FEDERATED MANAGED ALLOCATION PORTFOLIOS, 485APOS, 1999-11-29

FEDERATED MANAGED ALLOCATION PORTFOLIOS
485APOS, 1999-11-29

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1933 Act File No. 33-51247
1940 Act File No. 811-7129

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----

Pre-Effective Amendment No. ..................................

Post-Effective Amendment No. 11 ................................ X
------ -----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 12 ............................................... X
------ -----

FEDERATED MANAGED ALLOCATION PORTFOLIOS

(formerly, Managed Series Trust)
(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,

1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

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

X on JANUARY 31, 2000 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, DC 20037

FEDERATED MANAGED ALLOCATION PORTFOLIOS

(FORMERLY, MANAGED SERIES TRUST)

Federated Managed Income Portfolio(Formerly, Federated Managed Income Fund)

Federated Managed Conservative Growth Portfolio(Formerly, Federated Managed
Growth and Income Fund)

Federated Managed Moderate Growth Portfolio(Formerly, Federated Managed
Growth Fund)

Federated Managed Growth Portfolio(Formerly, Federated Managed Aggressive
Growth Fund)

INSTITUTIONAL SHARES

As with all mutual funds, the Securities and Exchange Commission (SEC) has
not approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

<PAGE>

CONTENTS
[To be filed by amendment.]

JANUARY 31, 2000

<PAGE>

RISK/RETURN SUMMARY

WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?

FUND OBJECTIVE
Federated Managed Income Portfolio ("FMIP") To seek total return with an
emphasis on income and potential
for capital appreciation

Federated Managed Conservative Growth To seek total return with an
Portfolio ("FMCGP") emphasis on income and capital
appreciation

Federated Managed Moderate Growth Portfolio To seek capital appreciation with
("FMMGP") income as a secondary objective

Federated Managed Growth Portfolio ("FMGP") To seek capital appreciation

While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the investment strategies and policies
described in this prospectus.

WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?

o by setting long-term ranges for each Fund's portfolio investments in each
asset category; o by allocating each Fund's portfolio among asset categories
within those defined ranges; and o by actively selecting securities within each
of the asset categories.

The Funds will each allocate their portfolios within the following ranges of
equity and fixed income securities: FMIP, 5%-25% equity and 75%-95% fixed
income; FMGP, 30%-50% equity and 50%-70% fixed income; FMMGP, 50%-70% equity and
30%-50% fixed income; and FMGP, 70%-90% equity and 10%-30% fixed income. The
Funds will further allocate portfolios among the following asset categories, in
such proportions as the Adviser from time-to-time determines, consistent with
the long-term ranges set by it: a Fund's equity portfolio will be allocated
among large company stocks, small company stocks and foreign stocks; and a
Fund's fixed income portfolio will be allocated among U.S. government
securities, mortgage-backed securities, investment grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities.

<PAGE>

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?

All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Funds. The primary factors that may reduce the Funds'
returns include:

OSTOCK MARKET RISKS. The value of equity securities in a Fund's
portfolio will fluctuate and, as a result, a Fund's share price may decline
suddenly or over a sustained period.

OINTEREST RATE RISKS. Prices of fixed income securities generally fall when
interest rates rise.

OCREDIT RISKS. There is a possibility that issuers of securities in which a Fund
may invest may default in the payment of interest or principal on the securities
when due, which could cause a Fund to lose money.

OCURRENCY RISKS. Exchange rates for currencies fluctuate daily. The combination
of currency risk and interest rate risks tends to make securities traded in
foreign markets more volatile than securities traded exclusively in the U.S.

OCALL RISKS AND PREPAYMENT RISKS. An issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. When
interest rates decline, unscheduled prepayments of principal could accelerate
and require a Fund to reinvest the proceeds of the prepayments at lower interest
rates.

OSECTOR RISKS. Because the Funds may allocate relatively more assets to certain
industry sectors than to others, the Funds' performance may be more susceptible
to any developments which affect those sectors emphasized by the Funds.

OLIQUIDITY RISKS. Certain of the securities in which the Funds invest may be
less readily marketable and may be subject to greater fluctuation in price than
other securities. ORISKS RELATED TO COMPANY SIZE. The smaller the capitalization
of a company, the less liquid its stock and the more volatile its price.
Companies with smaller market capitalizations also tend to have unproven records
and are more likely to fail than companies with larger market capitalizations.

ORISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES. Securities rated below
investment grade, also known as junk bonds, generally entail greater market,
credit and liquidity risks than investment grade securities.

ORISKS OF FOREIGN INVESTING. Because the Funds invest in securities issued by
foreign companies, the Funds' share price may be more affected by foreign
economic and political conditions, taxation policies and accounting and auditing
standards than would otherwise be the case. 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 or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.

<PAGE>

RISK/RETURN BAR CHARTS AND TABLES

INCOME PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF INSTITUTIONAL SHARES AS OF THE CALENDAR YEAR-END FOR
EACH OF FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 2.00% UP TO 16.00%.

THE `X' AXIS REPRESENTS CALCULATION PERIODS FROM THE EARLIEST FIRST FULL
CALENDAR YEAR-END OF THE INSTITUTIONAL SHARES START OF BUSINESS THROUGH THE
CALENDAR YEAR ENDED DECEMBER 31, 1998. THE LIGHT GRAY SHADED CHART FEATURES FOUR
DISTINCT VERTICAL BARS, EACH SHADED IN CHARCOAL, AND EACH VISUALLY REPRESENTING
BY HEIGHT THE TOTAL RETURN PERCENTAGES FOR THE CALENDAR YEAR STATED DIRECTLY AT
ITS BASE. THE CALCULATED TOTAL RETURN PERCENTAGE FOR THE INSTITUTIONAL SHARES
FOR EACH CALENDAR YEAR IS STATED DIRECTLY AT THE TOP OF EACH RESPECTIVE BAR, FOR
THE CALENDAR YEARS 1995 THROUGH1998. THE PERCENTAGES NOTED ARE:15.69%, 5.56%,
10.49% AND 9.95%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S INSTITUTIONAL SHARES TOTAL
RETURNS ON A CALENDAR YEAR-END BASIS.

THE FUND'S INSTITUTIONAL SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD).
THE TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE. THE FUND'S
INSTITUTIONAL SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1, 1999
TO SEPTEMBER 30, 1999 WAS (0.81%). WITHIN THE PERIOD SHOWN IN THE CHART, THE
FUND'S INSTITUTIONAL SHARES HIGHEST QUARTERLY RETURN WAS 5.24% (QUARTER ENDED
MARCH 31, 1995). ITS LOWEST QUARTERLY RETURN WAS (0.07%) (QUARTER ENDED MARCH
31, 1996). AVERAGE ANNUAL TOTAL RETURN TABLE The following table represents the
Fund's Institutional Shares Average Annual Total Returns for the calendar
periods ended December 31, 1998. The table shows the Fund's Institutional Shares
total returns averaged over a period of years relative to the Standard & Poor's
500 Index (S&P 500) and the Lehman Brothers Government/Corporate Bond Index
(LBGCBI), broad-based market indexes and the Lipper Balanced Funds Average
(LBFA), an average of funds with similar investment objectives. Total returns
for the indexes and average shown do not reflect sales charges, expenses or
other fees that the SEC requires to be reflected in the Fund's performance.
Indexes are unmanaged, and it is not possible to invest directly in an
index.

CALENDAR PERIOD INSTITUTIONAL SHARES S&P 500 LBGCBI LBFA
1 Year 9.95% 28.58% 9.47% 15.09%
Start of 9.17% 26.76% 8.98% 15.75%

Performance1

1 THE FUND'S INSTITUTIONAL SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

PAST PERFORMANCE DOES NOT NECESSARILY PREDICT FUTURE PERFORMANCE. THIS
INFORMATION PROVIDES YOU WITH HISTORICAL PERFORMANCE INFORMATION SO THAT YOU CAN
ANALYZE WHETHER THE FUND'S INVESTMENT RISKS ARE BALANCED BY ITS POTENTIAL
RETURNS.

<PAGE>

CONSERVATIVE GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF INSTITUTIONAL SHARES AS OF THE CALENDAR YEAR-END FOR
EACH OF FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 2.00% UP TO 20.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S INSTITUTIONAL SHARES TOTAL
RETURNS ON A CALENDAR YEAR-END BASIS.

THE FUND'S INSTITUTIONAL SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD).
THE TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE. THE FUND'S
INSTITUTIONAL SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1, 1999
TO SEPTEMBER 30, 1999 WAS (0.04%). WITHIN THE PERIOD SHOWN IN THE CHART, THE
FUND'S INSTITUTIONAL SHARES HIGHEST QUARTERLY RETURN WAS 7.16% (QUARTER ENDED
DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN WAS (2.14%) (QUARTER ENDED
SEPTEMBER 30, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table
represents the Fund's Institutional Shares Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's
Institutional Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.

CALENDAR PERIOD INSTITUTIONAL SHARES S&P 500 LBGCBI LBFA
1 Year 12.43% 28.58% 9.47% 15.09%
Start of 11.17% 26.76% 8.98% 15.75%

Performance1

1 THE FUND'S INSTITUTIONAL SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

PAST PERFORMANCE DOES NOT NECESSARILY PREDICT FUTURE PERFORMANCE. THIS
INFORMATION PROVIDES YOU WITH HISTORICAL PERFORMANCE INFORMATION SO THAT YOU
CAN ANALYZE WHETHER THE FUND'S INVESTMENT RISKS ARE BALANCED BY ITS POTENTIAL
RETURNS.

<PAGE>

MODERATE GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF INSTITUTIONAL SHARES AS OF THE CALENDAR YEAR-END FOR
EACH OF FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 5.00% UP TO 25.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S INSTITUTIONAL SHARES TOTAL
RETURNS ON A CALENDAR YEAR-END BASIS.

THE FUND'S INSTITUTIONAL SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE
(LOAD).THE TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE. THE
FUND'S INSTITUTIONAL SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY
1, 1999 TO SEPTEMBER 30, 1999 WAS 2.12%. WITHIN THE PERIOD SHOWN IN THE CHART,
THE FUND'S INSTITUTIONAL SHARES HIGHEST QUARTERLY RETURN WAS 12.01% (QUARTER
ENDED DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN WAS (7.13%) (QUARTER ENDED
SEPTEMBER 30, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table
represents the Fund's Institutional Shares Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's
Institutional Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.

CALENDAR PERIOD INSTITUTIONAL SHARES S&P 500 LBGCBI LBFA
1 Year 13.75% 28.58% 9.47% 15.09%
Start of 13.15% 26.76% 8.98% 15.75%

Performance1

1 THE FUND'S INSTITUTIONAL SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

<PAGE>

GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF INSTITUTIONAL SHARES AS OF THE CALENDAR YEAR-END FOR
EACH OF FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 5.00% UP TO 25.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S INSTITUTIONAL SHARES TOTAL
RETURNS ON A CALENDAR YEAR-END BASIS.

THE FUND'S INSTITUTIONAL SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD).
THE TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE. THE FUND'S
INSTITUTIONAL SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1, 1999
TO SEPTEMBER 30, 1999 WAS 2.95%. WITHIN THE PERIOD SHOWN IN THE CHART, THE
FUND'S INSTITUTIONAL SHARES HIGHEST QUARTERLY RETURN WAS 15.71% (QUARTER ENDED
DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN WAS (10.37%) (QUARTER ENDED
SEPTEMBER 30, 1998). AVERAGE ANNUAL TOTAL RETURN TABLE The following table
represents the Fund's Institutional Shares Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's
Institutional Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.

CALENDAR PERIOD INSTITUTIONAL SHARES S&P 500 LBGCBI LBFA
1 Year 15.77% 28.58% 9.47% 15.09%
Start of 14.11% 26.76% 8.98% 15.75%

Performance1

1 THE FUND'S INSTITUTIONAL SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED INCOME PORTFOLIO

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.

SHAREHOLDER FEES

FEES PAID DIRECTLY FROM YOUR INVESTMENT

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None

Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or redemption
proceeds, as applicable) None

Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price) None

Redemption Fee (as a percentage of amount redeemed, if applicable) None

Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Management Fee2 0.75%
Distribution (12b-1) Fee None
Shareholder Services Fee3 0.25%
Other Expenses 0.42%
Total Annual Fund Operating Expenses 1.42%

1 Although not contractually obligated to do so, the adviser and shareholder
services provider waived certain amounts. These are shown below along with
the net expenses the Fund ACTUALLY PAID for the fiscal year ended November
30,1999.

Total Waiver of Fund Expenses 0.62%
Total Actual Annual Fund Operating Expenses (after waivers) 0.80%

2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) for Institutional Shares was 0.33% for
the fiscal year ended November 30, 1999.

3 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.

<PAGE>

The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are BEFORE WAIVERS as shown in the table remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

1 Year $145
3 Years $449
5 Years $776
10 Years $1,702

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.

SHAREHOLDER FEES

FEES PAID DIRECTLY FROM YOUR INVESTMENT

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or redemption
proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 0.75%
Distribution (12b-1) Fee None
Shareholder Services Fee2 0.25%
Other Expenses 0.28%
Total Annual Fund Operating Expenses 1.28%

1 Although not contractually obligated to do so, the shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended November 30, 1999.

Total Waiver of Fund Expenses 0.20%
Total Actual Annual Fund Operating Expenses (after waivers) 1.08%
2 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are BEFORE WAIVERS as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

1 Year $130
3 Years $406
5 Years $702
10 Years $1,545

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED MODERATE GROWTH PORTFOLIO

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.

SHAREHOLDER FEES

FEES PAID DIRECTLY FROM YOUR INVESTMENT

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or redemption
proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None
Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

Total Waiver of Fund Expenses 0.20%
Total Actual Annual Fund Operating Expenses (after waivers) 1.07%

2 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are BEFORE WAIVERS as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

1 Year $129
3 Years $403
5 Years $697
10 Years $1,534

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED GROWTH PORTFOLIO

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.

SHAREHOLDER FEES

FEES PAID DIRECTLY FROM YOUR INVESTMENT

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None

Maximum Deferred Sales Charge (Load) (as a percentage of original purchase
price or redemption proceeds, as applicable) None

Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee2 0.75%
Distribution (12b-1) Fee None
Shareholder Services Fee3 0.25%
Other Expenses 0.45%
Total Annual Fund Operating Expenses 1.45%

Total Waiver of Fund Expenses 0.33%
Total Actual Annual Fund Operating Expenses (after waivers) 1.12%

2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate the voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) for Institutional Shares was 0.62%. for
the fiscal year ended November 30, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are BEFORE WAIVERS as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

1 Year $148
3 Years $459
5 Years $792
10 Years $1,735

WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?

Each Fund will primarily invest in two types of assets: equities and
fixed income, as follows:

O FMGP will invest 70%-90% of its assets in equity securities, and 10%-30% of
its assets in fixed income securities; O FMMGP will invest 50%-70% of its assets
in equity securities, and 30%-50% of its assets in fixed income securities; O
FMCGP will invest 30%-50% of its assets in equity securities, and 50%-70% of its
assets in fixed income securities; and O FMIP will invest 5%-25% of its assets
in equity securities, and 75%-95% of its assets in fixed income securities.

The Adviser manages the Funds based on the view that the investment of each
Fund's portfolio over the long term depends primarily on the fact that the
portfolio consists of securities from multiple asset categories ("Asset
Categories") which include, with respect to a Fund's equity portfolio, the
following: large company stocks, small company stocks and foreign stocks; and
with respect to a Fund's fixed income portfolio, the following: U.S. government
securities, mortgage-backed securities, investment-grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities. Of secondary importance to each Fund is the allocation of the
portfolio's assets among the Asset Categories in response to market conditions,
and the selection of securities within Asset Categories. Therefore, each Fund
pursues its investment objective in the following manner: O by setting long-term
ranges for each Fund's portfolio investments in each Asset Category; O by
allocating each Fund's portfolio assets among Asset Categories within those
defined ranges; and O by actively selecting securities within each of the Asset
Categories. The Adviser will regularly review each Fund's allocation among Asset
Categories. The Adviser will attempt to exploit price inefficiencies among the
various Asset Categories. For example, the Adviser may move an Asset Category to
its upper limit if the Adviser expects that category to offer superior returns
relative to other Asset Categories. Likewise, the Adviser may move the Asset
Category to its lower limit if the Adviser believes that category is overvalued
relative to the other Asset Categories. The selection of portfolio securities
involves an approach specific to each Asset Category. The approach for each
category is summarized as follows:

LARGE COMPANY STOCKS

With regard to the portion of each Fund's portfolio allocated to large company
stocks, each Fund pursues its investment objective by investing in common stock
of companies with large market capitalizations. Large market capitalization
companies are those which are the 1,000 companies with the largest market
capitalization. Market capitalization is determined by multiplying the number of
outstanding shares by the current market price per share. The Adviser invests in
companies that offer growth prospects or in companies whose stock is
undervalued. Using its own quantitative process, the Adviser rates the future
performance potential of companies, selecting the most promising companies for a
Fund's portfolio.

