FEDERATED TOTAL RETURN SERIES INC, 485BPOS, 1998-04-30

FEDERATED TOTAL RETURN SERIES INC
485BPOS, 1998-04-30

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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. 14 .................... X
------- ----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 16 .................................... X
------ ----

FEDERATED TOTAL RETURN SERIES, INC.

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,
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)
X on May 6, 1998 pursuant to paragraph (b)(1)(v)
60 days after filing pursuant to paragraph (a) (i) on _______ pursuant to
paragraph (a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copies To:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037

<PAGE>

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of Federated Total Return
Series, Inc., which consists of four portfolios: (1) Federated Total Return Bond
Fund, (2) Federated Limited Duration Fund (formerly, Federated Total Return
Limited Duration Fund), (3) Federated Government Fund, and (4) Federated Limited
Duration Government Fund. This filing relates only to Federated Limited Duration
Government Fund and is comprised of the following (the remaining references to
other portfolios have been kept for easier cross reference):

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..........(1-3) Incorporated by reference to
each portfolio's Annual Report dated
November 30, 1997; (4) Filed
in Part A.

Federated Limited Duration Government Fund
(A Portfolio of Federated Total Return Series, Inc.)
Institutional Shares

Semi-Annual Report and Supplement to Prospectus dated November 30, 1997

A. Please insert the following "Financial Highlights" table for Institutional
Shares as page 2 of the Institutional Shares prospectus:

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MARCH 31,
1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28
Net realized and unrealized gain (loss) on investments 0.03
Total from investment operations 0.31
LESS DISTRIBUTIONS
Distributions from net investment income (0.29)
Distributions from net realized gain on investments (0.06)
Total distributions (0.35)
NET ASSET VALUE, END OF PERIOD $10.05
TOTAL RETURN(B) 3.12%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.15%*
Net investment income 5.89%*
Expense waiver/reimbursement(c) 6.34%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,634
Portfolio turnover 303%
</TABLE>
* Computed on an annualized basis.

(a) Reflects operations for the period from October 3, 1997 (date of initial
public investment) to March 31, 1998.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

B. Please delete the first paragraph of the sub-section entitled "Voting Rights"
on page 12 and replace it with the following: "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 April 8, 1998, the following shareholders of record owned 25% or more of
the outstanding Institutional Shares of the Fund: Lebanon Valley National Bank,
Lebanon, Pennsylvania, owned approximately 43,331 Shares (27.91%) and The
Fidelity State Bank, Garden City, Kansas, owned approximately 42,304 Shares
(27.25%) and therefore, 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."

C. Please insert the following "Financial Highlights" table for Institutional
Service Shares as page 14 of the Institutional Shares prospectus:

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MARCH 31,
1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28
Net realized and unrealized gain (loss) on investments 0.02
Total from investment operations 0.30
LESS DISTRIBUTIONS
Distributions from net investment income (0.28)
Distributions from net realized gain on investments (0.06)
Total distributions (0.34)
NET ASSET VALUE, END OF PERIOD $10.05
TOTAL RETURN(B) 2.97%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58%*
Net investment income 5.77%*
Expense waiver/reimbursement(c) 6.76%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,536
Portfolio turnover 303%
</TABLE>
* Computed on an annualized basis.

(a) Reflects operations for the period from October 3, 1997 (date of initial
public investment) to March 31, 1998.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

D. Please insert the following financial statements after the "Financial
Highlights" table for Institutional Service Shares:

PORTFOLIO OF INVESTMENTS
FEDERATED LIMITED DURATION GOVERNMENT FUND
MARCH 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE

<C> <S> <C>
GOVERNMENT OBLIGATIONS--96.7%
$ 1,486,293 Government National Mortgage Association, 7.00% - 9.00%, $ 1,558,423
5/15/2027 - 11/15/2017
3,438,000 United States Treasury Notes, 5.625%, 12/31/1999 3,441,884
Total Government Obligations (identified cost $5,003,401) 5,000,307
(A)REPURCHASE AGREEMENT--2.7%
140,000 BT Securities Corp., 5.97%, dated 3/31/1998, due 4/1/1998 (at 140,000
amortized cost)
Total Investments (identified cost $5,143,401)(b) $ 5,140,307
</TABLE>

(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment[s] in the repurchase agreement is through participation in a joint
account with other Federated funds.

(b) The cost of investments for federal tax purposes amounts to $5,143,401. The
net unrealized depreciation of investments on a federal tax basis amounts to
$3,094 which is comprised of $2,067 appreciation and $5,161 depreciation at
March 31, 1998.

Note: The categories of investments are shown as a percentage of net assets
($5,169,200) at March 31, 1998.

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF ASSETS AND LIABILITIES
FEDERATED LIMITED DURATION GOVERNMENT FUND
MARCH 31, 1998 (UNAUDITED)

<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $ 5,140,307
$5,143,401)
Cash 946
Income receivable 58,581
Total assets 5,199,834
LIABILITIES:
Income distribution payable $ 21,810
Accrued expenses 8,824
Total liabilities 30,634
Net Assets for 514,580 shares outstanding $ 5,169,200
NET ASSETS CONSIST OF:
Paid in capital $ 5,145,970
Net unrealized depreciation of investments (3,094)
Accumulated net realized gain on investments 26,829
Distributions in excess of net investment income (505)
Total Net Assets $ 5,169,200
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,633,550 / 162,616 shares outstanding $10.05
INSTITUTIONAL SERVICE SHARES:
$3,535,650 / 351,964 shares outstanding $10.05
</TABLE>
(See Notes which are an integral part of the Financial Statements)

STATEMENT OF OPERATIONS
FEDERATED LIMITED DURATION GOVERNMENT FUND
PERIOD ENDED MARCH 31, 1998 (UNAUDITED)*

<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of dollar roll expense of $4,281) $ 153,927
EXPENSES:
Investment advisory fee $ 10,289
Administrative personnel and services fee 77,288
Custodian fees 3,143
Transfer and dividend disbursing agent fees and expenses 15,395
Directors'/Trustees' fees 1,026
Auditing fees 5,132
Legal fees 2,567
Portfolio accounting fees 29,280
Distribution services fee--Institutional Service Shares 1,013
Shareholder services fee--Institutional Service Shares 1,013
Share registration costs 11,410
Printing and postage 5,132
Insurance premiums 1,284
Taxes 1,026
Miscellaneous 2,569
Total expenses 167,567
Waivers and reimbursements--
Waiver of investment advisory fee $ (10,289)
Waiver of distribution services fee--Institutional Service (810)
Shares
Reimbursement of other operating expenses (151,045)
Total waivers and reimbursements (162,144)
Net expenses 5,423
Net investment income 148,504
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 26,834
Net change in unrealized appreciation (depreciation) of (3,094)
investments
Net realized and unrealized gain on investments 23,740
Change in net assets resulting from operations $ 172,244
</TABLE>
* For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF CHANGES IN NET ASSETS

