director

John T. Conroy, Jr.
Wood/IPC Commercial Department

John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North

Naples, FL
Birthdate: June 23, 1937
Director

William J. Copeland
One PNC Plaza - 23rd Floor

Pittsburgh, PA
Birthdate: July 4, 1918
Director

Inc.

J. Christopher Donahue*
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 11, 1949

Executive Vice President and Director

Donahue, Chairman and Director of the Corporation.

James E. Dowd
571 Hayward Mill Road

Concord, MA
Birthdate: May 18, 1922
Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director or Trustee of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111

Pittsburgh, PA
Birthdate: October 11, 1932
Director

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street

Pittsburgh, PA
Birthdate: June 18, 1924
Director

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942
Director

Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of

the Funds.

Gregor F. Meyer
Boca Grande Club
Boca Grande, FL

Birthdate: October 6, 1926
Director

Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or

Trustee of the Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University

Pittsburgh, PA
Birthdate: December 20, 1932
Director

President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh

Pittsburgh, PA
Birthdate: September 14, 1925
Director

Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University, U.S. Space
Foundation and Czech Management Center; President Emeritus, University
of Pittsburgh; Founding Chairman, National Advisory Council for
Environmental Policy and Technology, Federal Emergency Management
Advisory Board and Czech Management Center; Director or Trustee of the
Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935
Director

Public relations/marketing consultant; Conference Coordinator,
Non-profit entities; Director or Trustee of the Funds.

Glen R. Johnson
Federated Investors Tower

Pittsburgh, PA
Birthdate: May 2, 1929
President

Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

* This Directors is deemed to be an "interested person" as
defined in the Investment Company Act of 1940.

@ Member of the Executive Committee. The Executive Committee of
the Board of Directorss handles the responsibilities of the Board
between meetings of the Board.

Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.

As of September 15, 1997, Edgewood Services, Inc., Pittsburgh, PA
owned approximately 153,386 (30.65%), Federated Management Co.,
Pittsburgh, PA owned approximately 292,386 (58.42%), and Federated
Securities Corp., Pittsburgh, PA owned approximately 54,226 (10.83%)
of the Institutional Shares of the Fund. As of September 15, 1997,
Federated Services Company, Pittsburgh, PA, acting in various
capacities for numerous accounts, owned approximately 19 (66.25%), and
Federated Management, Pittsburgh, PA owned approximately 10 (33.75%)
of the Institutional Service Shares of the Fund.