SMALL COMPANY STOCKS

With regard to the portion of each Fund's portfolio allocated to small
company stocks, each Fund pursues its investment objective by investing at least
65% of the allocation in equity securities of companies that fall within the
market capitalization range of the S&P 600 Small Cap Index (Index). As of
__________, this range was $_____ million to $____ billion. Market
capitalization is determined by multiplying the number of outstanding shares by
the current market price per share. The Adviser invests in companies that offer
growth prospects or in companies whose stock is undervalued. Using its own
quantitative process, the Adviser rates the future performance potential of
companies, selecting the most promising companies for the Fund's portfolio.

Companies with similar characteristics may be grouped together in broad
categories called sectors. In determining the amount to invest in a security,
the Adviser limits a Fund's exposure to each business sector that comprises the
Index. A Fund's allocation to a sector will not be less than 50% or more than
200% of the Index's allocation to that sector. Each Fund ordinarily will hold
between 100 and 350 companies in its portfolio.

The Funds will buy securities in initial public offerings. The Funds will
participate in such offerings without regard to the issuer's market
capitalization. The Adviser will select initial public offerings based solely on
its fundamental analysis of the issuer.

FOREIGN STOCKS

With regard to the portion of each Fund's portfolio allocated to foreign stocks,
each Fund pursues its investment objective by investing the allocation in equity
securities of companies based outside the United States. The Adviser manages the
Funds based on the view that international equity markets are inefficient at
pricing securities and that careful security selection offers the best potential
for superior long-term investment returns. Selection of industry and country are
secondary considerations.

Using its own quantitative process, the Adviser ranks the future performance
potential of companies. The Adviser evaluates each company's earnings potential
in light of its current valuation to narrow the list of attractive companies.
The Adviser then evaluates management quality and may meet with company
representatives, company suppliers, customers, or competitors. The Adviser also
reviews the company's financial statements and forecasts of earnings. Based on
this information, the Adviser evaluates the sustainability of the company's
current growth trends and potential catalysts for increased growth. Using this
type of fundamental analysis, the Adviser selects the most promising companies
for the Funds' portfolios.

U.S. GOVERNMENT SECURITIES

U.S. government securities consist of treasury securities and non-mortgage
backed agency securities. The Adviser invests the U.S. government securities
portion of the Funds' portfolios by setting an average duration target for the
fixed income portion of each Fund. In constructing a portfolio with a targeted
average duration, the Adviser generally uses ongoing relative value analysis to
compare current yield differences of securities to their historical and expected
yield differences.

MORTGAGE BACKED SECURITIES

Mortgage backed securities generally offer higher yields than comparable
non-mortgage backed government securities. The extra yield compensates for
prepayment risk. The Adviser attempts to manage prepayment risk by selecting
mortgage backed securities with characteristics that make prepayment risk less
likely. Characteristics that the Adviser may consider in selecting mortgage
backed securities include the interest rate formulas of the underlying
mortgages, the index upon which the mortgage rate is based, the length of time
the mortgages have been outstanding, and the prior prepayment history of the
mortgages.

The Funds may invest in mortgage-backed securities primarily by investing in
another mutual fund (which is not available for general investment by the
public) that owns those securities and that is advised by an affiliate of the
Adviser. This other mutual fund is managed independently of the Funds and may
incur administrative expenses. Therefore, any such investment by the Funds may
be subject to duplicate expenses. However, the Adviser believes that the
benefits and efficiencies of this approach should outweigh the potential
additional expenses. The Funds may also invest in such securities directly.

INVESTMENT GRADE CORPORATE DEBT

With regard to the allocation in domestic corporate fixed income securities, the
Adviser allocates investments among industries and adjusts the credit quality of
the portfolio by analyzing current economic and securities market conditions,
particularly changes in interest rates and expected trends in corporate
earnings. These factors also guide the selection of maturity and duration of
portfolio securities. Duration measures the price sensitivity of a fixed income
security to changes in interest rates. In selecting a portfolio security, the
Adviser analyzes the business, competitive position, and financial condition of
the issuer to assess whether the security's risk is commensurate with its
potential return.

NON-INVESTMENT GRADE CORPORATE DEBT

The Funds will invest in noninvestment grade securities primarily by investing
in another mutual fund (which is not available for general investment by the
public) advised by an affiliate of the Adviser. The other mutual fund is managed
independently of the Funds and may incur administrative expenses. Therefore, any
such investment by the Funds may be subject to duplicate expenses. However, the
Adviser believes that the benefits and efficiencies of this approach should
outweigh the potential additional expenses. The Funds may also invest directly
in noninvestment grade securities. Although the selection of noninvestment grade
domestic corporate securities involves the same factors as investment grade
securities, the Adviser gives greater emphasis to its analysis of the issuer.

FOREIGN FIXED INCOME SECURITIES

With regard to the allocation to foreign fixed income securities, each Fund
pursues its objective by investing primarily in fixed income securities of
foreign governments and their agencies which are members of the Organization for
Economic Cooperation and Development.

The Adviser manages the foreign fixed income allocation to maintain an average
AA rating of its portfolio securities. The Adviser uses the J.P. Morgan Global
Traded Index Excluding U.S. Index (Global Index) as a benchmark for managing the
foreign fixed income allocation. The Adviser looks for opportunities to enhance
each Fund's performance by diverging from the Global Index. Such opportunities
may cause the Adviser to weight the portfolio differently than the Global Index
or to buy securities not represented in the Index. Under ordinary market
conditions, however, the duration of the portfolio securities does not deviate
more than 25% from the duration of the Global Index. No more than 25% of the
foreign fixed income allocation will be invested in any one country. The Funds
also intend to invest at least 50% of the foreign fixed income allocation in
securities that have received ratings in the two highest rating categories or
unrated securities that the Adviser considers of comparable quality.

The Adviser weighs several factors in selecting investments for the foreign
fixed income portfolio. First, the Adviser analyzes a country's general economic
condition and outlook, including its interest rates, foreign exchange rates and
trade balance. The Adviser then analyzes the country's financial condition,
including its credit ratings, government budget, tax base, outstanding public
debt and the amount of public debt held outside the country. In connection with
this analysis, the Adviser also considers how developments in other countries in
the region or the world might affect these factors.

Using its analysis, the Adviser tries to identify countries with favorable
characteristics, such as a strengthening economy, favorable inflation rate,
sound budget policy or strong public commitment to repay government debt. The
Adviser then evaluates available foreign fixed income investments in these
countries based upon its outlook for interest and foreign exchange rates. The
Adviser tries to select securities that offer the best potential returns
consistent with its general portfolio strategy. HEDGING Hedging transactions
are intended to reduce specific risks. For example, to protect the Funds against
circumstances that would normally cause the Funds' portfolio securities to
decline in value, the Funds may buy or sell a derivative contract that would
normally increase in value under the same circumstances. The Funds may also
attempt to hedge by using combinations of different derivatives contracts, or
derivatives contracts and securities. The Funds' ability to hedge may be limited
by the costs of the derivatives contracts. The Funds may attempt to lower the
cost of hedging by entering into transactions that provide only limited
protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions will not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to the Funds.

PORTFOLIO TURNOVER

Each Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause a Fund to have an increased
portfolio turnover rate, which is likely to generate shorter-term gains (losses)
for its shareholders, which are taxed at a higher rate than longer-term gains
(losses). Actively trading portfolio securities increases a Fund's trading costs
and may have an adverse impact on a Fund's performance.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUNDS INVEST?

EQUITY SECURITIES

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the type of equity security in which the Funds principally
invest.

COMMON STOCKS

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock.

FIXED INCOME SECURITIES

The following describes the types of fixed income securities in which the Funds
principally invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest CREDIT risks.

AGENCY SECURITIES

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The
United States supports some GSEs with its full faith and credit. Other GSEs
receive support through federal subsidies, loans or other benefits. A few
GSEs have no explicit financial support, but are regarded as having implied
support because the federal government sponsors their activities. Agency
securities are generally regarded as having low CREDIT risks, but not as low
as treasury securities. The Funds treat mortgage backed securities
guaranteed by GSEs as agency securities. Although a GSE guarantee protects
against credit risks, it does not reduce the INTEREST RATE AND PREPAYMENT
RISKS of these mortgage backed securities.

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The CREDIT RISKS of corporate debt securities vary widely among
issuers. In addition, the credit risk of an issuer's debt security may vary
based on its priority for repayment.

MORTGAGE BACKED SECURITIES

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the PREPAYMENT RISKS of the underlying
mortgages.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different PREPAYMENT and INTEREST RATE RISKS for
each CMO class.

SEQUENTIAL CMOS

In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all principal
payments after the first class is paid off. This process repeats for
each sequential class of CMO. As a result, each class of sequential pay
CMOs reduces the prepayment risks of subsequent classes.

PACS, TACS AND COMPANION CLASSES

More sophisticated CMOs include planned amortization classes (PACs) and
targeted amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive principal
payments and prepayments in excess of the specified rate. In addition,
PACs will receive the companion classes' share of principal payments, if
necessary, to cover a shortfall in the prepayment rate. This helps PACs
and TACs to control prepayment risks by increasing the risks to their
companion classes.

IOS AND POS

CMOs may allocate interest payments to one class (Interest Only or IOs)
and principal payments to another class (Principal Only or POs). POs
increase in value when prepayment rates increase. POs tend to increase
in value when interest rates decline (and prepayments increase) making
POs a useful hedge against interest rate risk. In contrast, IOs decrease
in value when prepayments increase, because the underlying mortgages
generate less interest payments. However, IOs tend to increase in value
when interest rates rise (and prepayments decrease), making IOs a useful
hedge against INTEREST RATE RISKS.

FLOATERS AND INVERSE FLOATERS

Another variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based upon a
market index such as LIBOR. The other class (Inverse Floaters) receives
any remaining interest payments from the underlying mortgages. Floater
classes receive more interest (and Inverse Floater classes receive
correspondingly less interest) as interest rates rise. This shifts
PREPAYMENT and INTEREST RATE RISKS from the Floater to the Inverse
Floater class, reducing the price volatility of the Floater class and
increasing the price volatility of the Inverse Floater class.

Z CLASSES

CMOs must allocate all payments received from the underlying mortgages
to some class. To capture any unallocated payments, CMOs generally have
an accrual (Z) class. Z classes do not receive any payments from the
underlying mortgages until all other CMO classes have been paid off.
Once this happens, holders of Z class CMOs receive all payments and
prepayments.

DELAYED DELIVERY TRANSACTIONS

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create INTEREST
RATE RISKS for the Fund. Delayed delivery transactions also involve CREDIT RISKS
in the event of a counterparty default. These transactions create LEVERAGE
RISKS.

TO BE ANNOUNCED SECURITIES (TBAS)

As with other delayed delivery transactions, a seller agrees to issue a
TBA security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Fund and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages. The
seller would not identify the specific underlying mortgages until it
issues the security. TBA mortgage backed securities increase INTEREST
RATE RISKS because the underlying mortgages may be less favorable than
anticipated by the Fund.

DOLLAR ROLLS

Dollar rolls are transactions where the Funds sell mortgage-backed
securities with a commitment to buy similar, but not identical,
mortgage-backed securities on a future date at a lower price. Normally,
one or both securities involved are TBA mortgage backed securities.
Dollar rolls are subject to INTEREST RATE RISKS AND CREDIT RISKS.

FOREIGN SECURITIES

Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:

o it is organized under the laws of, or has a principal office located in,
another country;

o the principal trading market for its securities is in another country; or

o it (or its subsidiaries) derived in its most current fiscal year at least
50% of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along
with the risks normally associated with domestic securities of the same type,
foreign securities are subject to CURRENCY RISKS AND RISKS OF FOREIGN INVESTING.
Trading in certain foreign markets is also subject to LIQUIDITY RISKS.

DERIVATIVE CONTRACTS

Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.

For example, the Funds could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Funds realize a gain; if it is less, the Funds realize a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Funds from closing out a position. If this happens, the
Funds will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Funds by preventing it from disposing
of or trading any assets it has been using to secure its obligations under the
contract.

The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Funds and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Funds use derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Funds' exposure to INTEREST
RATE AND CURRENCY RISKS, and may also expose the Funds to LIQUIDITY AND LEVERAGE
RISKS. OTC contracts also expose the Funds to CREDIT RISKS in the event that a
counterparty defaults on the contract.

The Funds may trade in the following types of derivative contracts.

FUTURES CONTRACTS

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts. Futures
contracts traded OTC are frequently referred to as forward contracts.

The Funds may buy or sell forward foreign currency exchange contracts, interest
rate futures contracts and stock index futures to accommodate cash flows and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Funds must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment
grade.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUNDS?

STOCK MARKET RISKS

The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline.

The Adviser attempts to manage market risk by limiting the amount each Fund
invests in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.

INTEREST RATE RISKS

Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.

Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

CREDIT RISKS

Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Funds
will lose money.

Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Funds must rely entirely upon the Adviser's credit assessment.

Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.

Credit risk includes the possibility that a party to a transaction involving
the Funds will fail to meet its obligations. This could cause the Funds to lose
the benefit of the transaction or prevent the Funds from selling or buying other
securities to implement their investment strategies.

CURRENCY RISKS

Exchange rates for currencies fluctuate daily. The combination of currency risk
and market risks tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the United States.

The Adviser attempts to manage currency risk by limiting the amount the Funds
invest in securities denominated in a particular currency. However,
diversification will not protect the Funds against a general increase in the
value of the U.S. dollar relative to other currencies.

CALL AND PREPAYMENT RISKS

Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price.

If a fixed income security is called, the Funds may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.

Unlike traditional fixed income securities, which pay a fixed rate of interest
until maturity (when the entire principal amount is due) payments on mortgage
backed securities include both interest and a partial payment of principal.
Partial payment of principal may be comprised of scheduled principal payments as
well as unscheduled payments from the voluntary prepayment, refinancing, or
foreclosure of the underlying loans. These unscheduled prepayments of principal
create risks that can adversely affect a Fund holding mortgage backed
securities.

For example, when interest rates decline, the values of mortgage backed
securities generally rise. However, when interest rates decline, unscheduled
prepayments can be expected to accelerate, and the Funds would be required to
reinvest the proceeds of the prepayments at the lower interest rates then
available. Unscheduled prepayments would also limit the potential for capital
appreciation on mortgage backed securities.

Conversely, when interest rates rise, the values of mortgage backed securities
generally fall. Since rising interest rates typically result in decreased
prepayments, this could lengthen the average lives of mortgage backed
securities, and cause their value to decline more than traditional fixed income
securities.

SECTOR RISKS

Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain sector
may underperform other sectors or as the market as a whole. As the Adviser
allocates more of a Fund's portfolio holdings to a particular sector, a Fund's
performance will be more susceptible to any economic, business or other
developments which generally affect that sector.

LIQUIDITY RISKS

Trading opportunities are more limited for securities that are not widely
held. This may make it more difficult to sell or buy a security at a favorable
price or time. Consequently, the Funds may have to accept a lower price to sell
a security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Funds'
performance. Infrequent trading of securities may also lead to an increase in
their price volatility.

Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, a Fund will be required to continue to hold the security or keep the
position open, and a Fund could incur losses.

RISKS RELATED TO COMPANY SIZE

Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.

Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to capital.
These factors also increase risks and make these companies more likely to fail
than companies with larger market capitalizations.

RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES

Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns and
financial setbacks may affect their prices more negatively, and their trading
market may be more limited.

RISKS OF FOREIGN INVESTING

Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.

Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Funds and their Adviser from obtaining information concerning
foreign companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.

Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's
investments.

WHAT DO SHARES COST?

You can purchase or redeem Shares any day the New York Stock Exchange (NYSE)
is open. When a Fund receives your transaction request in proper form (as
described in the prospectus), it is processed at the next calculated net asset
value (NAV). If a Fund purchases foreign securities that trade in foreign
markets on days the NYSE is closed, the value of a Fund's assets may change on
days you cannot purchase or redeem Shares. The Funds do not charge a front-end
sales charge. NAV is determined at the end of regular trading (normally 4:00
p.m. Eastern time) each day the NYSE is open. The Funds generally value equity
securities according to the last sale price in the market in which they are
primarily traded (either a national securities exchange or the over-the-counter
market). The Funds generally value fixed income securities at the last sale
price on a national securities exchange, if available, otherwise, as determined
by an independent pricing service.

The required minimum initial investment for each Fund is $25,000. There is no
required minimum subsequent investment amount.