FEDERATED LIMITED DURATION GOVERNMENT FUND

<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MARCH 31, 1998*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations--
Net investment income $ 148,504
Net realized gain on investments ($26,834 as computed for federal tax 26,834
purposes)
Net change in unrealized depreciation (3,094)
Change in net assets resulting from operations 172,244
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (127,262)
Institutional Service Shares (21,746)
Distributions from net realized gains
Institutional Shares (28,854)
Institutional Service Shares (1)
Change in net assets resulting from distributions to shareholders (177,863)
SHARE TRANSACTIONS-- Proceeds from sale of shares 6,911,539 Net asset value of
shares issued to shareholders in payment of distributions 27,972 declared Cost
of shares redeemed (6,799,116)
Change in net assets resulting from share transactions 140,395
Change in net assets 134,776
NET ASSETS:
Beginning of period 5,034,424
End of period $ 5,169,200
</TABLE>
* For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

(See Notes which are an integral part of the Financial Statements)

NOTES TO FINANCIAL STATEMENTS
FEDERATED LIMITED DURATION GOVERNMENT FUND

MARCH 31, 1998 (UNAUDITED)

ORGANIZATION

Federated Total Return Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of four portfolios. The
financial statements included herein are only those of Federated Limited
Duration Government Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.

The Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares. The investment objective of the Fund is to provide total return
consistent with current income.

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

INVESTMENT VALUATIONS

U.S. government securities, are generally valued at the mean of the latest bid
and asked price as furnished by an independent pricing service. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value.

REPURCHASE AGREEMENTS

It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.

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 the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.

INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS

Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.

FEDERAL TAXES

It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.

DOLLAR ROLL TRANSACTIONS

The Fund enters into dollar roll transactions with respect to mortgage
securities issued by GNMA, FNMA, and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are treated as short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the Fund's
current yield and total return.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.

OTHER

Investment transactions are accounted for on the trade date.

CAPITAL STOCK

At March 31, 1998, par value shares ($0.001 per share) authorized were as
follows:

NUMBER OF PAR VALUE
SHARE CLASS NAME CAPITAL STOCK AUTHORIZED
Institutional Shares 1,000,000,000
Institutional Service Shares 1,000,000,000
Total shares authorized 2,000,000,000

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1998(A)
INSTITUTIONAL SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 335,196 $ 3,375,755
Shares issued to shareholders in payment of distributions declared 2,063 20,769
Shares redeemed (675,169) (6,799,007)
Net change resulting from Institutional Share transactions (337,910) $(3,402,483)
<CAPTION>
PERIOD ENDED
MARCH 31, 1998(A)
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 351,227 $3,535,784
Shares issued to shareholders in payment of
distributions declared 717 7,203
Shares redeemed (11) (109)
Net change resulting from Institutional Service
Share transactions 351,933 $3,542,878
Net change resulting from share transactions 14,023 $140,395
</TABLE>

(a) For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Management, the Fund's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to 0.40% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.

ADMINISTRATIVE FEE

Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.

DISTRIBUTION SERVICES FEE

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Corporation's
Institutional Shares and Institutional Service Shares. The Plan provides that
the Fund may incur distribution expenses up to 0.25% of average daily net assets
of the Institutional Shares and Institutional Service Shares, annually, to
compensate FSC. FSC may voluntarily choose to waive a portion of this fee. FSC
can modify or terminate this voluntary waiver at any time at its sole
discretion.

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Institutional Service Shares for the period. The fee paid to FSS is used
to finance certain services for shareholders and to maintain shareholder
accounts. Federated Shareholder Services may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.

PORTFOLIO ACCOUNTING FEES

FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.

GENERAL

Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended March 31, 1998, were as follows:

PURCHASES $15,141,502
SALES $14,975,110

TRUSTEES

John F. Donahue

Thomas G. Bigley

John T. Conroy, Jr.

Nicholas P. Constantakis

William J. Copeland

J. Christopher Donahue

James E. Dowd

Lawrence D. Ellis, M.D.

Edward L. Flaherty, Jr.

Peter E. Madden

John E. Murray, Jr.

Wesley W. Posvar

Marjorie P. Smuts

OFFICERS

John F. Donahue

Chairman

Glen R. Johnson

President

J. Christopher Donahue

Executive Vice President

Edward C. Gonzales

Executive Vice President

John W. McGonigle

Executive Vice President, Treasurer, and Secretary

Anthony R. Bosch

Assistant Secretary

Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal.

This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.

[Graphic]
Federated Investors

Federated Limited Duration Government Fund

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

Institutional Shares

SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 30, 1997

March 31, 1998

[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com

Cusip 31428Q705
G02369-01 (4/98)

[Graphic]

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.

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 30,
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 30, 1997

TABLE OF CONTENTS

Summary of Fund Expenses 1

General Information 2

Investment Information 2
Investment Objective 2
Investment Policies 2
Investment Limitations 8
Hub and Spoke(registered trademark) Option 8

Net Asset Value 8

Investing in Institutional Shares 8
Share Purchases 8
Minimum Investment Required 9
What Shares Cost 9
Exchanging Securities for Fund Shares 9
Confirmations and Account Statements 9
Dividends and Distributions 9

Redeeming Institutional Shares 10
Telephone Redemption 10
Written Requests 10
Accounts with Low Balances 10

Fund Information 11
Management of the Fund 11
Distribution of Institutional Shares 11
Administration of the Fund 12

Shareholder Information 12
Voting Rights 12

Tax 13
Federal Income Tax 13
State and Local Taxes 13

Performance Information 13

Other Classes of Shares 13

SUMMARY OF FUND EXPENSES

INSTITUTIONAL SHARES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>

<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or redemption proceeds, as applicable)
None Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL OPERATING EXPENSES
(As a percentage of projected average net assets)*

Management Fee (after waiver)(1) 0.11%
12b-1 Fee None
Total Other Expenses 0.24%
Shareholder Services Fee(2) 0.00%
Total Operating Expenses (after waiver)(3) 0.35%

</TABLE>

(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.40%.

(2) Institutional Shares has no present intention of paying or accruing the
shareholder services fee during the fiscal year ending September 30, 1998.
If Institutional Shares were paying or accruing the shareholder services
fee, Institutional Shares would be able to pay up to 0.25% of its average
daily net assets for the shareholder services fee. See "Fund Information."

(3) The total operating expenses are estimated to be 0.64% absent the
anticipated voluntary waiver of a portion of the management fee.

* Total Institutional Shares operating expenses are estimated based on average
expenses expected to be incurred during the period ending September 30,
1998. During the course of this period, expenses may be more or less than
the average amount shown.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of the Institutional Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Fund Information". Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.

<TABLE>

EXAMPLE
- ---------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.

<S> <C>
1 year $ 4
3 years $11
5 years $20
10 years $44

</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THIS EXAMPLE IS BASED ON ESTIMATED DATA FOR THE INSTITUTIONAL
SHARES' FISCAL YEAR ENDING SEPTEMBER 30, 1998.