An account may be opened with a smaller amount as long as the minimum is
reached within 90 days. An institutional investor's minimum investment is
calculated by combining all accounts it maintains with a Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.

HOW ARE THE FUNDS SOLD?

The Funds offer two share classes: Institutional Shares and Select Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Institutional Shares. Each share class has different expenses
which affect their performance. Contact your investment professional or call
1-800-341-7400 for more information concerning the other class.

The Funds' Distributor, Federated Securities Corp., markets the Shares
described in this prospectus to individuals and financial institutions.

The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated).

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

o Submit your purchase order to the investment professional before the end
of regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to a Fund on the same day and a Fund receives payment within one
business day. You will become the owner of Shares and receive dividends when
a Fund receives your payment.

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUNDS

o Establish your account with a Fund by submitting a completed New Account Form;
and o Send your payment to a Fund by Federal Reserve wire or check.

You will become the owner of Shares and your Shares will be priced at the next
calculated NAV after a Fund receives your wire or your check. If your check does
not clear, your purchase will be canceled and you could be liable for any losses
or fees incurred by a Fund or Federated Shareholder Services Company, the Funds'
transfer agent.

An institution may establish an account and place an order by calling a Fund and
the Shares will be priced at the next calculated NAV after a Fund receives the
order.

<PAGE>

BY WIRE Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds
will not accept third-party checks (checks originally payable to someone other
than you or The
Federated Funds).

BY SYSTEMATIC INVESTMENT PROGRAM

Once you have opened an account, you may automatically purchase additional
Shares on a regular basis by completing the Systematic Investment Program (SIP)
section of the New Account Form or by contacting the Funds or your investment
professional. The minimum investment amount for SIPs is $50.

BY AUTOMATED CLEARINGHOUSE (ACH)

Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

<PAGE>

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or o directly from the Funds if you purchased Shares
directly from the Funds.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after a Fund
receives the order from your investment professional.

DIRECTLY FROM THE FUNDS

BY TELEPHONE

You may redeem Shares by calling the Funds at 1-800-341-7400 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.

BY MAIL

You may redeem Shares by mailing a written request to a Fund. You will
receive a redemption amount based on the next calculated NAV after a Fund
receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317 All requests must include:

o Fund Name and Share Class, account number and account registration; o amount
to be redeemed; and o signatures of all shareholders exactly as
registered. Call your investment professional or the Funds if you need
special instructions.

<PAGE>

SIGNATURE GUARANTEES Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days; or o a redemption is payable to someone other than
the shareholder(s) of record.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:

o an electronic transfer to your account at a financial institution that is an
ACH member; or o wire payment to your account at a domestic commercial bank that
is a Federal Reserve System member.

REDEMPTION IN KIND

Although each Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to a Fund.

SYSTEMATIC WITHDRAWAL PROGRAM

You may automatically redeem Shares in a minimum amount of $100 on a regular
basis. Complete the appropriate section of the New Account Form or an Account
Service Options Form or contact your investment professional or the Funds. Your
account value must meet the minimum initial investment amount at the time the
program is established. This program may reduce, and eventually deplete, your
account. Payments should not be considered yield or income.

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

The Funds no longer issue share certificates. If you are redeeming Shares
represented by certificates previously issued by the Funds, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases and redemptions (except for
systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.

DIVIDENDS AND CAPITAL GAINS

Each Fund (except the Income Fund) declares and pays any dividends quarterly
to shareholders. The Income Fund declares and pays any dividends monthly to
shareholders. Dividends are paid to all shareholders invested in a Fund on the
record date. The record date is the date on which a shareholder must officially
own Shares in order to earn a dividend.

In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares unless you elect cash payments.

If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before a Fund declares a dividend or
capital gain. Contact your investment professional or the Funds for information
concerning when dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.

TAX INFORMATION

The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Funds. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.

Fund distributions are expected to be both dividends and capital gains.
Redemptions are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.

WHO MANAGES THE FUNDS?

The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Funds'
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

The Adviser has delegated daily management of some of a Fund's assets to the
Sub-Adviser, Federated Global Investment Management Corp., who is paid by the
Adviser and not by the Funds based on the portion of foreign securities the
Sub-Adviser manages. The Sub-Adviser's address is 175 Water Street, New York, NY
10038-4965.

<PAGE>

PORTFOLIO MANAGERS

The portfolio managers for the Funds' individual asset categories are as
follows:

<TABLE>
<CAPTION>
<S> <C> <C>
NAME (PORTFOLIO ASSET CATEGORY
MANAGER SINCE) MANAGED BIOGRAPHY

JOHN W. HARRIS Overall John W. Harris is a portfolio manager for the
(December 1998) Allocation and Funds and performs the overall asset allocation

Domestic Large of the Funds' assets among the various asset
Company Stocks categories. In addition, Mr. Harris is a

manager of the U.S. large company stocks asset
category. He has performed these duties since
December 1998. In allocating the Funds' assets,
Mr.Harris evaluates the market environment and
economic outlook, utilizing the services of the
Adviser's Investment Strategy Committee.
Mr.Harris has been a Portfolio Manager and an
Assistant Vice President of the Funds' Adviser
since 1998. Mr. Harris initially joined
Federated in 1987 as an Investment Analyst. He
served as an Investment Analyst and an
Assistant Vice President from 1990 through 1992
and as a Senior Investment Analyst and a Vice
President through May 1993. After leaving the
money management field to travel extensively,
he rejoined Federated in 1997 as a Senior
Investment Analyst. Mr. Harris is a Chartered
Financial Analyst. He received his M.B.A. from
the University of Pittsburgh.

- ------------------------------------------------------------------------------------------
MICHAEL P. DONNELLY Domestic Large Mr. Donnelly joined Federated in 1989 as an
(June 1997) Company Stocks Investment Analyst. He served as a Portfolio
Manager from 1994 to 1998 and became a Senior
Portfolio Manager in 1998. He was a Vice
President of the Funds' Adviser from 1994 to
1999. In 1999, Mr. Donnelly became a Senior
Vice President of the Funds' Adviser.. Mr.
Donnelly is a Chartered Financial Analyst and
received his M.B.A. from the University of
Virginia.

- ------------------------------------------------------------------------------------------
JAMES E. Domestic Large Mr. Grefenstette joined Federated in 1992 and
GREFENSTETTE Company Stocks has been a Portfolio Manager and a Vice
(August 1994) President of the Funds' Adviser since 1996.

From 1994 until 1996, Mr. Grefenstette was a
Portfolio Manager and an Assistant Vice
President of the Funds' Adviser. Mr.
Grefenstette is a Chartered Financial Analyst;
he received his M.S. in Industrial
Administration from Carnegie Mellon University.

- ------------------------------------------------------------------------------------------
SUSAN M. NASON U.S. Treasury Ms. Nason joined Federated in 1987 and has been
(Inception) Securities a Senior Portfolio Manager and Senior Vice

President of the Funds' Adviser since 1997.
Ms.Nason served as a Portfolio Manager and Vice
President of the Funds' Adviser from 1993 to
1997. Ms. Nason is a Chartered Financial
Analyst and received her M.S.I.A. concentrating
in Finance from Carnegie Mellon University.

- ------------------------------------------------------------------------------------------
JOSEPH M. U.S. Treasury Mr. Balestrino joined Federated in 1986 and has
BALESTRINO Securities and been a Senior Portfolio Manager and Senior Vice
(March 1995) Investment-Grade President of the Funds' Adviser since 1998. He

Corporate Bonds was a Portfolio Manager and a Vice President of
the Funds' Adviser from 1995 to 1998.
Mr.Balestrino served as a Portfolio Manager and
an Assistant Vice President of the Funds'
Adviser from 1993 until 1995. Mr.Balestrino is
a Chartered Financial Analyst and received his
Master's Degree in Urban and Regional Planning
from the University of Pittsburgh.
- ------------------------------------------------------------------------------------------

<PAGE>

KATHLEEN M. Mortgage-Backed Ms. Foody-Malus joined Federated in 1983 and
FOODY-MALUS Securities has been a Senior Portfolio Manager since 1996
(Inception) and a Vice President of the Funds' Adviser

since 1993. She was a Portfolio Manager and a
Vice President of the Funds' Adviser from 1993
to 1996. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of

Pittsburgh.

- ------------------------------------------------------------------------------------------
ROBERT E. CAULEY Mortgage-Backed Mr. Cauley joined Federated in 1996 as a Senior
(July 1997) Securities Investment Analyst and an Assistant Vice

President of the Funds' Adviser and has been a

Portfolio Manager since 1997. Mr. Cauley has

been a Vice President of the Adviser since

1999. Mr. Cauley was a member of the
Asset-Backed Structuring Group at Lehman
Brothers Holding, Inc. from 1994 to 1996.
Mr.Cauley earned his M.S.I.A., concentrating in
Finance and Economics, from Carnegie Mellon

University.

- ------------------------------------------------------------------------------------------
JOHN T. GENTRY Investment Grade Mr. Gentry joined Federated in 1995 as an
(July 1997) Corporate Bonds Investment Analyst and has been a Senior

Investment Analyst and an Assistant Vice
President of the Funds' Adviser since 1997. Mr.
Gentry served as a Senior Treasury Analyst at
Sun Company, Inc. from 1991 to 1995. Mr. Gentry
is a Chartered Financial Analyst and earned his
M.B.A., with concentrations in Finance and
Accounting, from Cornell University.

- ------------------------------------------------------------------------------------------
MARK. E DURBIANO High Yield Mr. Durbiano joined Federated in 1982 and has
(Inception) Corporate Bonds been a Senior Portfolio Manager and a Senior

Vice President of the Funds' Adviser since
1996. From 1988 through 1995, Mr. Durbiano was
a Portfolio Manager and a Vice President of the
Funds' Adviser. Mr. Durbiano is a Chartered
Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.

- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
ROBERT M. KOWIT Foreign Bonds Mr. Kowit joined Federated in 1995 as a Senior
(November 1995) Portfolio Manager and a Vice President of the

Funds' Sub-Adviser. Mr. Kowit served as a
Managing Partner of Copernicus Global Asset
Management from January 1995 through October
1995. From 1990 to 1994, he served as Senior
Vice President/Portfolio Manager of
International Fixed Income and Foreign Exchange
for John Hancock Advisers. Mr. Kowit received
his M.B.A. from Iona College with a
concentration in finance.

- ------------------------------------------------------------------------------------------
MICHEAL W. CASEY, Foreign Bonds Mr. Casey joined Federated in 1996 as a Senior
PH. D. Investment Analyst and an Assistant Vice
(January 1997) President. Mr. Casey currently serves as a

Senior Portfolio Manager and has been a Vice
President of the Sub-Adviser since 1998. Mr.
Casey served as an International Economist and
Portfolio Strategist for Maria Fiorini Ramirez
Inc. from 1990 to 1996. Mr. Casey earned a
Ph.D. concentrating in economics from The New
School for Social Research and a M.Sc. from the
London School of Economics.

- ------------------------------------------------------------------------------------------

<PAGE>

LINDA A. DUESSEL Utility Stocks Ms.Duessel joined Federated in 1991 and has
(February 1997) been a Portfolio Manager and a Vice President

of the Funds' Adviser since 1995. Ms.Duessel
was a Senior Investment Analyst and an
Assistant Vice President of the Funds' Adviser
from 1991 until 1995. Ms. Duessel is a
Chartered Financial Analyst and received her
M.S. in Industrial Administration from Carnegie

Mellon University.

- ------------------------------------------------------------------------------------------
STEVEN J. LEHMAN Utility Stocks Mr. Lehman joined the Funds' Adviser in May
(December 1995) 1997 as a Portfolio Manager and a Vice

President. He has been a Senior Portfolio
Manager since 1998. From 1986 to1997, Mr.
Lehman served as a Portfolio Manager, then Vice
President/Senior Portfolio Manager, at First
Chicago NBD. Mr. Lehman is a Chartered
Financial Analyst; he received his M.A. from
the University of Chicago.

- ------------------------------------------------------------------------------------------
AASH M. SHAH Domestic Small Mr. Shah joined Federated in 1993 and has been
(June 1997) Company Stocks a Portfolio Manager and a Vice President of the

Funds' Adviser since January 1997. Mr. Shah was

a Portfolio Manager and served as an Assistant

Vice President of the Adviser from 1995 to
1996, and as an Investment Analyst from 1993 to
1995. Mr. Shah received his Masters in
Industrial Administration from Carnegie Mellon
University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial

Analyst.

- ------------------------------------------------------------------------------------------
KEITH J. SABOL Domestic Small Mr. Sabol joined Federated in 1994 and has been
(June 1997) Company Stocks a Portfolio Manager since 1996 and a Vice

President of the Funds' Adviser since 1998. Mr.
Sabol was an Investment Analyst, and then
Equity Research Coordinator for the Funds'
Adviser from 1994 to 1996. Mr. Sabol is a
Chartered Financial Analyst; he earned his M.S.
in Industrial Administration from Carnegie

Mellon University.

- ------------------------------------------------------------------------------------------
ALEXANDRE DE Foreign Stocks Mr. de Bethmann joined Federated in 1995 as a
BETHMANN Senior Portfolio Manager and a Vice President
(November 1995) of the Funds' Sub-Adviser. Mr. de Bethmann

served as Assistant Vice President/Portfolio

Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to
1995. Mr. de Bethmann received his M.B.A. in
Finance from Duke University.

- ------------------------------------------------------------------------------------------
FRANK SEMACK Foreign Stocks Mr. Semack joined Federated in 1995 as a Senior
(November 1995) Portfolio Manager and a Vice President of the

Funds' Sub-Adviser. Mr. Semack served as an
Investment Analyst at Omega Advisers, Inc. from
1993 to 1994. Mr. Semack received his M.Sc. in
economics from the London School of Economics.

- ------------------------------------------------------------------------------------------
</TABLE>

The Adviser, Sub-Adviser and other subsidiaries of Federated advise
approximately 175 mutual funds and separate accounts, which totaled
approximately $111 billion in assets as of December 31, 1998. Federated was
established in 1955 and is one of the largest mutual fund investment managers in
the United States with approximately 1,900 employees. More than 4,000 investment
professionals make Federated Funds available to their customers.

ADVISORY FEES

The Adviser receives an annual investment advisory fee of 0.75% of each Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse a Fund for certain operating expenses.

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures
because certain computer systems may be unable to interpret dates after December
31, 1999 or experience other date-related problems. The Year 2000 problem may
cause systems to process information incorrectly and could disrupt businesses,
such as the Funds, that rely on computers.

While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Funds' service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Funds' investments.
To assess the potential effect of the Year 2000 problem, the Adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
the Funds may purchase. However, this may be difficult with certain issuers. For
example, funds dealing with foreign service providers or investing in foreign
securities will have difficulty determining the Year 2000 readiness of those
entities. The financial impact of these issues for the Funds is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Funds.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand each Fund's financial
performance for its past five fiscal years, or since inception, if the life of a
Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.

This information has been audited by Arthur Andersen LLP, whose report, along
with the Funds' audited financial statements, is included in the Annual Reports.

<PAGE>

FEDERATED MANAGED ALLOCATION PORTFOLIOS

Federated Managed Income Portfolio
Federated Managed Conservative Growth Portfolio
Federated Managed Moderate Growth Portfolio
Federated Managed Growth Portfolio

INSTITUTIONAL SHARES

JANUARY 31, 2000

You can obtain information about the Funds (including the SAI) by writing to or
visiting the Public Reference Room in Washington, D.C. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected]. or by writing to the SEC's Public
Reference Section, Washington D.C. 20549-0102. Call 1-202-942-8090 for
information on the Public Reference Room's operations and copying fees.

<PAGE>

INVESTMENT COMPANY ACT FILE NO. 811-7129
CUSIP 000000000

CUSIP 000000000
CUSIP 000000000
CUSIP 000000000

G00873-03-IS (1/00)

FEDERATED MANAGED ALLOCATION PORTFOLIOS

(FORMERLY, MANAGED SERIES TRUST)

Federated Managed Income Portfolio(Formerly, Federated Managed Income Fund)

Federated Managed Conservative Growth Portfolio(Formerly, Federated Managed
Growth and Income Fund)

Federated Managed Moderate Growth Portfolio(Formerly, Federated Managed
Growth Fund)

Federated Managed Growth Portfolio(Formerly, Federated Managed Aggressive
Growth Fund)

SELECT SHARES

<PAGE>

CONTENTS
[To be filed by amendment.]

JANUARY 31, 2000

<PAGE>

RISK/RETURN SUMMARY

WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?

FUND OBJECTIVE

Federated Managed To seek total
Income Portfolio return with an
("FMIP") emphasis on income

and potential for

capital
appreciation

Federated Managed To seek total
Conservative Growth return with an
Portfolio("FMCGP") emphasis on income

and capital

appreciation

Federated Managed To seek capital
Moderate Growth appreciation with
Portfolio("FMMGP") income as a

secondary objective

Federated Managed To seek capital
Growth appreciation

Portfolio("FMGP")

While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the investment strategies and policies
described in this prospectus.

WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?

The Funds invest in diversified portfolios which are allocated among several
categories of equity and fixed income securities. The Adviser manages the Funds
based on the view that the investment performance of each Fund's portfolio over
the long term depends primarily on the fact that the portfolio consists of
securities from multiple categories. Of secondary importance to each Fund's
performance is allocation of the portfolio among asset categories in response to
market conditions and the selection of securities within asset categories.
Therefore, each Fund pursues its investment objective in the following
manner: o .......by setting long-term ranges for each Fund's portfolio
investments in each asset category; o by allocating each Fund's portfolio among
asset categories within those defined ranges; and o by actively selecting
securities within each of the asset categories. The Funds will each allocate
their portfolios within the following ranges of equity and fixed income
securities: FMIP, 5%-25% equity and 75%-95% fixed income; FMGP, 30%-50% equity
and 50%-70% fixed income; FMMGP, 50%-70% equity and 30%-50% fixed income; and
FMGP, 70%-90% equity and 10%-30% fixed income. The Funds will further allocate
portfolios among the following asset categories, in such proportions as the
Adviser from time-to-time determines, consistent with the long-term ranges set
by it: a Fund's equity portfolio will be allocated among large company stocks,
small company stocks and foreign stocks; and a Fund's fixed income portfolio
will be allocated among U.S. government securities, mortgage-backed securities,
investment grade corporate debt, non-investment grade corporate debt ("junk
bonds") and foreign fixed income securities.

<PAGE>

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?

All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Funds. The primary factors that may reduce the Funds'
returns include:

O STOCK MARKET RISKS. The value of equity securities in a Fund's
portfolio will fluctuate and, as a result, a Fund's share price may decline
suddenly or over a sustained period.

OINTEREST RATE RISKS. Prices of fixed income securities generally fall when
interest rates rise.

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 or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other government agency.

<PAGE>

RISK RETURN BAR CHARTS AND TABLES

INCOME PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF SELECT SHARES AS OF THE CALENDAR YEAR-END FOR EACH OF
FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 2.00% UP TO 16.00%.

THE `X' AXIS REPRESENTS CALCULATION PERIODS FROM THE EARLIEST FIRST FULL
CALENDAR YEAR-END OF THE SELECT SHARES START OF BUSINESS THROUGH THE CALENDAR
YEAR ENDED DECEMBER 31, 1998. THE LIGHT GRAY SHADED CHART FEATURES FOUR DISTINCT
VERTICAL BARS, EACH SHADED IN CHARCOAL, AND EACH VISUALLY REPRESENTING BY HEIGHT
THE TOTAL RETURN PERCENTAGES FOR THE CALENDAR YEAR STATED DIRECTLY AT ITS BASE.
THE CALCULATED TOTAL RETURN PERCENTAGE FOR THE SELECT SHARES FOR EACH CALENDAR
YEAR IS STATED DIRECTLY AT THE TOP OF EACH RESPECTIVE BAR, FOR THE CALENDAR
YEARS 1995 THROUGH1998. THE PERCENTAGES NOTED ARE:14.83%, 4.72%, 9.84% AND
9.27%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S SELECT SHARES TOTAL RETURNS
ON A CALENDAR YEAR-END BASIS.

THE FUND'S SELECT SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE
TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

THE FUND'S SELECT SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1,
1999 TO SEPTEMBER 30, 1999 WAS (1.41%).

WITHIN THE PERIOD SHOWN IN THE CHART, THE FUND'S SELECT SHARES HIGHEST QUARTERLY
RETURN WAS 5.04% (QUARTER ENDED MARCH 31, 1995). ITS LOWEST QUARTERLY RETURN WAS
(0.10%) (QUARTER ENDED MARCHR 31, 1996).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. CALENDAR PERIOD SELECT SHARES S&P
500 LBGCBI LBFA 1 Year 9.27% 28.58% 9.47% 15.09% Start of 8.41% 26.76% 8.98%
15.75% Performance1

1 THE FUND'S SELECT SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

<PAGE>

CONSERVATIVE GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF SELECT SHARES AS OF THE CALENDAR YEAR-END FOR EACH OF
FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 2.00% UP TO 20.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S SELECT SHARES TOTAL RETURNS
ON A CALENDAR YEAR-ENDBASIS.

THE FUND'S SELECT SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE
TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

THE FUND'S SELECT SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1,
1999 TO SEPTEMBER 30, 1999 WAS (0.57%).

WITHIN THE PERIOD SHOWN IN THE CHART, THE FUND'S SELECT SHARES HIGHEST QUARTERLY
RETURN WAS 6.89% (QUARTER ENDED DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN
WAS (2.33%) (QUARTER ENDED SEPTEMBER 30, 1998).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. CALENDAR PERIOD SELECT SHARES S&P
500 LBGCBI LBFA 1 Year 11.56% 28.58% 9.47% 15.09% Start of 10.42% 26.76% 8.98%
15.75% Performance1

1 THE FUND'S SELECT SHARES START OF PERFORMANCE DATE WAS MAY 25, 1994.

<PAGE>

MODERATE GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF SELECT SHARES AS OF THE CALENDAR YEAR-END FOR EACH OF
FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 5.00% UP TO 25.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S SELECT SHARES TOTAL RETURNS
ON A CALENDAR YEAR-END BASIS.

THE FUND'S SELECT SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE
TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

THE FUND'S SELECT SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM
JANUARY 1, 1999 TO SEPTEMBER 30, 1999 WAS 1.50%.

WITHIN THE PERIOD SHOWN IN THE CHART, THE FUND'S SELECT SHARES HIGHEST QUARTERLY
RETURN WAS11.85% (QUARTER ENDED DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN
WAS (7.24%) (QUARTER ENDED SEPTEMBER 30, 1998).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. CALENDAR PERIOD SELECT SHARES S&P
500 LBGCBI LBFA 1 Year 12.99% 28.58% 9.47% 15.09% Start of 12.38% 26.76% 8.98%
15.75% Performance1

1 The Fund's Select Shares start of performance date was May 25, 1994.

<PAGE>

GROWTH PORTFOLIO

THE GRAPHIC PRESENTATION DISPLAYED HERE CONSISTS OF A BAR CHART REPRESENTING THE
ANNUAL TOTAL RETURNS OF SELECT SHARES AS OF THE CALENDAR YEAR-END FOR EACH OF
FOUR YEARS.

THE `Y' AXIS REFLECTS THE "% TOTAL RETURN" BEGINNING WITH "0.00%" AND INCREASING
IN INCREMENTS OF 5.00% UP TO 25.00%.

THE BAR CHART SHOWS THE VARIABILITY OF THE FUND'S SELECT SHARES TOTAL RETURNS
ON A CALENDAR YEAR-END BASIS.

THE FUND'S SELECT SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE
TOTAL RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

THE FUND'S SELECT SHARES TOTAL RETURN FOR THE NINE MONTH PERIOD FROM JANUARY 1,
1999 TO SEPTEMBER 30, 1999 WAS 2.41%.

WITHIN THE PERIOD SHOWN IN THE CHART, THE FUND'S SELECT SHARES HIGHEST QUARTERLY
RETURN WAS 15.52% (QUARTER ENDED DECEMBER 31, 1998). ITS LOWEST QUARTERLY RETURN
WAS (10.53%) (QUARTER ENDED SEPTEMBER 30, 1998).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500) and the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. CALENDAR PERIOD SELECT SHARES S&P
500 LBGCBI LBFA 1 Year 15.06% 28.58% 9.47% 15.09% Start of 13.37% 26.76% 8.98%
15.75% Performance1

1 The Fund's Select Shares start of performance date was May 25, 1994.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED INCOME PORTFOLIO

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Select Shares of the Fund. SHAREHOLDER FEES FEES PAID DIRECTLY FROM YOUR
INVESTMENT Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering None price) Maximum Deferred Sales Charge (Load) (as a percentage of
original purchase price None or redemption proceeds, as applicable) Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (and other None
Distributions) (as a percentage of offering price) Redemption Fee (as a
percentage of amount redeemed, if applicable) None Exchange Fee None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fee2 0.75%
Distribution (12b-1) Fee3 0.75%
Shareholder Services Fee 0.25%
Other Expenses 0.42%
Total Annual Fund Operating Expenses 2.17%
1 Although not contractually obligated to do so, the adviser and distributor
waived certain amounts. These amounts are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended November 30,1999.

Total Waiver of Fund Expenses 0.67%
Total Actual Annual Fund Operating Expenses (after waivers) 1.50%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this waiver at any time. The management fee paid by the Fund
(after the voluntary waiver) for Select Shares was 0.33% for the fiscal year
ended November 30, 1999. 3 The distributor voluntarily waived a portion of the
distribution (12b-1) fee. The distributor can terminate this voluntary waiver at
any time. The distribution (12b-1) fee paid by the Fund (after the voluntary
waiver) for Select Shares was 0.50% for the fiscal year ended November 30, 1999.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Select Shares with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund's Select Shares for the time periods
indicated and then redeem all of your Select Shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's Select Shares operating expenses are BEFORE WAIVERS as shown in the
table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

1 Year $220
3 Years $679
5 Years $1,164
10 Years $2,503

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fee 0.75%
Distribution (12b-1) Fee2 0.75%
Shareholder Services Fee 0.25%
Other Expenses 0.28%
Total Annual Fund Operating Expenses 2.03%
1 Although not contractually obligated to do so, the distributor waived
certain amounts. These amounts are shown below along with the net expenses the
Fund ACTUALLY PAID for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.25%
Total Actual Annual Fund Operating Expenses (after waivers) 1.78%
2 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1)fee paid by the Fund (after the voluntary waiver) for Select
Shares was 0.50% for the year ended November 30, 1999.

EXAMPLE

1 Year $206
3 Years $637
5 Years $1,093
10 Years $2,358

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED MODERATE GROWTH PORTFOLIO

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fee 0.75%
Distribution (12b-1) Fee2 0.75%
Shareholder Services Fee 0.25%
Other Expenses 0.27%
Total Annual Fund Operating Expenses 2.02%
1 Although not contractually obligated to do so, the distributor waived
certain amounts. These amounts are shown below along with the net expenses the
Fund ACTUALLY PAID for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.25%
Total Actual Annual Fund Operating Expenses (after waivers) 1.77%
2 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1) fee paid by the Fund (after the voluntary waiver) for
Select Shares was 0.50% for the fiscal year ended November 30, 1999.

EXAMPLE

1 Year $205
3 Years $634
5 Years $1,088
10 Years $2,348

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEDERATED MANAGED GROWTH PORTFOLIO

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (Before Waivers)1

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee2 0.75%
Distribution (12b-1) Fee3 0.75%
Shareholder Services Fee 0.25%
Other Expenses 0.45%
Total Annual Fund Operating Expenses 2.20%
1 Although not contractually obligated to do so, the adviser and distributor
waived certain amounts. These are shown below along with the net expenses the
Fund ACTUALLY PAID for the fiscal year ended November 30, 1999.

Total Waiver of Fund Expenses 0.38%
Total Actual Annual Fund Operating Expenses (after waivers) 1.82%

2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this waiver at any time. The management fee paid by the Fund
(after the voluntary waiver) for Select Shares was 0.62% for the fiscal year
ended November 30, 1999. 3 The distributor voluntarily waived a portion of the
distribution (12b-1) fee. The distributor can terminate this voluntary waiver at
any time. The distribution (12b-1) fee paid by the Fund (after the voluntary
waiver) for Select Shares was 0.50% for the fiscal year ended November 30, 1999.

EXAMPLE

1 Year $223
3 Years $688
5 Years $1,180
10 Years $2,534

WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?

Each Fund will primarily invest in two types of assets: equities and
fixed income, as follows:

g The Adviser manages the Funds based on the view that the investment of each
Fund's portfolio over the long term depends primarily on the fact that the
portfolio consists of securities from multiple asset categories ("Asset
Categories") which include, with respect to a Fund's equity portfolio, the
following: large company stocks, small company stocks and foreign stocks; and
with respect to a Fund's fixed income portfolio, the following: U.S. government
securities, mortgage-backed securities, investment-grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities. g Of secondary importance to each Fund is the allocation of the
portfolio's assets among the Asset Categories in response to market conditions,
and the selection of securities within Asset Categories. g Therefore, each Fund
pursues its investment objective in the following manner: O by setting long-term
ranges for each Fund's portfolio investments in each Asset Category; O by
allocating each Fund's portfolio assets among Asset Categories within those
defined ranges; and O by actively selecting securities within each of the Asset
Categories. g The Adviser will regularly review each Fund's allocation among
Asset Categories. The Adviser will attempt to exploit price inefficiencies among
the various Asset Categories. For example, the Adviser may move an Asset
Category to its upper limit if the Adviser expects that category to offer
superior returns relative to other Asset Categories. Likewise, the Adviser may
move the Asset Category to its lower limit if the Adviser believes that category
is overvalued relative to the other Asset Categories. g The selection of
portfolio securities involves an approach specific to each Asset Category. The
approach for each category is summarized as follows:

LARGE COMPANY STOCKS

With regard to the portion of each Fund's portfolio allocated to large
company stocks, each Fund pursues its investment objective by investing in
common stock of companies with large market capitalizations. Large market
capitalization companies are those which are the 1,000 companies with the
largest market capitalization. Market capitalization is determined by
multiplying the number of outstanding shares by the current market price per
share. The Adviser invests in companies that offer growth prospects or in
companies whose stock is undervalued. Using its own quantitative process, the
Adviser rates the future performance potential of companies, selecting the most
promising companies for a Fund's portfolio.

SMALL COMPANY STOCKS

With regard to the portion of each Fund's portfolio allocated to small
company stocks, each Fund pursues its investment objective by investing at least
65% of the allocation in equity securities of companies that fall within the
market capitalization range of the S&P 600 Small Cap Index (Index). As of
___________, this range was $____ million to $____ billion. Market
capitalization is determined by multiplying the number of outstanding shares by
the current market price per share. The Adviser invests in companies that offer
growth prospects or in companies whose stock is undervalued. Using its own
quantitative process, the Adviser rates the future performance potential of
companies, selecting the most promising companies for the Fund's portfolio.

FOREIGN STOCKS

With regard to the portion of each Fund's portfolio allocated to foreign
stocks, each Fund pursues its investment objective by investing the allocation
in equity securities of companies based outside the United States. The Adviser
manages the Funds based on the view that international equity markets are
inefficient at pricing securities and that careful security selection offers the
best potential for superior long-term investment returns. Selection of industry
and country are secondary considerations.

U.S. GOVERNMENT SECURITIES

MORTGAGE BACKED SECURITIES

INVESTMENT GRADE CORPORATE DEBT

With regard to the allocation in domestic corporate fixed income securities,
the Adviser allocates investments among industries and adjusts the credit
quality of the portfolio by analyzing current economic and securities market
conditions, particularly changes in interest rates and expected trends in
corporate earnings. These factors also guide the selection of maturity and
duration of portfolio securities. Duration measures the price sensitivity of a
fixed income security to changes in interest rates. In selecting a portfolio
security, the Adviser analyzes the business, competitive position, and financial
condition of the issuer to assess whether the security's risk is commensurate
with its potential return.

NON-INVESTMENT GRADE CORPORATE DEBT

The Funds will invest in noninvestment grade securities primarily by
investing in another mutual fund (which is not available for general investment
by the public) advised by an affiliate of the Adviser. The other mutual fund is
managed independently of the Funds and may incur administrative expenses.
Therefore, any such investment by the Funds may be subject to duplicate
expenses. However, the Adviser believes that the benefits and efficiencies of
this approach should outweigh the potential additional expenses. The Funds may
also invest directly in noninvestment grade securities. Although the selection
of noninvestment grade domestic corporate securities involves the same factors
as investment grade securities, the Adviser gives greater emphasis to its
analysis of the issuer.

FOREIGN FIXED INCOME SECURITIES

The Adviser manages the foreign fixed income allocation to maintain an
average AA rating of its portfolio securities. The Adviser uses the J.P. Morgan
Global Traded Index Excluding U.S. Index (Global Index) as a benchmark for
managing the foreign fixed income allocation. The Adviser looks for
opportunities to enhance each Fund's performance by diverging from the Global
Index. Such opportunities may cause the Adviser to weight the portfolio
differently than the Global Index or to buy securities not represented in the
Index. Under ordinary market conditions, however, the duration of the portfolio
securities does not deviate more than 25% from the duration of the Global Index.
No more than 25% of the foreign fixed income allocation will be invested in any
one country. The Funds also intend to invest at least 50% of the foreign fixed
income allocation in securities that have received ratings in the two highest
rating categories or unrated securities that the Adviser considers of comparable
quality.