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 the 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 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.

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 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.

GOVERNMENT SECURITIES

* 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.

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 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.

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.

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.

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 FUTURES AND OPTIONS ON FUTURES

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.

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 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.

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.

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.

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.

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.
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 [REGISTERED TRADEMARK] 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 (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.

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 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

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, Martin Luther King 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 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. 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 Shares, a gain or loss may be realized by the
investor.

CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions. In addition,
shareholders will receive periodic statements reporting all account activity,
including dividends paid. The Fund will not issue share certificates.

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 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 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. 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 FUND 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 0.40% 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.

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 $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.

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.

Susan M. Nason has been a portfolio manager of the Fund 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 a portfolio manager of the Fund 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 a portfolio manager of the Fund 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.
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 0.25% 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. Currently, Institutional Shares are accruing no shareholder services
fees. Shareholders will be notified if this changes.

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 as specified below:

MAXIMUM AVERAGE AGGREGATE DAILY
FEE NET ASSETS
- ------------ ------------------------------------
0.150% on the first $250 million
0.125% on the next $250 million
0.100% 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 to voluntarily waive a portion of
its fee.
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 October
28, 1997, Edgewood Services, Inc., who was the record owner of 153,879 (30.11%)
and Federated Management Co., who was the record owner of 251,239 (49.15%) of
the Institutional Shares and Federated Services Company, who was the record
owner of 19 (76.01%) 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. 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 and are also subject to shareholder services fees.

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.

[LOGO OMITTED] FEDERATED INVESTORS
FEDERATED LIMITED DURATION GOVERNMENT FUND

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

Institutional Shares
PROSPECTUS

NOVEMBER 30, 1997

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

FEDERATED LIMITED DURATION GOVERNMENT FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

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

INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
State Street Bank and
Trust Company
c/o Federated
Services Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS
Ernst & Young LLP
One Oxford Centre
Pittsburgh, PA 15219

Federated Securities Corp., Distributor

Federated Investors Tower
Pittsburgh, PA 15222-3779

1-800-341-7400

WWW.federatedinvestors.com

Cusip 31428Q705

G01923-01-IS (11/97)

Federated Limited Duration Government Fund
(A Portfolio of Federated Total Return Series, Inc.)
Institutional Service Shares
Semi-Annual Report and Supplement to Prospectus dated November 30, 1997
A. Please insert the following "Financial Highlights" table for
Institutional Service Shares as page 2 of the Institutional
Service Shares prospectus:
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MARCH 31, 1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28
Net realized and unrealized gain (loss) on 0.02
investments
Total from investment operations 0.30
LESS DISTRIBUTIONS
Distributions from net investment income (0.28)
Distributions from net realized gain on investments (0.06)
Total distributions (0.34)
NET ASSET VALUE, END OF PERIOD $10.05
TOTAL RETURN(B) 2.97%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58%*
Net investment income 5.77%*
Expense waiver/reimbursement(c) 6.76%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,536
Portfolio turnover 303%
</TABLE>
* Computed on an annualized basis.

(a) Reflects operations for the period from October 3, 1997 (date of initial
public investment) to March 31, 1998.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

B. Please delete the first paragraph of the sub-section entitled "Voting Rights"
on page 12 and replace it with the following:

"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 April 8, 1998, the following shareholders of record owned 25% or more of
the outstanding Institutional Service Shares of the Fund: Charlotte County Day
School, Charlotte, North Carolina, owned approximately 258,230 Shares (73.07%)
and PCA International Inc., Matthews, North Carolina, owned approximately 95,161
Shares (26.93%) and therefore, 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."

C. Please insert the following "Financial Highlights" table for Institutional
Shares as page 14 of the Institutional Service Shares prospectus:

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MARCH 31, 1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28
Net realized and unrealized gain (loss) on 0.03
investments
Total from investment operations 0.31
LESS DISTRIBUTIONS
Distributions from net investment income (0.29)
Distributions from net realized gain on investments (0.06)
Total distributions (0.35)
NET ASSET VALUE, END OF PERIOD $10.05
TOTAL RETURN(B) 3.12%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.15%*
Net investment income 5.89%*
Expense waiver/reimbursement(c) 6.34%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,634
Portfolio turnover 303%
</TABLE>
* Computed on an annualized basis.

(a) Reflects operations for the period from October 3, 1997 (date of initial
public investment) to March 31, 1998.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

D. Please insert the following financial statements after the "Financial
Highlights" table for Institutional Shares:

PORTFOLIO OF INVESTMENTS
FEDERATED LIMITED DURATION GOVERNMENT FUND
MARCH 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE

Note: The categories of investments are shown as a percentage of net assets
($5,169,200) at March 31, 1998.

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF ASSETS AND LIABILITIES
FEDERATED LIMITED DURATION GOVERNMENT FUND
MARCH 31, 1998 (UNAUDITED)

STATEMENT OF OPERATIONS
FEDERATED LIMITED DURATION GOVERNMENT FUND
PERIOD ENDED MARCH 31, 1998 (UNAUDITED)*

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF CHANGES IN NET ASSETS

FEDERATED LIMITED DURATION GOVERNMENT FUND

PERIOD ENDED
(UNAUDITED)
MARCH 31, 1998*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations--
Net investment income $ 148,504
Net realized gain on investments ($26,834 as computed 26,834
for federal tax purposes)
Net change in unrealized depreciation (3,094)
Change in net assets resulting from operations 172,244
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (127,262)
Institutional Service Shares (21,746)
Distributions from net realized gains
Institutional Shares (28,854)
Institutional Service Shares (1)
Change in net assets resulting from distributions to (177,863)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 6,911,539
Net asset value of shares issued to shareholders in 27,972
payment of distributions declared
Cost of shares redeemed (6,799,116)
Change in net assets resulting from share transactions 140,395
Change in net assets 134,776
NET ASSETS:
Beginning of period 5,034,424
End of period $ 5,169,200
</TABLE>
* For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

(See Notes which are an integral part of the Financial Statements)

NOTES TO FINANCIAL STATEMENTS

ORGANIZATION

The Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares. The investment objective of the Fund is to provide total return
consistent with current income.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

REPURCHASE AGREEMENTS

INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS

FEDERAL TAXES

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

DOLLAR ROLL TRANSACTIONS

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

CAPITAL STOCK

At March 31, 1998, par value shares ($0.001 per share) authorized were as
follows:

NUMBER OF PAR VALUE
SHARE CLASS NAME CAPITAL STOCK AUTHORIZED
Institutional Shares 1,000,000,000
Institutional Service Shares 1,000,000,000
Total shares authorized 2,000,000,000

Transactions in capital stock were as follows:

(a) For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

ADMINISTRATIVE FEE

DISTRIBUTION SERVICES FEE

SHAREHOLDER SERVICES FEE

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

PORTFOLIO ACCOUNTING FEES

FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.

GENERAL

Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended March 31, 1998, were as follows:

PURCHASES $15,141,502
SALES $14,975,110

TRUSTEES

John F. Donahue

Thomas G. Bigley

John T. Conroy, Jr.

Nicholas P. Constantakis

William J. Copeland

J. Christopher Donahue

James E. Dowd

Lawrence D. Ellis, M.D.

Edward L. Flaherty, Jr.

Peter E. Madden

John E. Murray, Jr.

Wesley W. Posvar

Marjorie P. Smuts

OFFICERS

John F. Donahue

Chairman

Glen R. Johnson

President

J. Christopher Donahue

Executive Vice President

Edward C. Gonzales

Executive Vice President

John W. McGonigle

Executive Vice President, Treasurer, and Secretary

Anthony R. Bosch

Assistant Secretary

Mutual funds are not bank deposits or obligations, are not
guaranteed by any bank, and are not insured or guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency. Investment in mutual funds involves
risk, including possible loss of principal.

[Graphic]

Federated Investors

Federated Limited Duration Government Fund
(A Portfolio of Federated Total Return Series, Inc.)
Institutional Service Shares
Semi-Annual Report and
Supplement to Prospectus Dated November 30, 1997

March 31, 1998

[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 31428Q606
G02369-02 (4/98)
[Graphic]

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).

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 30, 1997

TABLE OF CONTENTS

Summary of Fund Expenses 1

General Information 2

Investment Information 2
Investment Objective 2
Investment Policies 2
Investment Limitations 8
Hub and Spoke [registered trademark] Option 8

Net Asset Value 8

Investing in Institutional Service Shares 8
Share Purchases 8
Minimum Investment Required 9
What Shares Cost 9
Exchanging Securities for Fund Shares 9
Confirmations and Account Statements 9
Dividends and Distributions 9

Redeeming Institutional Service Shares 10
Telephone Redemption 10
Written Requests 10
Accounts with Low Balances 10

Fund Information 10
Management of the Fund 10
Distribution of Institutional Service Shares 11
Administration of the Fund 12

Shareholder Information 12
Voting Rights 12

Tax Information 13
Federal Income Tax 13
State and Local Taxes 13

Performance Information 13

Other Classes of Shares 13

SUMMARY OF FUND EXPENSES

INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>

<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL OPERATING EXPENSES
(As a percentage of projected average net assets)*

Management Fee (after waiver)(1) 0.11%
12b-1 Fee (after waiver)(2) 0.05%
Total Other Expenses 0.49%
Shareholder Services Fee 0.25%
Total Operating Expenses (after waivers)(3) 0. 65%

</TABLE>

(2) The 12b-1 fee has been reduced to reflect the anticipated voluntary waiver
of a portion of the 12b-1 fee. The distributor can terminate the voluntary
waiver at any time at its sole discretion. The maximum 12b-1 fee is 0.25%.

(3) The total operating expenses are estimated to be 1.14% absent the
anticipated voluntary waiver of portions of the management fee and 12b-1
fee.

* Total Institutional Service Shares operating expenses are estimated based on
average expenses expected to be incurred during the period ending September
30, 1998. During the course of this period, expenses may be more or less
than the average amount shown.

LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and (2) redemption
at the end of each time period.
<S> <C>
1 year $ 7
3 years $21
5 years $36
10 years $81

</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE
IS BASED ON ESTIMATED DATA FOR THE INSTITUTIONAL SERVICE SHARES' FISCAL YEAR
ENDING SEPTEMBER 30, 1998.

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
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. 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

ACCEPTABLE INVESTMENTS

* 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.

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.

ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS")

COLLATERALIZED MORTGAGE OBLIGATIONS

REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS")

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 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.

CREDIT ENHANCEMENT

DEMAND FEATURES

INTEREST RATE SWAPS

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. 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 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

REPURCHASE AGREEMENTS

RESTRICTED AND ILLIQUID SECURITIES

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

LENDING OF PORTFOLIO SECURITIES

AVERAGE PORTFOLIO DURATION

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

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 [REGISTERED TRADEMARK] 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

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 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

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

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, Martin Luther King 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 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.

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 Shares,
a gain or loss may be realized by the investor.

CONFIRMATIONS AND ACCOUNT STATEMENTS

Shareholders will receive detailed confirmations of transactions. In addition,
shareholders will receive periodic statements reporting all account activity,
including dividends paid. The Fund will not issue share certificates.

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

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 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.

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 $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
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.

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 $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.

Todd A. Abraham has been a portfolio manager of the Fund 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 a portfolio manager of the Fund 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 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.
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 0.25% 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

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 as
specified below:

AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE
FEE FEDERATED FUNDS
- ------------ ------------------------------------
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

SHAREHOLDER INFORMATION

VOTING RIGHTS

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 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 and are also subject to
shareholder services fees. 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.
[LOGO OMITTED] FEDERATED INVESTORS
FEDERATED LIMITED DURATION GOVERNMENT FUND

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

Institutional Service Shares
PROSPECTUS

NOVEMBER 30, 1997

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

FEDERATED LIMITED DURATION GOVERNMENT FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

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

INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS
Ernst & Young LLP
One Oxford Centre
Pittsburgh, PA 15219

Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
WWW.federatedinvestors.com

Cusip 31428Q606

G01923-02-SS (11/97)

FEDERATED LIMITED DURATION GOVERNMENT FUND

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

INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES

SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 30, 1997

A. Please insert the following as the second paragraph under the section
entitled "Portfolio Turnover" on page 6 of the Statement of Additional
Information:

"For the six-month period ended March 31, 1998, the Fund's portfolio
turnover rate was 303%. The portfolio turnover rate is representative of
only 6 months of activity."

B. Please insert the following as the second paragraph under the section
entitled "Fund Ownership" on page 11 of the Statement of Additional Information:

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

As of April 8, 1998, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund:

The Fidelity State Bank, Garden City, Kansas, owned approximately 42,304 Shares
(27.25%); Lebanon Valley National Bank, Lebanon, Pennsylvania, owned
approximately 43,331 Shares (27.91%); Clinton National Bank, Clinton, Iowa,
owned approximately 21,234 Shares (13.68%); and Russell L. Ray, Great Falls,
Virginia, owned approximately 19,906 Shares (12.82%).

As of April 8, 1998, the following shareholders of record owned 5% or more of
the outstanding Institutional Service Shares of the Fund:

Charlotte County Day School, Charlotte, North Carolina, owned approximately
258,230 Shares (73.07%); and PCA International, Inc., Matthews, North
Carolina, owned approximately 95,161 Shares (26.93%)."