Using its analysis, the Adviser tries to identify countries with favorable
characteristics, such as a strengthening economy, favorable inflation rate,
sound budget policy or strong public commitment to repay government debt. The
Adviser then evaluates available foreign fixed income investments in these
countries based upon its outlook for interest and foreign exchange rates. The
Adviser tries to select securities that offer the best potential returns
consistent with its general portfolio strategy. HEDGING Hedging transactions are
intended to reduce specific risks. For example, to protect the Funds against
circumstances that would normally cause the Funds' portfolio securities to
decline in value, the Funds may buy or sell a derivative contract that would
normally increase in value under the same circumstances. The Funds may also
attempt to hedge by using combinations of different derivatives contracts, or
derivatives contracts and securities. The Funds' ability to hedge may be limited
by the costs of the derivatives contracts. The Funds may attempt to lower the
cost of hedging by entering into transactions that provide only limited
protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions will not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to the Funds.

<PAGE>

PORTFOLIO TURNOVER

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUNDS INVEST?

EQUITY SECURITIES

COMMON STOCKS

FIXED INCOME SECURITIES

The following describes the types of fixed income securities in which the
Funds principally invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of
the United States. Treasury securities are generally regarded as having the
lowest CREDIT RISKS.

AGENCY SECURITIES

The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the INTEREST RATE AND PREPAYMENT RISKs of these mortgage backed
securities.

CORPORATE DEBT SECURITIES

MORTGAGE BACKED SECURITIES

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs. Mortgage
backed securities come in a variety of forms. Many have extremely complicated
terms. The simplest form of mortgage backed securities are pass-through
certificates. An issuer of pass-through certificates gathers monthly payments
from an underlying pool of mortgages. Then, the issuer deducts its fees and
expenses and passes the balance of the payments onto the certificate holders
once a month. Holders of pass-through certificates receive a pro rata share of
all payments and pre-payments from the underlying mortgages. As a result, the
holders assume all the PREPAYMENT RISKS of the underlying mortgages.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

SEQUENTIAL CMOS

PACS, TACS AND COMPANION CLASSES

This helps PACs and TACs to control prepayment risks by increasing the
risks to their companion classes.

IOS AND POS

FLOATERS AND INVERSE FLOATERS

Z CLASSES

DELAYED DELIVERY TRANSACTIONS

TO BE ANNOUNCED SECURITIES (TBAS)

DOLLAR ROLLS

FOREIGN SECURITIES

Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if: o it is
organized under the laws of, or has a principal office located in, another
country; o the principal trading market for its securities is in another
country; or o it (or its subsidiaries) derived in its most current fiscal year
at least 50% of its total assets, capitalization, gross revenue or profit from
goods produced,

services performed, or sales made in another country.

DERIVATIVE CONTRACTS

The Funds may trade in the following types of derivative contracts.

FUTURES CONTRACTS

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine whether a security is investment grade based upon
the credit ratings given by one or more nationally recognized rating services.
For example, Standard and Poor's, a rating service, assigns ratings to
investment grade securities (AAA, AA, A, and BBB) based on their assessment of
the likelihood of the issuer's inability to pay interest or principal (default)
when due on each security. Lower credit ratings correspond to higher credit
risk. If a security has not received a rating, the Funds must rely entirely upon
the Adviser's credit assessment that the security is comparable to investment
grade.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUNDS?

STOCK MARKET RISKS

INTEREST RATE RISKS

CREDIT RISKS

Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Funds
will lose money. Many fixed income securities receive credit ratings from
services such as Standard & Poor's and Moody's Investors Service, Inc. These
services assign ratings to securities by assessing the likelihood of issuer
default. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Funds must rely entirely upon the Adviser's
credit assessment.

Credit risk includes the possibility that a party to a transaction
involving the Funds will fail to meet its obligations. This could cause the
Funds to lose the benefit of the transaction or prevent the Funds from selling
or buying other securities to implement their investment strategies.

CURRENCY RISKS

The Adviser attempts to manage currency risk by limiting the amount the
Funds invest in securities denominated in a particular currency. However,
diversification will not protect the Funds against a general increase in the
value of the U.S. dollar relative to other currencies.

CALL AND PREPAYMENT RISKS

Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market price. An
increase in the likelihood of a call may reduce the security's price.

Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response to
adverse economic or market conditions. Spreads may also increase if the security
is perceived to have an increased prepayment risk or is perceived to have less
market demand. SECTOR RISKS Companies with similar characteristics
may be grouped together in broad categories called sectors. Sector risk is the
possibility that a certain sector may underperform other sectors or as the
market as a whole. As the Adviser allocates more of a Fund's portfolio holdings
to a particular sector, a Fund's performance will be more susceptible to any
economic, business or other developments which generally affect that sector.

LIQUIDITY RISKS

RISKS RELATED TO COMPANY SIZE

RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES

RISKS OF FOREIGN INVESTING

WHAT DO SHARES COST?

You can purchase or redeem Shares any day the New York Stock Exchange (NYSE)
is open. When a Fund receives your transaction request in proper form (as
described in the prospectus), it is processed at the next calculated net asset
value (NAV). If a Fund purchases foreign securities that trade in foreign
markets on days the NYSE is closed, the value of a Fund's assets may change on
days you cannot purchase or redeem Shares.The Funds do not charge a front-end
sales charge. NAV is determined at the end of regular trading (normally 4:00
p.m. Eastern time) each day the NYSE is open. The Funds generally value equity
securities according to the last sale price in the market in which they are
primarily traded (either a national securities exchange or the over-the-counter
market). The Funds generally value fixed income securities at the last sale
price on a national securities exchange, if available, otherwise, as determined
by an independent pricing service.

The required minimum initial investment for each Fund is $1,500. There is no
required minimum subsequent investment amount. Accounts established through
investment professionals may be subject to a smaller minimum investment amount.
Keep in mind that investment professionals may charge you fees for their
services in connection with your Share transactions.

HOW ARE THE FUNDS SOLD?

The Funds offer two share classes: Select Shares and Institutional Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Select Shares. Each share class has different expenses which
affect their performance. Contact your investment professional or call
1-800-341-7400 for more information concerning the other class.

The Funds' Distributor, Federated Securities Corp., markets the Shares
described in this prospectus to retail and private banking customers of
financial institutions.

When the Distributor receives marketing fees, it may pay some or all of them
to investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees
to the Distributor and investment professionals for the sale, distribution and
customer servicing of a Fund's Select Shares. Because these Shares pay marketing
fees on an ongoing basis, your investment cost may be higher over time than
other shares with different sales charges and marketing fees.

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUNDS

o Establish your account with a Fund by submitting a completed New Account Form;
and o Send your payment to a Fund by Federal Reserve wire or check.

An institution may establish an account and place an order by calling a Fund
and the Shares will be priced at the next calculated NAV after a Fund receives
the order.

BY WIRE Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds
will not accept third-party checks (checks originally payable to someone other
than you or The Federated Funds).

BY SYSTEMATIC INVESTMENT PROGRAM

BY AUTOMATED CLEARINGHOUSE (ACH)

<PAGE>

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or o directly from the Funds if you purchased Shares
directly from the Funds.

THROUGH AN INVESTMENT PROFESSIONAL

DIRECTLY FROM THE FUNDS

BY TELEPHONE

BY MAIL

You may redeem Shares by mailing a written request to a Fund. You will
receive a redemption amount based on the next calculated NAV after a Fund
receives your written request in proper form. Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317 All requests must include:

SIGNATURE GUARANTEES Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days; or o a redemption is payable to someone other than
the shareholder(s) of record.

PAYMENT METHODS FOR REDEMPTIONS

o an electronic transfer to your account at a financial institution that is an
ACH member; or o wire payment to your account at a domestic commercial bank that
is a Federal Reserve System member.

REDEMPTION IN KIND

Although each Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days: o
to allow your purchase to clear; o during periods of market volatility; or o
when a shareholder's trade activity or amount adversely impacts a Fund's ability
to manage its assets. You will not accrue interest or dividends on uncashed
checks from a Fund if those checks are undeliverable and returned to a Fund.

SYSTEMATIC WITHDRAWAL PROGRAM

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

DIVIDENDS AND CAPITAL GAINS

Each Fund (except the Income Fund) declares and pays any dividends quarterly to
shareholders. The Income Fund declares and pays any dividends monthly to
shareholders. Dividends are paid to all shareholders invested in a Fund on the
record date. The record date is the date on which a shareholder must officially
own Shares in order to earn a dividend.

In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares unless you elect cash payments.

ACCOUNTS WITH LOW BALANCES

TAX INFORMATION

Fund distributions are expected to be both dividends and capital gains.
Redemptions are taxable sales. Please consult your tax Adviser regarding your
federal, state, and local tax liability.

WHO MANAGES THE FUNDS?

The Adviser has delegated daily management of some of the Funds' assets to the
Sub-Adviser, Federated Global Investment Management Corp., who is paid by the
Adviser and not by the Funds based on the portion of foreign securities the
Sub-Adviser manages. The Sub-Adviser's address is 175 Water Street, New York, NY
10038-4965.

<PAGE>

PORTFOLIO MANAGERS

The portfolio managers for the Funds' individual asset categories are as
follows:

NAME (PORTFOLIO ASSET CATEGORY
MANAGER SINCE) MANAGED BIOGRAPHY

JOHN W. HARRIS Overall John W. Harris is a portfolio manager for the
(December 1998) Allocation and Funds and performs the overall asset allocation

Domestic Large of the Funds' assets among the various asset
Company Stocks categories. In addition, Mr. Harris is a

manager of the U.S.large company stocks asset
category. He has performed these duties since
December 1998. In allocating the Funds' assets,
Mr. Harris evaluates the market environment and
economic outlook, utilizing the services of the
Adviser's Investment Strategy Committee. Mr.
Harris has been a Portfolio Manager and an
Assistant Vice President of the Funds' Adviser
since 1998. Mr. Harris initially joined
Federated in 1987 as an Investment Analyst. He
served as an Investment Analyst and an
Assistant Vice President from 1990 through 1992
and as a Senior Investment Analyst and a Vice
President through May 1993. After leaving the
money management field to travel extensively,
he rejoined Federated in 1997 as a Senior
Investment Analyst. Mr. Harris is a Chartered
Financial Analyst. He received his M.B.A. from
the University of Pittsburgh.

- ------------------------------------------------------------------------------------------
MICHAEL P. DONNELLY Domestic Large Mr. Donnelly joined Federated in 1989 as an
(June 1997) Company Stocks Investment Analyst. He served as a Portfolio
Manager from 1994 to 1998 and became a Senior
Portfolio Manager in 1998. He was a Vice
President of the Funds' Adviser from 1994 to
1999. In 1999, Mr. Donnelly became a Senior
Vice President of the Funds' Adviser. Mr.
Donnelly is a Chartered Financial Analyst and
received his M.B.A. from the University of
Virginia.

- ------------------------------------------------------------------------------------------

<PAGE>

JAMES E. Domestic Large Mr. Grefenstette joined Federated in 1992 and
GREFENSTETTE Company Stocks has been a Portfolio Manager and a Vice
(August 1994) President of the Funds' Adviser since 1996.

Corporate Bonds was a Portfolio Manager and a Vice President of
the Funds' Adviser from 1995 to 1998. Mr.
Balestrino served as a Portfolio Manager and an
Assistant Vice President of the Funds' Adviser
from 1993 until 1995. Mr. Balestrino is a
Chartered Financial Analyst and received his
Master's Degree in Urban and Regional Planning
from the University of Pittsburgh.
- ------------------------------------------------------------------------------------------

<PAGE>

KATHLEEN M. Mortgage-Backed Ms. Foody-Malus joined Federated in 1983 and
FOODY-MALUS Securities has been a Senior Portfolio Manager since 1996
(Inception) and a Vice President of the Funds' Adviser

since 1993. She was a Portfolio Manager and a
Vice President of the Funds' Adviser from 1993
to 1996. Ms.Foody-Malus received her M.B.A. in
Accounting/Finance from the University of

Pittsburgh.

- ------------------------------------------------------------------------------------------

<PAGE>

ROBERT E. CAULEY Mortgage-Backed Mr. Cauley joined Federated in 1996 as a Senior
(July 1997) Securities Investment Analyst and an Assistant Vice

President of the Funds' Adviser and has been a

Portfolio Manager since 1997. Mr. Cauley has
been a Vice President of the Adviser since
1999. Mr. Cauley was a member of the
Asset-Backed Structuring Group at Lehman
Brothers Holding, Inc. from 1994 to 1996. Mr.
Cauley earned his M.S.I.A., concentrating in
Finance and Economics, from Carnegie Mellon

University.

- ------------------------------------------------------------------------------------------
MARK E. DURBIANO High Yield Mr. Durbiano joined Federated in 1982 and has
(Inception) Corporate Bonds been a Senior Portfolio Manager and a Senior

Vice President of the Funds' Adviser
since 1996. From 1988 through 1995, Mr.
Durbiano was a Portfolio Manager and a
Vice President of the Funds' Adviser.
Mr.Durbiano is a Chartered Financial
Analyst and received his M.B.A. in
Finance from the University of
Pittsburgh.

- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
ROBERT M. KOWIT Foreign Bonds Mr. Kowit joined Federated in 1995 as a
(November 1995) Portfolio Manager and a Vice President of the

- ------------------------------------------------------------------------------------------

<PAGE>

LINDA A. DUESSEL Utility Stocks Ms. Duessel joined Federated in 1991 and has
(February 1997) been a Portfolio Manager and a Vice President

of the Funds' Adviser since 1995. Ms. Duessel
was a Senior Investment Analyst and an
Assistant Vice President of the Funds' Adviser
from 1991 until 1995. Ms. Duessel is a
Chartered Financial Analyst and received her
M.S. in Industrial Administration from Carnegie

Mellon University.

- ------------------------------------------------------------------------------------------

<PAGE>

STEVEN J. LEHMAN Utility Stocks Mr. Lehman joined the Funds' Adviser in May
(December 1995) 1997 as a Portfolio Manager and a Vice

President. He has been a Senior Portfolio
Manager since 1998. From 1986 to 1997, Mr.
Lehman served as a Portfolio Manager, then Vice
President/Senior Portfolio Manager, at First
Chicago NBD. Mr. Lehman is a Chartered
Financial Analyst; he received his M.A. from
the University of Chicago.

Funds Adviser since January 1997. Mr. Shah was
a Portfolio Manager and served as an Assistant
Vice President of the Adviser from 1995 to
1996, and as an Investment Analyst from 1993 to
1995. Mr. Shah received his Masters in
Industrial Administration from Carnegie Mellon
University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial

Analyst.

Mellon University.

served as Assistant Vice President/Portfolio

Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to
1995. Mr. de Bethmann received his M.B.A. in
Finance from Duke University.

Funds' Sub-Adviser. Mr. Semack served as an
Investment Analyst at Omega Advisers, Inc. from
1993 to 1994. Mr. Semack received his M.Sc. in
economics from the London School of Economics.

- ------------------------------------------------------------------------------------------
</TABLE>

ADVISORY FEES

<PAGE>

YEAR 2000 READINESS

The Funds' service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

This information has been audited by Arthur Andersen LLP, whose report, along
with the Funds' audited financial statements, is included in the Annual Reports.

<PAGE>

FEDERATED MANAGED ALLOCATION PORTFOLIOS

Federated Managed Income Portfolio
Federated Managed Conservative Growth Portfolio
Federated Managed Moderate Growth Portfolio
Federated Managed Growth Portfolio

SELECT SHARES

JANUARY 31, 2000

A Statement of Additional Information (SAI) dated January 31, 2000 is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI and Annual and
Semi-Annual Reports to shareholders as they become available. The Annual
Reports' Management Discussions & Analyses discuss market conditions and
investment strategies that significantly affected each Fund's performance during
its last fiscal year. To obtain the SAI, Annual Report, and Semi-Annual Report
and other information without charge, and make inquiries, call your investment
professional or the Funds at 1-800-341-7400. You can obtain information about
the Funds (including the SAI) by writing to or visiting the Public Reference
Room in Washington, D.C. You may also access fund information from the EDGAR
Database on the SEC's Internet site at http://www.sec.gov. You can purchase
copies of this information by contacting the SEC by email at [email protected].
or by writing to the SEC's Public Reference Section, Washington D.C. 20549-0102.
Call 1-202-942-8090 for information on the Public Reference Room's operations
and copying fees.