C. Please delete the section entitled "Directors' Compensation" on page 12 of
the Statement of Additional Information and replace it with the following:

DIRECTORS' COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue $0 $0 for the Trust and
Chairman and Director 56 other investment companies in the Fund Complex

Thomas G. Bigley $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex

John T. Conroy $1,105 $122,362 for the Trust and
Director 56 other investment companies in the Fund Complex

Nicholas P. Constantakis** $0 $0 for the Trust and
Director 34 other investment companies in the Fund Complex

William J. Copeland $1,105 $122,362 for the Trust and
Director 56 other investment companies in the Fund Complex

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

James E. Dowd $1,105 $122,362 for the Trust and
Director 56 other investment companies in the Fund Complex

Lawrence D. Ellis, M.D. $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex

Edward L. Flaherty, Jr. $1,105 $122,362 for the Trust and
Director 56 other investment companies in the Fund Complex

Peter E. Madden $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex

John E. Murray, Jr. $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex

Wesley W. Posvar $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex

Marjorie P. Smuts $1,004 $111,222 for the Trust and
Director 56 other investment companies in the Fund Complex
</TABLE>

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

** Mr. Constantakis became a member of the Directors on February 23, 1998.
He did not receive any fees as of March 31, 1998 for the Fund.

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

+ The information is provided for the last calendar year.

D. Please insert the following as the second paragraph of the section entitled
"Advisory Fees" which begins on page 13 of the Statement of Additional
Information:

"For the six-month period ended March 31, 1998, the Fund earned advisory fees in
the amount of $10,289, all of which were waived."

E. Please insert the following as the second sentence of the section entitled
"Fund Administration" on page 13 of the Statement of Additional Information:

"For the six-month period ended March 31, 1998, the administrator earned
fees of $77,288."

F. Please insert the following as the final paragraph under the section entitled
"Distribution Plan (Institutional Service Shares Only) and Shareholder Services"
on page 14 of the Statement of Additional Information:

"For the six-month period ended March 31, 1998, the Fund paid $1,013, of which
$810 was voluntarily waived for Institutional Service Shares under the
Distribution Plan. In addition, for the six-month period ended March 31, 1998,
the Fund paid $0 and $1,103 in shareholder service fees for Institutional Shares
and Institutional Service Shares, respectively."

G. Please insert the following as the final sentence of the first paragraph
under the section entitled "Brokerage Transactions" on page 13 of the Statement
of Additional Information:

"For the six-month period ended March 31, 1998, the Fund paid no brokerage
commissions."

H. Please insert the following as the first three paragraphs under the section
entitled "Total Return" on page 15 of the Statement of Additional Information:

"The Fund's cumulative total return for Institutional Shares for the six-month
period ended March 31, 1998, was 6.28%.

The Fund's cumulative total return for Institutional Service Shares for the
six-month period ended March 31, 1998, was 6.12%.

Cumulative total return reflects total performance over a specified period of
time. This total return assumes and is reduced by the payment of the maximum
sales charge and/or the contingent deferred sales charge."

I. Please insert the following as the first paragraph under the section entitled
"Yield" on page 15 of the Statement of Additional Information:

"The Fund's yields for the thirty-day period ended March 31, 1998, were 5.63%
and 5.33%, for Institutional Shares and Institutional Service Shares,
respectively."

March 31, 1998

Federated Investors
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com

Cusip 31428Q705
Cusip 31428Q606
G02369-03 (4/98)

[Graphic]

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 30, 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 Limited Duration Government Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000

Statement dated November 30, 1997
[GRAPHIC OMITTED]

Cusip 31428Q705
Cusip 31428Q606
G01923-03(11/97)

<PAGE>

Table of Contents
- --------------------------------------------------------------------------------

General Information About the Fund 1

Investment Objective and Policies 1
Types of Investments 1
Adjustable Rate Mortgage Securities ("ARMS") 1
Collateralized Mortgage Obligations ("CMOs") 1
Real Estate Mortgage Investment Conduits ("REMICs") 2
Interest-Only and Principal-Only Investments 2
Privately Issued Mortgage-Related Securities 2
Resets of Interest 2
Caps and Floors 3
Futures and Options Transactions 3
Leveraging 5
Leverage Through Borrowing 5
Medium Term Notes and Deposit Notes 5
Average Life 5
Weighted Average Portfolio Duration 5
Lending of Portfolio Securities 6
When-Issued and Delayed Delivery Transactions 6
Repurchase Agreements 6
Reverse Repurchase Agreements 7
Investing in Securities of Other Investment Companies 7
Portfolio Turnover 7

Investment Limitations 7

Federated Total Return Series, Inc. Management 8
Fund Ownership 12
Directors' Compensation 13
Director Liability 13

Investment Advisory Services 14
Adviser to the Fund 14
Advisory Fees 14

Brokerage Transactions 14

Other Services 14
Fund Administration 14
Custodian and Portfolio Accountant 15
Transfer Agent 15
Independent Auditors 15

Purchasing Shares 15
Distribution Plan (Institutional Service Shares only)
and Shareholder Services 15

Determining Net Asset Value 16
Determining Market Value of Securities16
Use of Amortized Cost 16

Redeeming Shares 16
Redemption in Kind 16

Tax Status 17
The Fund's Tax Status 17
Shareholders' Tax Status 17

Total Return 17

Yield 17

Performance Comparisons 18
Economic and Market Information 18

About Federated Investors 18
Mutual Fund Market 19

<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.

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;

<PAGE>

(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")

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

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.

<PAGE>

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

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.

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.

<PAGE>

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).

<PAGE>

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.

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.

<PAGE>

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.

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.

<PAGE>

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.

Investing in Securities of Other Investment Companies

The Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.

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 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 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.

Concentration of Investments

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

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.

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.

<PAGE>

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.

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

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
Company.

<PAGE>

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 Trustee in private real estate
ventures in Southwest Florida; formerly, President, Naples Property Management,
Inc. and Northgate Village Development Corporation; Director or Trustee of the
Funds.

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

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 Company.

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

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.

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

<PAGE>

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935

Director

Public relations/Marketing/Conference Planning; 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; Treasurer of some of
the Funds.

* 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.

<PAGE>

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; RIMCO Monument Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; 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 October 28, 1997, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund: Edgewood Service, Inc.,
Pittsburgh, PA owned 153,879 (30.11%); Federated Management Co., Pittsburgh, PA
owned 251,239 (49.15%); and Federated Securities Corp., Pittsburgh, PA owned
92,893 (18.17%). As of October 28, 1997, the following shareholders of record
owned 5% or more of the outstanding Institutional Service Shares of the Fund:
Federated Services Company, Pittsburgh, PA, acting in numerous capacities for
various accounts, owned 19 (76.01%); and Federated Management, Pittsburgh, PA
owned 10 (33.89%).

<PAGE>

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 54 other investment companies in the Fund Complex
Thomas G. Bigley $1,004 $86,331 for the Corporation and
Director 54 other investment companies in the Fund Complex
John T. Conroy, Jr., $1,105 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex
William J. Copeland, $1,105 $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, $1,105 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D., $1,004 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex
Edward L. Flaherty, Jr., $1,105 $115,760 for the Corporation and
Director 54 other investment companies in the Fund Complex
Peter E. Madden, $1,004 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex
John E. Murray, Jr., $1,004 $104,898 for the Corporationand
Director 54 other investment companies in the Fund Complex
Wesley W. Posvar, $1,004 $104,898 for the Corporation and
Director 54 other investment companies in the Fund Complex
Marjorie P. Smuts, $1,004 $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, 1997 and the
Corporation was comprised of four portfolios.

+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.

<PAGE>

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.

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.

<PAGE>

Custodian and Portfolio Accountant

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
Pennsylvania, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. The fee paid for this service is
based upon the level of the Fund's average net assets for the period plus
out-of-pocket expenses.

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, 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.

<PAGE>

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.

<PAGE>

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 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

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.

<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.

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 Merrill Lynch 1-3 Year Treasury Index is an unmanaged index tracking
short-term U.S. Treasury securities between 1 and 2.99 years. The index is
produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.

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

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

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.

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.

<PAGE>

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 Timothy C. Pillion, Senior
Vice President, Bank Marketing & Sales.

Broker/Dealers and Bank Broker/Dealer Subsidiaries

Federated funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial professionals and
institutions has earned it high 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

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:
(a) Financial Statements: (1-3) Incorporated by reference to each
portfolio's Annual Report dated November 30, 1997, pursuant to
Rule 411 under the Securities Act of 1933. (File Nos. 33-50773
and 811-7115); (4) Filed in Part A.
(b) Exhibits:
(1)(i) Conformed copy of Articles of Incorporation; (ii)
Conformed copy of Articles of Amendment of Articles of
Incorporation; (2)
(2) Copy of By-Laws; (1)
(3) Not Applicable;
(4) Copy of Specimen Certificate for Shares of Capital
Stock of the Registrant; (10)
(5) (i) Copy of Investment Advisory Contract and conformed
copies of Exhibits A and B of Investment Advisory
Contract; (7)
(ii) Conformed copies of Exhibits D and E of Investment
Advisory Contract; (11)
(6) (i) Copy of Distributor's Contract and Conformed copies
of Exhibits A, B, C, and D to Distributor's Contract;
(4)
(ii) Copy of Distributor's Contract and Conformed copies of
Exhibits E and F to Distributor's Contract; (10)
(iii) Conformed copies of Exhibits G and H to Distributor's
Contract; (11)
(iv) The Registrant hereby incorporates the conformed copy
of the specimen Mutual Funds Sales and Service
Agreement; Mutual Funds Service Agreement; and Plan
Trustee/Mutual Funds Service Agreement from Item 24 (b)
(6) of the Cash Trust Series II Registration Statement
on Form N-1A, filed with the Commission on July 24,
1995. (File Numbers 33-38550 and 811-6269);
(7) Not Applicable;
(8) (i) Conformed copy of the Custodian Agreement of the
Registrant; (4)
(ii) Conformed Copy of Fee Schedule to the Custodian
Agreement of the Registrant; (13)
- -------------------------------------------------
+ All exhibits have been filed electronically.

(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed October 25, 1993. (File Nos. 33-50773 and
811-7115)

(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 21, 1993. (File Nos. 33-50773
and 811-7115)

(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 27, 1994. (File Nos. 33-50773 and
811-7115)

(7) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed June 6, 1995. (File Nos. 33-50773 and
811-7115)

(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed November 27, 1996. (File Nos. 33-50773
and 811-7115)

(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed March 31, 1997. (File Nos. 33-50773 and
811-7115)

(13) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed November 26, 1997. (File Nos. 33-50773
and 811-7115)

(9) (i) Conformed copy of Fund Accounting Services, Administrative Services,
Transfer Agency Services, and Custody Services Procurement
Agreement of the Registrant; (13)
(ii) Conformed copy of Administrative Services Agreement; (4) (iii) The
responses described in Item 24(b)(6) are hereby incorporated by
reference;
(iv) Conformed Copy of Amended and Restated Shareholder Services Agreement
of the Registrant; (13)
(10) Conformed copy of Opinion and Consent of Counsel as to legality of
shares being registered; (2)
(11) Conformed copy of Consent of Independent Auditors; (13) (12) Not
Applicable; (13) Conformed copy of Initial Capital Understanding; (3) (14) Not
Applicable; (15)(i) Conformed copy of Distribution Plan including Exhibits A
and B; (11)
(ii) Conformed copy of Exhibits C to Distribution Plan; (10) (iii) Conformed
copy of Exhibit D and E to Distribution Plan; (11)
(iv) The responses described in Item 24(b)(6) are hereby incorporated by
reference;
(16)(i) Copy of Schedules for Computation of Fund Performance Data for the
Federated Limited Duration; (12)
(ii) Copy of Schedules of Computation of Fund Performance Data for Federated
Total Return Bond Fund and Federated Government
Fund; (13)
(iii) Copy of Schedules of Computation of Fund
Performance Data for Federated Limited Duration
Government Fund; +
(17) Copies of Financial Data Schedules; +
- ----------------------------------
+ All exhibits have been filed electronically.

(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 21, 1993. (File Nos. 33-50773
and 811-7115)

(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed January 13, 1994. (File Nos. 33-50773
and 811-7115)

(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 27, 1994. (File Nos. 33-50773 and
811-7115)

(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed November 27, 1996. (File Nos. 33-50773
and 811-7115)

(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed March 31, 1997. (File Nos. 33-50773 and
811-7115)

(12) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed May 28, 1997. (File Nos. 33-50773 and
811-7115)

(13) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed November 26, 1997. (File Nos. 33-50773
and 811-7115)

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

(19)(i) Conformed copy of Power of Attorney; + (ii) Conformed copy of Limited
Power of Attorney; (10)

Item 25. Persons Controlled by or Under Common Control with Registrant:

None

Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class as of April 8, 1998

Shares of capital stock
($0.001 per Share par value)

Federated Government Fund
Institutional Shares 1,063
Institutional Service Shares 1,007
Federated Total Return Bond Fund
Institutional Shares 1,085
Institutional Service Shares 1,051
Federated Limited Duration Fund
Institutional Shares 1,066
Institutional Service Shares 1,019
Federated Limited Duration Government Fund
Institutional Shares 38
Institutional Service Shares 10

Item 27. Indemnification: (1)

Item 28. Business and Other Connections of Investment Adviser:

(a) For a description of the other business of the investment adviser, see the
section entitled "Management of the Fund" in Part A. The affiliations with
the Registrant of four of the Trustees and one of the Officers of the
investment adviser are included in Part B of this Registration Statement
under "Federated Total Return Series, Inc. Management." The remaining
Trustee of the investment adviser, his position with the investment
adviser, and, in parentheses, his principal occupation is: Mark D. Olson
(Partner, Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown,
Delaware 19947.