INVESTMENT COMPANY ACT FILE NO. 811-7129
CUSIP 000000000

CUSIP 000000000
CUSIP 000000000
CUSIP 000000000

G00873-04-SEL (100)

STATEMENT OF ADDITIONAL INFORMATION

FEDERATED MANAGED ALLOCATION PORTFOLIOS
(FORMERLY, MANAGED SERIES TRUST)

FEDERATED MANAGED INCOME PORTFOLIO(FORMERLY, FEDERATED MANAGED INCOME FUND)

FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO(FORMERLY, FEDERATED MANAGED
GROWTH AND INCOME FUND)

FEDERATED MANAGED MODERATE GROWTH PORTFOLIO(FORMERLY, FEDERATED MANAGED
GROWTH FUND)

FEDERATED MANAGED GROWTH PORTFOLIO(FORMERLY, FEDERATED MANAGED AGGRESSIVE
GROWTH FUND)

INSTITUTIONAL SHARES
SELECT SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for the Funds, dated January 31, 2000.

The SAI incorporates by reference the Funds' Annual Reports. Obtain a prospectus
or the Annual Report without charge by calling 1-800-341-7400.

january 31, 2000

CONTENTS

How are the Funds Organized? 1
Securities in Which the Funds Invest 1
What do Shares Cost? 14
How are the Funds Sold? 15
Subaccounting Services 15
Redemption in Kind 15
Massachusetts Partnership Law 16
Account and Share Information 16
Tax Information 16
Who Manages and Provides Services to the Funds? 17
How Do the Funds Measure Performance? 23
Who is Federated Investors, Inc.? 26
Financial Information 28
Investment Ratings 29
Addresses Back Cover

CUSIP 000000000 CUSIP 000000000 CUSIP 000000000 CUSIP 000000000 CUSIP
000000000 CUSIP 000000000 CUSIP 000000000 CUSIP 000000000

G00873-05 (1/00)

<PAGE>

HOW ARE THE FUNDS ORGANIZED?

Each Fund is a diversified portfolio of Federated Managed Allocation
Portfolios (the Trust). The Trust is an open-end, management investment company
that was established under the laws of the Commonwealth of Massachusetts on
November 15, 1993. The Trust may offer separate series of shares representing
interests in separate portfolios of securities. Effective January 31, 2000, the
Trust changed its name from Managed Series Trust to Federated Managed Allocation
Portfolios and Federated Managed Income Fund, Federated Managed Growth and
Income Fund, Federated Managed Growth Fund, and Federated Managed Aggressive
Growth Fund changed their names to Federated Managed Income Portfolio, Federated
Managed Conservative Growth Portfolio, Federated Managed Moderate Growth
Portfolio and Federated Managed Growth Portfolio, respectively.

The Board of Trustees (the Board) has established two classes of shares of each
Fund, known as Institutional Shares and Select Shares (Shares). This SAI relates
to both classes of Shares. The Funds' investment adviser is Federated Investment
Management Company (Adviser). Effective March 31, 1999, Federated Management,
former Adviser to the Funds, became Federated Investment Management Company
(formerly, Federated Advisers).

SECURITIES IN WHICH THE FUNDS INVEST

In pursuing its investment strategy, each Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
Following is a table that indicates which types of securities are a:

o P = PRINCIPAl investment of a Fund; (shaded in chart) o A = ACCEPTABLe (but
not principal) investment of a Fund; or o N = NOT AN ACCEPTABLe investment of a
Fund.
<TABLE>
<CAPTION>

- ----------------------------------------------------- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
SECURITIES INCOME CONSERVATIVE MODERATE GROWTH
PORTFOLIO GROWTH GROWTH PORTFOLIO

PORTFOLIO PORTFOLIO

- ----------------------------------------------------- ----------- -------------- ------------- -------------

- -----------------------------------------------------
----------- -------------- ------------- -------------
COMMON STOCKS A A A A

----------- ------------- -------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
SMALL COMPANY STOCKS N P P P

- ----------------------------------------------------- -------------- ------------- -------------
- ----------------------------------------------------- ----------- ------------- -------------

----------- -------------- ------------- -------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
PREFERRED STOCKS A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
INTERESTS IN OTHER LIMITED LIABILITY COMPANIES A A A A
- ----------------------------------------------------- ----------- -------------- ------------- -------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
REAL ESTATE INVESTMENT TRUSTS A A A A

- -----------------------------------------------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
DERIVATIVE CONTRACTS P P P P

- ----------------------------------------------------- ----------- -------------- ------------- -------------
- -----------------------------------------------------
FUTURES CONTRACTS P P P P

- -----------------------------------------------------
- ----------------------------------------------------- ----------- -------------- ------------- -------------
OPTIONS A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
- -----------------------------------------------------
HYBRID INSTRUMENTS A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
REPURCHASE AGREEMENTS A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
REVERSE REPURCHASE AGREEMENTS A A A A

- -----------------------------------------------------
----------- -------------- ------------- -------------
DELAYED DELIVERY TRANSACTIONS1 P P P P

- ----------------------------------------------------- ----------- -------------- ------------- -------------
----------- -------------- ------------- -------------
SECURITIES LENDING A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
- -----------------------------------------------------
ASSET COVERAGE A A A A

- ----------------------------------------------------- ----------- -------------- ------------- -------------
</TABLE>

1. The Funds do not intend to engage in such transactions to an extent that
would cause the segregation of more than 20% of the total value of a Fund's
assets.

SECURITIES DESCRIPTIONS AND TECHNIQUES

EQUITY SECURITIES

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the additional types of equity securities in which the Funds
invest.

COMMON STOCKS

PREFERRED STOCKS

Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock. The Funds may also treat such redeemable preferred stock as a fixed
income security.

INTERESTS IN OTHER LIMITED LIABILITY COMPANIES

Entities such as limited partnerships, limited liability companies, business
trusts and companies organized outside the United States may issue
securities comparable to common or preferred stock.

REAL ESTATE INVESTMENT TRUSTS (REITS)

REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax
if they limit their operations and distribute most of their income. Such tax
requirements limit a REIT's ability to respond to changes in the commercial
real estate market.

WARRANTS

Warrants give the Funds the option to buy the issuer's equity securities at
a specified price (the exercise price) at a specified future date (the
expiration date). The Funds may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the MARKET RISKS of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

The following describes the types of fixed income securities in which the Funds
invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of
the United States. Treasury securities are generally regarded as having the
lowest credit risks.

AGENCY SECURITIES

The Funds treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the MARKET and PREPAYMENT RISKS of these mortgage backed
securities.

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. The Funds may also purchase interests in bank
loans to companies. The CREDIT RISKS of corporate debt securities vary
widely amount issuers.

In addition, the credit risk of an issuer's debt security may also vary
based on its priority for repayment. For example, higher ranking (senior)
debt securities have a higher priority than lower ranking (subordinated)
securities. This means that the issuer might not make payments on
subordinated securities while continuing to make payments on senior
securities. In addition, in the event of bankruptcy, holders of senior
securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer
any payment that would reduce its capital below regulatory requirements.

MORTGAGE BACKED SECURITIES

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the PREPAYMENT
RISKS of the underlying mortgages.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying
pass-through certificate among holders of different classes of mortgage
backed securities. This creates different PREPAYMENT and INTEREST RATE
RISKS for each CMO class.

<PAGE>

SEQUENTIAL CMOS

In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all
principal payments after the first class is paid off. This process
repeats for each sequential class of CMO. As a result, each class of
sequential pay CMOs reduces the prepayment risks of subsequent
classes.

PACS, TACS AND COMPANION CLASSES

More sophisticated CMOs include planned amortization classes (PACs)
and targeted amortization classes (TACs). PACs and TACs are issued
with companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive
principal payments and prepayments in excess of the specified rate.
In addition, PACs will receive the companion classes' share of
principal payments, if necessary, to cover a shortfall in the
prepayment rate.

This helps PACs and TACs to control prepayment risks by increasing
the risks to their companion classes.

IOS AND POS

CMOs may allocate interest payments to one class (Interest Only or
IOs) and principal payments to another class (Principal Only or POs).
POs increase in value when prepayment rates increase. POs tend to
increase in value when interest rates decline (and prepayments
increase) making POs a useful hedge against interest rate risk. In
contrast, IOs decrease in value when prepayments increase, because
the underlying mortgages generate less interest payments. However,
IOs tend to increase in value when interest rates rise (and
prepayments decrease), making IOs a useful hedge against INTEREST
RATE RISKS.

FLOATERS AND INVERSE FLOATERS

Another variant allocates interest payments between two classes of
CMOs. One class (Floaters) receives a share of interest payments
based upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts PREPAYMENT and INTEREST RATE RISKS
from the Floater to the Inverse Floater class, reducing the price
volatility of the Floater class and increasing the price volatility
of the Inverse Floater class.

Z CLASSES

CMOs must allocate all payments received from the underlying
mortgages to some class. To capture any unallocated payments, CMOs
generally have an accrual (Z) class. Z classes do not receive any
payments from the underlying mortgages until all other CMO classes
have been paid off. Once this happens, holders of Z class CMOs
receive all payments and prepayments.

ASSET BACKED SECURITIES

Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to
create an asset backed security. Asset backed securities may take the form
of commercial paper, notes, or pass through certificates. The Funds may also
purchase mortgage-related asset backed securities such as home equity loans,
second mortgages, and manufactured housing obligations. Asset backed
securities have PREPAYMENT RISKS.

Like mortgage-backed securities, asset backed securities may be issued by a
private entity and, although these securities must be investment grade, they
can present a credit risk.

ZERO COUPON SECURITIES

Zero coupon securities do not pay interest or principal until final
maturity unlike debt securities that provide periodic payments of interest
(referred to as a coupon payment). Investors buy zero coupon securities at a
price below the amount payable at maturity. The difference between the
purchase price and the amount paid at maturity represents interest on the
zero coupon security. Investors must wait until maturity to receive interest
and principal, which increases the INTEREST RATE and CREDIT RISKS of a zero
coupon security. A zero coupon step-up security converts to a coupon
security before final maturity.

<PAGE>

There are many forms of zero coupon securities. Some are issued at a
discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury
STRIPs, IOs and POs are the most common forms of stripped zero coupon
securities. In addition, some securities give the issuer the option to
deliver additional securities in place of cash interest payments, thereby
increasing the amount payable at maturity. These are referred to as
pay-in-kind or PIK securities.

CREDIT ENHANCEMENT

Credit enhancement consists of an arrangement in which a company agrees
to pay amounts due on a fixed income security after the issuer defaults. In
some cases the company providing credit enhancement makes all payments
directly to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

Common types of credit enhancement include guarantees, letters of credit,
bond insurance and surety bonds. Credit enhancement also includes
arrangements where securities or other liquid assets secure payment of a
fixed income security. If a default occurs, these assets may be sold and the
proceeds paid to security's holders. Either form of credit enhancement
reduces credit risks by providing another source of payment for a fixed
income security.

CONVERTIBLE SECURITIES

Convertible securities are fixed income securities that the Funds have the
option to exchange for equity securities at a specified conversion price. The
option allows the Funds to realize additional returns if the market price of the
equity securities exceeds the conversion price. For example, a Fund may hold
fixed income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, a Fund could realize an additional $2 per share by converting
its fixed income securities.

Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit the
Funds to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment.

The Funds treat convertible securities as both fixed income and equity
securities for purposes of its investment policies and limitations, because of
their unique characteristics.

FOREIGN SECURITIES

Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:

o it is organized under the laws of, or has a principal office located in,
another country;

o the principal trading market for its securities is in another country; or

Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to CURRENCY RISKS and RISKS OF FOREIGN INVESTING. Trading
in certain foreign markets is also subject to LIQUIDITY RISKS.

DEPOSITARY RECEIPTS

Depositary receipts represent interests in underlying securities issued
by a foreign company. Depositary receipts are not traded in the same market
as the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions. The foreign securities
underlying European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs), and International Depositary receipts (IDRs), are traded globally or
outside the United States. Depositary Receipts involve many of the same
risks of investing directly in foreign securities, including CURRENCY RISKS
and RISKS OF FOREIGN INVESTING.

FOREIGN EXCHANGE CONTRACTS

In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, the Fund may enter into spot currency trades. In
a spot trade, a Fund agrees to exchange one currency for another at the
current exchange rate. A Fund may also enter into derivative contracts in
which a foreign currency is an underlying asset. The exchange rate for
currency derivative contracts may be higher or lower than the spot exchange
rate. Use of these derivative contracts may increase or decrease the Fund's
exposure to CURRENCY RISKS.

FOREIGN GOVERNMENT SECURITIES

Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.

Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and credit.
Further, foreign government securities include mortgage-related securities
issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

DERIVATIVE CONTRACTS

For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, a
Fund realizes a gain; if it is less, a Fund realizes a loss. Exchanges may limit
the amount of open contracts permitted at any one time. Such limits may prevent
a Fund from closing out a position. If this happens, a Fund will be required to
keep the contract open (even if it is losing money on the contract), and to make
any payments required under the contract (even if it has to sell portfolio
securities at unfavorable prices to do so). Inability to close out a contract
could also harm a Fund by preventing it from disposing of or trading any assets
it has been using to secure its obligations under the contract.

The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between a Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.

Depending upon how the Funds use derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease a Fund's exposure to INTEREST RATE
and CURRENCY RISKS, and may also expose a Fund to LIQUIDITY AND LEVERAGE RISKS.
OTC contracts also expose the Funds to CREDIT RISKS in the event that a
counterparty defaults on the contract.

The Funds may trade in the following types of derivative contracts.

FUTURES CONTRACTS

The Funds may buy or sell forward foreign currency exchange contracts,
interest rate futures contracts and stock index futures to accommodate cash
flows and to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market
conditions.

<PAGE>

OPTIONS

Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call
option gives the holder (buyer) the right to buy the underlying asset from
the seller (writer) of the option. A put option gives the holder the right
to sell the underlying asset to the writer of the option. The writer of the
option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option.

The Funds may buy and sell options on foreign currencies, foreign currency
futures, securities and securities indexes to manage interest rate and
currency risks. The Funds may write call options on securities which they
own to generate income.

HYBRID INSTRUMENTS

Hybrid instruments combine elements of derivative contracts with those of
another security (typically a fixed income security). All or a portion of
the interest or principal payable on a hybrid security is determined by
reference to changes in the price of an underlying asset or by reference to
another benchmark (such as interest rates, currency exchange rates or
indices). Hybrid instruments also include convertible securities with
conversion terms related to an underlying asset or benchmark.

The risks of investing in hybrid instruments reflect a combination of the
risks of investing in securities, options, futures and currencies, and
depend upon the terms of the instrument. Thus, an investment in a hybrid
instrument may entail significant risks in addition to those associated with
traditional fixed income or convertible securities. Hybrid instruments are
also potentially more volatile and carry greater INTEREST RATE RISKS than
traditional instruments. Moreover, depending on the structure of the
particular hybrid, it may expose the Funds to LEVERAGE RISKS or carry
LIQUIDITY RISKS.

SWAPS

Swaps are contracts in which two parties agree to pay each other (swap) the
returns derived from underlying assets with differing characteristics. Most
swaps do not involve the delivery of the underlying assets by either party,
and the parties might not own the assets underlying the swap. The payments
are usually made on a net basis so that, on any given day, a Fund would
receive (or pay) only the amount by which its payment under the contract is
less than (or exceeds) the amount of the other party's payment. Swap
agreements are sophisticated instruments that can take many different forms,
and are known by a variety of names including caps, floors, and collars.
Common swap agreements that the Funds may use include:

INTEREST RATE SWAPS

Interest rate swaps are contracts in which one party agrees to make
regular payments equal to a fixed or floating interest rate times a
stated principal amount of fixed income securities, in return for
payments equal to a different fixed or floating rate times the same
principal amount, for a specific period. For example, a $10 million
LIBOR swap would require one party to pay the equivalent of the
London Interbank Offer Rate of interest (which fluctuates) on $10
million principal amount in exchange for the right to receive the
equivalent of a stated fixed rate of interest on $10 million
principal amount.

CAPS AND FLOORS

Caps and Floors are contracts in which one party agrees to make
payments only if an interest rate or index goes above (Cap) or below
(Floor) a certain level in return for a fee from the other party.

TOTAL RETURN SWAPS

Total return swaps are contracts in which one party agrees to make
payments of the total return from the underlying asset during the
specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying
asset.

SPECIAL TRANSACTIONS

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Funds buy a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Funds' return on the transaction. This return is unrelated to
the interest rate on the underlying security. The Funds will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser.

The Funds' custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor
the value of the underlying security each day to ensure that the value of
the security always equals or exceeds the repurchase price.

Repurchase agreements are subject to CREDIT RISKS.