+ All exhibits have been filed electronically.

(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed October 25, 1993. (File
Nos. 33-50773 and 811-7115)

(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed November 27, 1996. (File Nos. 33-50773
and 811-7115)

The remaining Officers of the investment adviser are:

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

Senior Vice Presidents: Joseph M. Balestrino
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Sandra L. McInerney
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski

Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Randall S. Bauer
David A. Briggs
Micheal W. Casey
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Steven Lehman
Marian R. Marinack
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
Christopher Smith
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka

Assistant Vice Presidents:
Stefanie L. Bachhuber
Arthur J. Barry
Robert E. Cauley
Lee R. Cunningham, II
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Natalie F. Metz
Joseph M. Natoli
Keith J. Sabol
John Sheehy
Michael W. Sirianni
Gregg S. Tenser
Leonardo A. Vila
Lori A. Wolff

Secretary: Stephen A. Keen

Treasurer: Thomas R. Donahue

Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle

Assistant Treasurer: Richard B. Fisher

The business address of each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. These
individuals are also officers of a majority of the investment advisers to the
Funds listed in Part B of this Registration Statement.

Item 29. Principal Underwriters:

(a) Federated Securities Corp. the Distributor for shares of the Registrant,
acts as principal underwriter for the following open-end investment
companies, including the Registrant:

111 Corcoran 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 Core Trust; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated 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; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Virtus
Funds; The Wachovia Funds; The Wachovia Municipal Funds; Tower Mutual Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Vision Group of Funds, Inc.; and World Investment Series, Inc.

Federated Securities Corp. also acts as principal underwriter for the following
closed-end investment company: Liberty Term Trust, Inc.- 1999.

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst. Treasurer,
Federated Securities Corp.

Edward C. Gonzales Director, Executive Vice
Federated Investors Tower President, Federated,
Pittsburgh, PA 15222-3779 Securities Corp.

Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:

Registrant 5800 Corporate Drive
Pittsburgh, PA 15237-7000

Federated Services Company Federated Investors Tower
Transfer Agent, Dividend 1001 Liberty Avenue
Disbursing Agent and Pittsburgh, PA 15222-3779
Portfolio Recordkeeper

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

Federated Management..........Federated Investors Tower
Investment Adviser............1001 Liberty Avenue
..............................Pittsburgh, PA 15222-3779

State Street Bank and.........P.O. Box 8600
Trust Company Boston, Massachusetts 02266
Custodian

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the provisions of Section 16(c)
of the 1940 Act with respect to the removal of Directors and the calling of
special shareholder meetings by shareholders.

Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered, a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED TOTAL RETURN SERIES,
INC. certifies that it meets all the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 30th day of April, 1998.

FEDERATED TOTAL RETURN SERIES, INC.
BY: /s/ Anthony R. Bosch
Anthony R. Bosch, Assistant Secretary
Attorney in Fact for John F. Donahue
April 30, 1998

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:

NAME TITLE DATE
By: /s/ Anthony R. Bosch Attorney In Fact April 30, 1998
Anthony R. Bosch For the Persons
ASSISTANT SECRETARY Listed Below

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

Glen R. Johnson* President

J. Christopher Donahue* Executive Vice President
and Director

Edward C. Gonzales Executive Vice President

John W. McGonigle* Executive Vice President,
Treasurer and Secretary (Principal
Financial and Accounting Officer)

Thomas G. Bigley* Director

John T. Conroy, Jr.* Director

Nicholas P. Constantakis* Director

William J. Copeland* Director

James E. Dowd* Director

Lawrence D. Ellis, M.D.* Director

Edward L. Flaherty, Jr.* Director

Peter E. Madden* Director

John E. Murray, Jr.* Director

Wesley W. Posvar* Director

Marjorie P. Smuts* Director

* By Power of Attorney

Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Offering
Federated Limited Duration Price/Share= $10.00
Government Fund
Institutional Shares
Return Since Inception 5/31/97 NAV= $10.05
ending 3/31/98

FYE: September 30, 1998
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Daily Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Monthly Dates Shares /Share /Share /Share Shares Price Value
6/30/97 100.000 0.053287863 0.00000 $10.03 100.531 $10.03 $1,008.33
7/31/97 100.531 0.056319557 0.00000 $10.07 101.094 $10.07 $1,018.01
8/31/97 101.094 0.053306230 0.00000 $10.04 101.630 $10.04 $1,020.37
9/30/97 101.630 0.051214277 0.00000 $10.08 102.147 $10.08 $1,029.64
10/31/97 102.147 0.051552992 0.00000 $10.10 102.668 $10.10 $1,036.95
11/11/97 102.668 0.000000000 0.05750 $10.03 103.257 $10.03 $1,035.66
11/30/97 103.257 0.051264572 0.00000 $10.03 103.784 $10.03 $1,040.96
12/31/97 103.784 0.051163730 0.00000 $10.04 104.313 $10.04 $1,047.30
1/31/98 104.313 0.049090559 0.00000 $10.08 104.821 $10.08 $1,056.60
2/28/98 104.821 0.045065974 0.00000 $10.04 105.292 $10.04 $1,057.13
3/31/98 105.292 0.044302233 0.00000 $10.05 105.756 $10.05 $1,062.85
</TABLE>
Note: The Fund has paid income and ST capital gain dividends in FYE 9/30/98.

$1,000 (1+T) = Ending Value

T =
6.28%

Federated Limited
Duration Government Fund

Institutional Shares

<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
Yield = 2{( $8,108.68 - $349.98 )+1)^6-1}=
-----------------------------------------------------------------
Computation of SEC Yield 166,520 *( $10.05 - 0.00000 )
As of: March 31, 1998
SEC Yield = 5.63%
==============

Dividend and/or Interest
Inc for the 30 days ended $8,108.68

Net Expenses for $349.98
the Period

Avg Daily Shares
Outstanding and entitled
to receive dividends 166,520

Maximum offering price $10.05
per share as of 3/31/98

Undistributed net income 0.00000

</TABLE>

<TABLE>
<CAPTION>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Offering
Federated Limited Duration Government Fund Price/Share= $10.00

Institutional Servce Shares
Return Since Inception 5/31/97 NAV= $10.05
ending 3/31/98

FYE: September 30, 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Daily Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Monthly Dates Shares /Share /Share /Share Shares Price Value
6/30/97 100.000 0.053287863 0.00000 $10.03 100.531 $10.03 $1,008.33
7/31/97 100.531 0.056319557 0.00000 $10.07 101.094 $10.07 $1,018.01
8/31/97 101.094 0.053306230 0.00000 $10.04 101.630 $10.04 $1,020.37
9/30/97 101.630 0.050809131 0.00000 $10.08 102.143 $10.08 $1,029.60
10/31/97 102.143 0.049100091 0.00000 $10.10 102.639 $10.10 $1,036.66
11/11/97 102.639 0.000000000 0.05750 $10.03 103.228 $10.03 $1,035.37
11/30/97 103.228 0.048756004 0.00000 $10.03 103.729 $10.03 $1,040.41
12/31/97 103.729 0.048653490 0.00000 $10.04 104.232 $10.04 $1,046.49
1/31/98 104.232 0.046571445 0.00000 $10.08 104.714 $10.08 $1,055.51
2/28/98 104.714 0.042557706 0.00000 $10.04 105.157 $10.04 $1,055.78
3/31/98 105.157 0.041781137 0.00000 $10.05 105.595 $10.05 $1,061.23
</TABLE>

$1,000 (1+T) = Ending Value
T = 6.12%

Note: The Fund has paid income and ST capital gain dividends in FYE 9/30/98.