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REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are repurchase agreements in which the Funds
are the sellers (rather than the buyers) of the securities, and agrees to
repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Funds. Reverse
repurchase agreements are subject to CREDIT RISKS. In addition, reverse
repurchase agreements create LEVERAGE RISKS because the Funds must
repurchase the underlying security at a higher price, regardless of the
market value of the security at the time of repurchase.

DELAYED DELIVERY TRANSACTIONS

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Funds buy securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the
period between purchase and settlement, no payment is made by the Funds to
the issuer and no interest accrues to the Funds. The Funds record the
transaction when they agree to buy the securities and reflect their value in
determining the price of its shares. Settlement dates may be a month or more
after entering into these transactions so that the market values of the
securities bought may vary from the purchase prices. Therefore, when issued
transactions create INTEREST RATE RISKS for the Funds. Delayed delivery
transactions also involve CREDIT RISKS in the event of a counterparty
default. These transactions create LEVERAGE RISKS.

TO BE ANNOUNCED SECURITIES (TBAS)

As with other delayed delivery transactions, a seller agrees to issue
a TBA security at a future date. However, the seller does not specify
the particular securities to be delivered. Instead, the Funds agree to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Funds and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages.
However, the seller would not identify the specific underlying mortgages
until it issues the security. TBA mortgage backed securities increase
INTEREST RATE RISKS because the underlying mortgages may be less
favorable than anticipated by the Funds.

DOLLAR ROLLS

SECURITIES LENDING

The Funds may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Funds receive cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Funds the equivalent of any dividends or interest received on
the loaned securities.

The Funds will reinvest cash collateral in securities that qualify as an
acceptable investment for the Funds. However, the Funds must pay interest to
the borrower for the use of cash collateral.

Loans are subject to termination at the option of the Funds or the
borrower. The Funds will not have the right to vote on securities while they
are on loan, but they will terminate a loan in anticipation of any important
vote. The Funds may pay administrative and custodial fees in connection with
a loan and may pay a negotiated portion of the interest earned on the cash
collateral to a securities lending agent or broker.

Securities lending activities are subject to INTEREST RATE RISKS AND CREDIT
RISKS. These transactions create LEVERAGE RISKS.

SECURITIES OF OTHER INVESTMENT COMPANIES

Each Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its univested cash. It
should be noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by a Fund in shares of other
investment companies may be subject to such duplicate expenses.

Effective March 1, 1999, the Funds may invest in mortgage-backed securities
primarily by investing in another mutual fund (which is not available for
general investment by the public) that owns those securities and that is advised
by an affiliate of the Adviser. This other mutual fund is managed independently
of the Funds and may incur administrative expenses. Therefore, any such
investment by the Funds may be subject to duplicate expenses. However, the
Adviser believes that the benefits and efficiencies of this approach should
outweigh the potential additional expenses. The Funds may also invest in such
securities directly.

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ASSET COVERAGE

In order to secure its obligations in connection with derivatives contracts or
special transactions, the Funds will either own the underlying assets, enter
into an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Funds' obligations. Unless the Funds have other
readily marketable assets to set aside, they cannot trade assets used to secure
such obligations entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Funds to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.

INVESTMENT RISKS

STOCK MARKET RISKS

g The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline and you could lose money. g The Adviser attempts to manage market risk
by limiting the amount each Fund invests in each company. However,
diversification will not protect a Fund against widespread or prolonged declines
in the stock market. INTEREST RATE RISKS g Prices of fixed income securities
rise and fall in response to changes in the interest rate paid by similar
securities. Generally, when interest rates rise, prices of fixed income
securities fall. However, market factors, such as the demand for particular
fixed income securities, may cause the price of certain fixed income securities
to fall while the prices of other securities rise or remain unchanged. g
Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates. CREDIT RISKS g Credit risk
is the possibility that an issuer will default on a security by failing to pay
interest or principal when due. If an issuer defaults, the Funds will lose
money. g Many fixed income securities receive credit ratings from services
such as Standard & Poor's and Moody's Investor Services, Inc. These services
assign ratings to securities by assessing the likelihood of issuer default.
Lower credit ratings correspond to higher credit risk. If a security has not
received a rating, the Funds must rely entirely upon the Adviser's credit
assessment. g Fixed income securities generally compensate for greater
credit risk by paying interest at a higher rate. The difference between the
yield of a security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk. Spreads
may increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security's rating is lowered, or the
security is perceived to have an increased credit risk. An increase in the
spread will cause the price of the security to decline. g Credit risk
includes the possibility that a party to a transaction involving the Funds will
fail to meet its obligations. This could cause the Funds to lose the benefit of
the transaction or prevent the Funds from selling or buying other securities to
implement their investment strategies. CURRENCY RISKS g Exchange rates for
currencies fluctuate daily. The combination of currency risk and market risks
tends to make securities traded in foreign markets more volatile than securities
traded exclusively in the U.S. G The Adviser attempts to manage currency risk
by limiting the amount the Funds invest in securities denominated in a
particular currency. However, diversification will not protect the Funds against
a general increase in the value of the U.S. dollar relative to other
currencies. CALL AND PREPAYMENT RISKS G Call risk is the possibility that an
issuer may redeem a fixed income security before maturity (a call) at a price
below its current market price. An increase in the likelihood of a call may
reduce the security's price. g If a fixed income security is called, the
Funds may have to reinvest the proceeds in other fixed income securities with
lower interest rates, higher credit risks, or other less favorable
characteristics. g Unlike traditional fixed income securities, which pay a fixed
rate of interest until maturity (when the entire principal amount is due)
payments on mortgage backed securities include both interest and a partial
payment of principal. Partial payment of principal may be comprised of scheduled
principal payments as well as unscheduled payments from the voluntary prepayment
, refinancing, or foreclosure of the underlying loans. These unscheduled
prepayments of principal create risks that can adversely affect a Fund holding
mortgage backed securities. g For example, when interest rates decline, the
values of mortgage backed securities generally rise. However, when interest
rates decline, unscheduled prepayments can be expected to accelerate, and the
Fund would be required to reinvest the proceeds of the prepayments at the lower
interest rates then available. Unscheduled prepayments would also limit the
potential for capital appreciation on mortgage backed securities. g Conversely,
when interest rates rise, the values of mortgage backed securities generally
fall. Since rising interest rates typically result in decreased prepayments,
this could lengthen the average lives of mortgage backed securities, and cause
their value to decline more than traditional fixed income securities. g
Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response to
adverse economic or market conditions. Spreads may also increase if the security
is perceived to have an increased prepayment risk or is perceived to have less
market demand. g SECTOR RISKS G Companies with similar
characteristics may be grouped together in broad categories called sectors.
Sector risk is the possibility that a certain sector may underperform other
sectors or as the market as a whole. As the Adviser allocates more of a Fund's
portfolio holdings to a particular sector, a Fund's performance will be more
susceptible to any economic, business or other developments which generally
affect that sector. RISKS RELATED TO COMPANY SIZE g Generally, the smaller
the market capitalization of a company, the fewer the number of shares traded
daily, the less liquid its stock and the more volatile its price. Market
capitalization is determined by multiplying the number of its outstanding shares
by the current market price per share. g Companies with smaller market
capitalizations also tend to have unproven track records, a limited product or
service base and limited access to capital. These factors also increase risks
and make these companies more likely to fail than companies with larger market
capitalizations. RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES g
Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns and
financial setbacks may affect their prices more negatively, and their trading
market may be more limited. RISKS OF FOREIGN INVESTING

g Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors. g Foreign companies may not provide information (including
financial statements) as frequently or to as great an extent as companies in the
United States. Foreign companies may also receive less coverage than United
States companies by market analysts and the financial press. In addition,
foreign countries may lack uniform accounting, auditing and financial reporting
standards or regulatory requirements comparable to those applicable to U.S.
companies. These factors may prevent the Fund and its Adviser from obtaining
information concerning foreign companies that is as frequent, extensive and
reliable as the information available concerning companies in the United States.
g Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Fund's
investments. LEVERAGE RISKS g Leverage risk is created when an investment
exposes a Fund to a level of risk that exceeds the amount invested. Changes in
the value of such an investment magnify a Fund's risk of loss and potential for
gain. LIQUIDITY RISKS g Trading opportunities are more limited for equity
securities that are not widely held. This may make it more difficult to sell or
buy a security at a favorable price or time. Consequently, the Funds may have to
accept a lower price to sell a security, sell other securities to raise cash or
give up an investment opportunity, any of which could have a negative effect on
the Funds' performance. Infrequent trading of securities may also lead to an
increase in their price volatility. g Liquidity risk also refers to the
possibility that the Funds may not be able to sell a security or close out a
derivative contract when it wants to. If this happens, the Funds will be
required to continue to hold the security or keep the position open, and the
Funds could incur losses. g OTC derivative contracts generally carry greater
liquidity risk than exchange-traded contracts. g FUNDAMENTAL INVESTMENT
OBJECTIVES AND POLICIES

FUND OBJECTIVE
Federated Managed Income Portfolio To seek total return with an

emphasis on income and potential
for capital appreciation

Federated Managed Conservative Growth To seek total return with an
Portfolio emphasis on income and capital

appreciation

Federated Managed Moderate Growth Portfolio To seek capital appreciation with
income as a secondary objective

Federated Managed Growth Portfolio To seek capital appreciation

The investment objectives may not be changed by the Funds' Trustees without
shareholder approval.

INVESTMENT LIMITATIONS

DIVERSIFICATION OF INVESTMENTS

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

A Fund may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the 1940 Act.

<PAGE>

INVESTING IN REAL ESTATE

A Fund may not purchase or sell real estate, provided that this restriction
does not prevent a Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein. A
Fund may exercise its rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated
in an orderly manner. INVESTING IN COMMODITIES

The Funds may not purchase or sell physical commodities, provided that the
Funds may purchase securities of companies that deal in commodities.

UNDERWRITING

A Fund may not underwrite the securities of other issuers, except that a Fund
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933. LENDING CASH OR SECURITIES

A Fund may not make loans, provided that this restriction does not prevent a
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests. CONCENTRATION OF
INVESTMENTS

A Fund will not make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same industry.
Government securities, municipal securities and bank instruments will not be
deemed to constitute an industry.

THE ABOVE LIMITATIONS CANNOT BE CHANGED BY THE BOARD OF TRUSTEES (BOARD)
UNLESS AUTHORIZED BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING
SECURITIES," AS DEFINED BY THE INVESTMENT COMPANY ACT. THE FOLLOWING
LIMITATIONS, HOWEVER, MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL.
SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS
BECOMES EFFECTIVE.

BUYING ON MARGIN

A Fund will not purchase securities on margin, provided that a Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities, and further provided that a Fund may make margin deposits in
connection with its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments. PLEDGING ASSETS

A Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissable borrowing or to collateral arrangements in connection with
permissable activities. INVESTING IN ILLIQUID SECURITIES

A Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 15% of a Fund's net assets.
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 non-fundamental policy, for
purposes of the commodities policy, investments in transactions involving
futures contracts and options, forward currency contracts, swap transactions and
other financial contracts that settle by payment of cash are not deemed to be
investments in commodities. In applying a Fund's concentration restriction: (a)
utility companies will be divided according to their services, for example, gas,
gas transmission, electric and telephone will each be considered a separate
industry; (b) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (c)
asset-backed securities will be classified according to the underlying assets
securing such securities. To conform to the current view of the SEC that only
domestic bank instruments may be excluded from industry concentration
limitations, as a matter of non-fundamental policy, a Fund will not exclude
foreign bank instruments from industry concentration limits as long as the
policy of the SEC remains in effect. In addition, investments in bank
instruments, and investments in certain industrial development bonds funded by
activities in a single industry, will be deemed to constitute investment in an
industry, except when held for temporary defensive purposes. The investment of
more than 25% of the value of a Fund's total assets in any one industry will
constitute "concentration."

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For purposes of its policies and limitations, the Funds consider certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." DETERMINING MARKET
VALUE OF SECURITIES

Market values of a Fund's portfolio securities are determined as follows:

g for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;

g in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;

g for fixed income securities, at the last sale price on a national
securities exchange, if available, otherwise, as determined by an independent
pricing service; g futures contracts and options are generally valued at market
values established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market are
generally valued according to the mean between the last bid and the last asked
price for the option as provided by an investment dealer or other financial
institution that deals in the option. The Board may determine in good faith that
another method of valuing such investments is necessary to appraise their fair
market value; g for short-term obligations, according to the mean between
bid and asked prices as furnished by an independent pricing service, except that
short-term obligations

with remaining maturities of less than 60 days at the time of purchase may be
valued at amortized cost or at fair market value as determined in good faith
by the Board; and

g for all other securities at fair value as determined in good faith by
the Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its net asset value
(NAV), the Funds value foreign securities at the latest closing price on the
exchange on which they are traded immediately prior to the closing of the NYSE.
Certain foreign currency exchange rates may also be determined at the latest
rate prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Occasionally,
events that affect these values and exchange rates may occur between the times
at which they are determined and the closing of the NYSE. If such events
materially affect the value of portfolio securities, these securities may be
valued at their fair value as determined in good faith by the Funds' Board,
although the actual calculation may be done by others.

WHAT DO SHARES COST?

Each Fund's NAV per Share fluctuates and is based on the market value of
all securities and other assets of a Fund.

The NAV for each class of Shares may differ 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.

<PAGE>

HOW ARE THE FUNDS SOLD?

Under the Distributor's Contract with the Funds, the Distributor
(Federated Securities Corp.) offers Shares on a continuous, best-efforts basis.

RULE 12B-1 PLAN(SELECT SHARES)

As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Select Shares so that overall Fund assets are maintained or increased.
This helps the Funds achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Select Share redemptions.
Also, the Funds' service providers that receive asset-based fees also benefit
from stable or increasing Fund assets.

The Funds may compensate the Distributor more or less than its actual marketing
expenses. In no event will a Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.

For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid
in any one year may not be sufficient to cover the marketing-related expenses
the Distributor has incurred. Therefore, it may take the Distributor a number of
years to recoup these expenses.

SHAREHOLDER SERVICES

The Funds may pay Federated Shareholder Services Company, a subsidiary
of Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.

SUPPLEMENTAL PAYMENTS

Investment professionals may be paid fees out of the assets of the
Distributor and/or Federated Shareholder Services Company (but not out of
Fund assets). The Distributor and/or Federated Shareholder Services Company may
be reimbursed by the Adviser or its affiliates.

Investment professionals receive such fees for providing distribution-related
services or shareholder services such as sponsoring sales, providing sales
literature, conducting training seminars for employees, and engineering
sales-related computer software programs and systems. Also, investment
professionals may be paid cash or promotional incentives, such as reimbursement
of certain expenses relating to attendance at informational meetings about the
Funds or other special events at recreational-type facilities, or items of
material value. These payments will be based upon the amount of Shares the
investment professional sells or may sell and/or upon the type and nature of
sales or marketing support furnished by the investment professional.

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

Although each Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of a Fund's portfolio securities.

Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as each Fund determines its NAV.
The portfolio securities will be selected in a manner that the Funds' Board
deems fair and equitable and, to the extent available, such securities will be
readily marketable.

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

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Funds. To protect their
shareholders, the Funds have filed legal documents with Massachusetts that
expressly disclaim the liability of their shareholders for acts or obligations
of the Funds.

In the unlikely event a shareholder is held personally liable for the Funds'
obligations, the Funds are required by the Declaration of Trust to use their
property to protect or compensate the shareholder. On request, the Fundswill
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Funds. Therefore, financial loss resulting from liability as a
shareholder will occur only if a Fund itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS

Each share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.

Trustees may be removed by the Board or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote.

As of January __, 2000 the following shareholders owned of record,
beneficially, or both, 5% or more of the outstanding Shares of the Funds:

[TO BE FILED BY AMENDMENT.]

TAX INFORMATION

FEDERAL INCOME TAX

Each Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to registered investment companies. If these requirements are
not met, it will not receive special tax treatment and will pay federal income
tax.

Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by a Fund.

FOREIGN INVESTMENTS

If a Fund purchases foreign securities, their investment income may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which a Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of a Fund's assets to be invested within various countries is
uncertain. However, the Funds intend to operate so as to qualify for
treaty-reduced tax rates when applicable.

Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.

If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to Federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of a Fund's assets at the end of the tax year
is represented by stock or securities of foreign corporations, a Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of a Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

BOARD OF TRUSTEES

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of four
funds and the Federated Fund Complex is comprised OF 54 investment companies,
whose investment advisers are affiliated with the Funds' Adviser.

As of January __, 2000 the Funds' Board and Officers as a group owned less than
1% of the Funds' outstanding Shares.