Federated Limited Duration
Government Fund
Institutional Service Shares
<S> <C> <C> <C> <C>q <C> <C> <C> <C>
-------------------------------------------------------------
Yield = 2{( $17,016.04 - $1,600.49 )+1)^6-1}=
-------------------------------------------------------------
Computation of SEC Yield 349,432 *( $10.05 - 0.00000 )
As of: March 31, 1998
SEC Yield = 5.33%
==============

Dividend and/or Interest
Inc for the 30 days ended $17,016.04

Net Expenses for $1,600.49
the Period

Avg Daily Shares
Outstanding and entitled
to receive dividends 349,432

Maximum offering price $10.05
per share as of 3/31/98

Undistributed net income 0.00000
</TABLE>

Exhibit 19(i) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of FEDERATED TOTAL RETURN SERIES, INC. and
the Deputy General Counsel of Federated Services Company, and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.

SIGNATURES TITLE DATE

/S/JOHN F. DONAHUE Chairman and Director March 31, 1998
- ---------------------------------
John F. Donahue (Chief Executive Officer)

/S/ GLEN R. JOHNSON President March 31, 1998
- ---------------------------------
Glen R. Johnson

/S/ J. CHRISTOPHER DONAHUE Executive Vice President March 31, 1998
- ---------------------------------
J. Christopher Donahue and Director

/S/ JOHN W. MCGONIGLE Treasurer, Executive March 31, 1998
John W. McGonigle Vice President and Secretary
(Principal Financial and
Accounting Officer)

/S/ THOMAS G. BIGLEY Director March 31, 1998
- ---------------------------------
Thomas G. Bigley

/S/ NICHOLAS P. CONSTANTAKIS Director March 31, 1998
- ---------------------------------
Nicholas P. Constantakis

/S/ JOHN T. CONROY, JR. Director March 31, 1998
- ---------------------------------
John T. Conroy, Jr.
SIGNATURES TITLE DATE

/S/ WILLIAM J. COPELAND Director March 31, 1998
- ---------------------------------
William J. Copeland

/S/ JAMES E. DOWD Director March 31, 1998
- ---------------------------------
James E. Dowd

/S/ LAWRENCE D. ELLIS, M.D. Director March 31, 1998
Lawrence D. Ellis, M.D.

/S/ EDWARD L. FLAHERTY, JR. Director March 31, 1998
- ---------------------------------
Edward L. Flaherty, Jr.

/S/ PETER E. MADDEN Director March 31, 1998
- ---------------------------------
Peter E. Madden

/S/ JOHN E. MURRAY, JR. Director March 31, 1998
- ---------------------------------
John E. Murray, Jr.

/S/ WESLEY W. POSVAR Director March 31, 1998
- ---------------------------------
Wesley W. Posvar

/S/ MARJORIE P. SMUTS Director March 31, 1998
- ---------------------------------
Marjorie P. Smuts

Sworn to and subscribed before me this 31st day of March 31, 1998

/S/ CHERI S. GOOD
Notarial Seal

Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> Federated Limited
Duration Government Fund
Institutional Shares

<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-END> Mar-31-1998
<INVESTMENTS-AT-COST> 5,143,401
<INVESTMENTS-AT-VALUE> 5,140,307
<RECEIVABLES> 58,581
<ASSETS-OTHER> 946
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,199,834
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,634
<TOTAL-LIABILITIES> 30,634
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,145,970
<SHARES-COMMON-STOCK> 162,616
<SHARES-COMMON-PRIOR> 500,557
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 505
<ACCUMULATED-NET-GAINS> 26,829
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,094)
<NET-ASSETS> 1,633,550
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 153,927
<OTHER-INCOME> 0
<EXPENSES-NET> 5,423
<NET-INVESTMENT-INCOME> 148,504
<REALIZED-GAINS-CURRENT> 26,834
<APPREC-INCREASE-CURRENT> (3,094)
<NET-CHANGE-FROM-OPS> 172,244
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 127,262
<DISTRIBUTIONS-OF-GAINS> 28,854
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 335,196
<NUMBER-OF-SHARES-REDEEMED> 675,169
<SHARES-REINVESTED> 2,063
<NET-CHANGE-IN-ASSETS> 134,776
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 29,047
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 167,567
<AVERAGE-NET-ASSETS> 5,214,815
<PER-SHARE-NAV-BEGIN> 10.090
<PER-SHARE-NII> 0.280
<PER-SHARE-GAIN-APPREC> 0.030
<PER-SHARE-DIVIDEND> 0.290
<PER-SHARE-DISTRIBUTIONS> 0.060
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.050
<EXPENSE-RATIO> 0.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> Federated Limited Duration
Government Fund
Institutional Service Shares

<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-END> Mar-31-1998
<INVESTMENTS-AT-COST> 5,143,401
<INVESTMENTS-AT-VALUE> 5,140,307
<RECEIVABLES> 58,581
<ASSETS-OTHER> 946
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,199,834
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,634
<TOTAL-LIABILITIES> 30,634
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,145,970
<SHARES-COMMON-STOCK> 351,964
<SHARES-COMMON-PRIOR> 30
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 505
<ACCUMULATED-NET-GAINS> 26,829
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,094)
<NET-ASSETS> 3,535,650
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 153,927
<OTHER-INCOME> 0
<EXPENSES-NET> 5,423
<NET-INVESTMENT-INCOME> 148,504
<REALIZED-GAINS-CURRENT> 26,834
<APPREC-INCREASE-CURRENT> (3,094)
<NET-CHANGE-FROM-OPS> 172,244
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,746
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 351,227
<NUMBER-OF-SHARES-REDEEMED> 11
<SHARES-REINVESTED> 717
<NET-CHANGE-IN-ASSETS> 134,776
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 29,047
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 167,567
<AVERAGE-NET-ASSETS> 5,214,825
<PER-SHARE-NAV-BEGIN> 10.090
<PER-SHARE-NII> 0.280
<PER-SHARE-GAIN-APPREC> 0.020
<PER-SHARE-DIVIDEND> 0.280
<PER-SHARE-DISTRIBUTIONS> 0.060
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.050
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>