<PAGE>

NAME TOTAL
BIRTHDATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST AND FUND COMPLEX

JOHN F. DONAHUE*#+ Chief Executive Officer and Director or $0 $0 for the
Birth Date: July 28, 1924 Trustee of the Federated Fund Complex, Trust and 54
Federated Investors Chairman and Director, Federated other
Tower Investors, Inc.; Chairman and Trustee, investment
1001 Liberty Avenue Federated Investment Management Company; companies in
Pittsburgh, PA Chairman and Director, Federated the Fund
CHAIRMAN AND TRUSTEE Investment Counseling and Federated Global Complex
Investment Management Corp..; Chairman,
Passport Research, Ltd.

THOMAS G. BIGLEY Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: February 3, Complex; Director, Member of Executive Trust and
1934 Committee, Children's Hospital of other
15 Old Timber Trail Pittsburgh; Director, Robroy Industries, investment
Pittsburgh, PA Inc. (coated steel conduits/computer companies in
TRUSTEE storage equipment); formerly: Senior the Fund Complex
Partner, Ernst & Young LLP; Director, MED
3000 Group, Inc. (physician practice
management); Director, Member of Executive
Committee, University of Pittsburgh.

JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: June 23, 1937 Complex; President, Investment Properties Trust and __
Wood Commercial Dept. Corporation; Senior Vice President, other
John R. Wood Associates, John R. Wood and Associates, Inc., investment
Inc. Realtors Realtors; Partner or Trustee in private companies in
3255 Tamiami Trail North real estate ventures in Southwest Florida; the Fund Complex
Naples, FL formerly: President, Naples Property
TRUSTEE Management, Inc. and Northgate Village
Development Corporation.

NICHOLAS CONSTANTAKIS Director or Trustee of the Federated Fund $_____ $_____for the
Birth Date: September 3, Complex; formerly: Partner, Andersen Trust and
1939 Worldwide SC. __ other
175 Woodshire Drive investment
Pittsburgh, PA companies
TRUSTEE in the Fund
Complex

WILLIAM J. COPELAND Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: July 4, 1918 Complex; Director and Member of the Trust and __
One PNC Plaza-23rd Floor Executive Committee, Michael Baker Corp. other
Pittsburgh, PA (engineering, construction, operations, investment
TRUSTEE and technical services); Chairman, companies in
Pittsburgh Foundation; Director, Forbes the Fund Complex
Fund (philanthropy); formerly: Vice

Chairman and Director, PNC Bank, N.A. and
PNC Bank Corp.; Director, Ryan Homes, Inc.

Previous Positions: Director, United
Refinery; Director, Forbes Fund; Chairman,
Pittsburgh Foundation; Chairman,
Pittsburgh Civic Light Opera; Chairman,
Health Systems Agency of Allegheny County;
Vice President, United Way of Allegheny
County; President, St. Clair Hospital;
Director, Allegheny Hospital.

JOHN F. CUNNINGHAM++ Director or Trustee of some of the $_____ $__ for the
Birth Date: March 5, 1943 Federated Fund Complex; Chairman, Trust and __
353 El Brillo Way President and Chief Executive Officer, other
Palm Beach, FL Cunningham & Co., Inc. (strategic business investment
TRUSTEE consulting); Trustee Associate, Boston companies in
College; Director, Iperia Corp. the Fund Complex
(communications/software); formerly:

Director, Redgate Communications and EMC
Corporation (computer storage systems) .

Previous Positions: Chairman of the Board
and Chief Executive Officer, Computer
Consoles, Inc., President and Chief
Operating Officer, Wang Laboratories;
Director, First National Bank of Boston;
Director, Apollo Computer, Inc.

LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: October 11, Complex; Professor of Medicine, University Trust and __
1932 of Pittsburgh; Medical Director, other
3471 Fifth Avenue University of Pittsburgh Medical Center - investment
Suite 1111 Downtown; Hematologist, Oncologist, and companies in
Pittsburgh, PA Internist, University of Pittsburgh the Fund Complex
TRUSTEE Medical Center; Member, National Board of
Trustees, Leukemia Society of America.

PETER E. MADDEN Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: March 16, Complex; formerly: Representative, Trust and __
1942 Commonwealth of Massachusetts General other
One Royal Palm Way Court; President, State Street Bank and investment
100 Royal Palm Way Trust Company and State Street companies in
Palm Beach, FL Corporation. the Fund Complex
TRUSTEE

Previous Positions: Director, VISA USA and
VISA International; Chairman and Director,
Massachusetts Bankers Association;
Director, Depository Trust Corporation;
Director, The Boston Stock Exchange.

CHARLES F. MANSFIELD, Director or Trustee of some of the $_____ $___ for the
JR.++ Federated Fund Complex; Management Trust and __
Birth Date: April 10, Consultant. other
1945 investment
80 South Road Previous Positions: Chief Executive companies in
Westhampton Beach, NY Officer, PBTC International Bank; Partner, the Fund Complex
TRUSTEE Arthur Young & Compnay (now Ernst & Young
LLP); Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice President,
Citibank; Assistant Professor of Banking and
Finance, Frank G. Zarb School of Business, Hofstra
University.

JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $_____ $_____ for the
J.D., S.J.D.# Complex; President, Law Professor, Trust and __
Birth Date: December 20, Duquesne University; Consulting Partner, other
1932 Mollica & Murray; Director, Michael Baker investment
President, Duquesne Corp. (engineering, construction, companies in
University operations and technical servivces). the Fund Complex
Pittsburgh, PA

TRUSTEE Previous Positions: Dean and Professor of
Law, University of Pittsburgh School of
Law; Dean and Professor of Law, Villanova
University School of Law.

MARJORIE P. SMUTS Director or Trustee of the Federated Fund $_____ $_____ for the
Birth Date: June 21, 1935 Complex; Public Trust and __
4905 Bayard Street Relations/Marketing/Conference Planning. other
Pittsburgh, PA investment
TRUSTEE Previous Positions: National Spokesperson, companies in
Aluminum Company of America; television the Fund
Complex producer; business owner.

JOHN S. WALSH++ Director or Trustee of some of the $__ $_____ for the
Birth Date: November 28, Federated Fund Complex; President and Trust and __
1957 Director, Heat Wagon, Inc. (manufacturer other
2007 Sherwood Drive of construction temporary heaters); investment
Valparaiso, IN President and Director, Manufacturers companies in
TRUSTEE Products, Inc. (distributor of portable the Fund Complex
construction heaters); President, Portable
Heater Parts, a division of Manufacturers
Products, Inc.; Director, Walsh & Kelly,
Inc. ((heavy highway contractor);
formerly: Vice President, Walsh & Kelly,

Inc.

GLEN R. JOHNSON* Staff member, Federated Securities Corp. $0 $0 for the
Birth Date: May 2, 1929 Trust and __
Federated Investors Tower other
1001 Liberty Avenue investment
Pittsburgh, PA companies in
PRESIDENT AND TRUSTEE the Fund Complex
J. CHRISTOPHER DONAHUE*+ President or Executive Vice President of $0 $0 for the
Birth Date: April 11, the Federated Fund Complex; Director or Trust and __
1949 Trustee of some of the Funds in the other
Federated Investors Tower Federated Fund Complex; President, Chief investment
1001 Liberty Avenue Executive Officer and Director, Federated companies in
Pittsburgh, PA Investors, Inc.; President and Trustee, the Fund Complex
EXECUTIVE VICE PRESIDENT Federated Investment Management Company;
AND TRUSTEE President and Trustee, Federated

Investment Counseling; President and Director,
Federated Global Investment Management Corp.;
President, Passport Research, Ltd.; Trustee,
Federated Shareholder Services Company; Director,
Federated Services Company.

<PAGE>

EDWARD C. GONZALES Trustee or Director of some of the Funds $0 $__ for the
Birth Date: October 22, in the Federated Fund Complex; President, Trust and __
1930 Executive Vice President and Treasurer of other
Federated Investors Tower some of the Funds in the Federated Fund investment
1001 Liberty Avenue Complex; Vice Chairman, Federated company in the
Pittsburgh, PA Investors, Inc.; Vice President, Federated Fund Complex
EXECUTIVE VICE PRESIDENT Investment Management Company and
Federated Investment Counseling, Federated
Global Investment Management Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.

JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $__ for the
Birth Date: October 26, the Federated Fund Complex; Executive Vice Trust and __
1938 President, Secretary, and Director, other
Federated Investors Tower Federated Investors, Inc.; Trustee, investment
1001 Liberty Avenue Federated Investment Management Company companies in
Pittsburgh, PA and Federated Investment Counseling; the Fund Complex
EXECUTIVE VICE PRESIDENT Director, Federated Global Investment
AND SECRETARY Management Corp., Federated Services

Company and Federated Securities Corp.

RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Trust and __
Federated Investors Tower Director or Trustee of some of the Funds other
1001 Liberty Avenue in the Federated Fund Complex; Executive investment
Pittsburgh, PA Vice President, Federated Investors, Inc.; companies in
VICE PRESIDENT Chairman and Director, Federated the Fund Complex
Securities Corp.

RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birth Date: June 17, 1954 Vice President - Funds Financial Services Trust and 54
Federated Investors Tower Division, Federated Investors, Inc.; other
1001 Liberty Avenue formerly: various management positions investment
Pittsburgh, PA within Funds Financial Services Division companies in
TREASURER of Federated Investors, Inc. the Fund Complex

J. THOMAS MADDEN Chief Investment Officer of these Funds $0 $0 for the
Birth Date: October 22, and various other Funds in the Federated Trust and __
1945 Fund Complex; Executive Vice President, other
Federated Investors Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Investment Management Corp., companies in
Pittsburgh, PA Federated Investment Management Company the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Vice
President, Federated Investors, Inc.;
formerly: Executive Vice President and
Senior Vice President, Federated
Investment Counseling Institutional
Portfolio Management Services Division;
Senior Vice President, Federated
Investment Management Company and Passport
Research, Ltd.

</TABLE>

* AN ASTERISK DENOTES A TRUSTEE WHO IS DEEMED TO BE AN INTERESTED PERSON AS
DEFINED IN THE INVESTMENT COMPANY ACT OF 1940.

# A POUND SIGN DENOTES A MEMBER OF THE BOARD'S EXECUTIVE COMMITTEE, WHICH
HANDLES THE BOARD'S RESPONSIBILITIES BETWEEN ITS MEETINGS.

+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, EXECUTIVE VICE
PRESIDENT AND TRUSTEE OF THE TRUST.

++ MESSRS. CUNNINGHAM, MANSFIELD AND WALSH BECAME MEMBERS OF THE BOARD OF
TRUSTEES ON JANUARY 1, 1999. THEY DID NOT EARN ANY FEES FOR SERVING THE FUND
COMPLEX SINCE THESE FEES ARE REPORTED AS OF THE END OF THE LAST CALENDAR YEAR.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Funds.

The Adviser is a wholly-owned subsidiary of Federated.

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

OTHER RELATED SERVICES

Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.

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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.

RESEARCH SERVICES

Research services 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 may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
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 those 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.

Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.

ADMINISTRATOR

Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:

MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE FUNDS

0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% 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 voluntarily waive a portion of its fee and may
reimburse the Funds for expenses.

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Funds. Foreign instruments purchased by the Funds are
held by foreign banks participating in a network coordinated by State Street
Bank.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountant for the Funds, Arthur Andersen LLP, plans
and performs its audit so that it may provide an opinion as to whether the
Funds' financial statements and financial highlights are free of material
misstatement.

FEES PAID BY THE FUNDS FOR SERVICES
<S> <C> <C> <C>
- ------------------ -------------------------------- --------------------------- ---------------------------
FUND ADVISORY FEE PAID BROKERAGE COMMISSIONS PAID ADMINISTRATIVE FEE PAID
ADVISORY FEE WAIVED

SUB-ADVISORY FEE PAID

--------------------------- ---------------------------
-------------------------------- --------------------------- ---------------------------
FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,

-------------------------------- --------------------------- ---------------------------
-----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------
-----------------------------------------------------------------------------------------
INCOME PORTFOLIO $___ $880,363 $696,806 $___ $29,143 $18,013 $___ $155,001 $154,890
$___ $494,803 $461,157
$___ $58,453 $8,724
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
CONSERVATIVE $___ $1,704,532 $1,535,953 $___ $154,743 $235,841 $___ $171,362 $155,085
GROWTH PORTFOLIO $___ $0 $101,972
$___ $313,796 $99,378
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
MODERATE GROWTH $___ $1,876,254 $1,653,493 $___ $461,050 $423,125 $___ $188,627 $166,775
PORTFOLIO $___ $0 $129,366
$___ $340,468 $243,773
- -----------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO $___ $1,048,670 $762,135 $___ $341,583 $279,734 $___ $155,001 $154,893
$___ $176,779 $326,658
$___ $149,290 $87,324
- -----------------------------------------------------------------------------------------------------------

- ----------------------- --------------------------- --------------------------- ---------------------------
SELECT SHARES INSTITUTIONAL SHARES SELECT SHARES

--------------------------- --------------------------- ---------------------------
FIGURES FOR THE 12B-1 FEE 12B-FEE SHAREHOLDER SHAREHOLDER SHAREHOLDER SHAREHOLDER
FISCAL YEAR ENDED PAID WAIVED SERVICING SERVICING SERVICING SERVICING
NOVEMBER 30, 1999 FEE PAID FEE WAIVED FEE PAID FEE WAIVED

- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
INCOME PORTFOLIO $___ $___ $___ $___ $___ $___
- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
CONSERVATIVE GROWTH $___ $___ $___ $___ $___ $___
PORTFOLIO

- -----------------------
- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
GROWTH PORTFOLIO $___ $___ $___ $___ $___ $___
- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
</TABLE>

Fees are allocated among classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable class of Shares.

HOW DO THE FUNDS MEASURE PERFORMANCE?

The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

The performance of Shares depends upon such variables as: portfolio
quality; average portfolio maturity; type and value of portfolio securities;
changes in interest rates; changes or differences in the Funds' or any class of
Shares' expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.

AVERAGE ANNUAL TOTAL RETURNS AND YIELD

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ------------------- ------------------------------------------------------- ----------------------------
FUND AVERAGE ANNUAL TOTAL RETURNS YIELDS

FOR THE PERIODS ENDED NOVEMBER 30, 1999 FOR THE 30-DAY PERIOD ENDED
-------------------------------------------------------
--------------------------- ---------------------------
INSTITUTIONAL SHARES SELECT SHARES NOVEMBER 30, 1999

--------------------------- --------------------------- ----------------------------
------------- ------------- ------------- -------------
ONE-YEAR SINCE ONE-YEAR SINCE INSTITUTIONAL SELECT

INCEPTION INCEPTION SHARES SHARES

(5/25/94) (5/25/94)

</TABLE>

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

YIELD

The yield of Shares is calculated by dividing: (i) the net investment income
per Share earned by the Shares over a 30-day period; by (ii) the maximum
offering price per Share on the last day of the period. This number is then
annualized using semi-annual compounding. This means that the amount of income
generated during the 30-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 Shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

g references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

g charts, graphs and illustrations using a Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment; g discussions of economic,
financial and political developments and their impact on the securities market,
including the portfolio manager's views on how such developments could impact
the Funds; and g information about the mutual fund industry from sources such as
the Investment Company Institute. A Fund may compare its performance, or
performance for the types of securities in which it invests, to a variety of
other investments, including federally insured bank products such as bank
savings accounts, certificates of deposit, and Treasury bills.

The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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 Funds use in advertising may include:

o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making competitive 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 specified
period of time. From time to time, a Portfolio will quote its Lipper
ranking in advertising and sales literature.

o STANDARD & POOR'S RATINGS GROUP UTILITY INDEX is an unmanaged index of
common stocks from forty different utilities. This index indicates daily
changes in the price of the stocks. The index also provides figures for
changes in price from the beginning of the year to date and for a
twelve-month period.

O STANDARD & POOR'S RATINGS GROUP DAILY STOCK PRICE INDEX OF 500 COMMON
STOCKS, a composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the total
returns of funds whose portfolios are invested primarily in common stocks.
In addition, the Standard & Poor's index assumes reinvestments of all
dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
in the Standard & Poor's figures.

o STANDARD & POOR'S RATINGS GROUP SMALL STOCK INDEX, is a broadly diversified
index consisting of approximately 600 small capitalization common stocks
that can be used to compare to the total returns of funds whose portfolios
are invested primarily in small capitalization common stocks.

o EUROPE, AUSTRALIA, AND FAR EAST (EAFE) is a market capitalization weighted
foreign securities index, which is widely used to measure the performance
of European, Australian, New Zealand and Far Eastern stock markets. The
index covers approximately 1,020 companies drawn from 18 countries in the
above regions. The index values its securities daily in both U.S. dollars
and local currency and calculates total returns monthly. EAFE U.S. dollar
total return is a net dividend figure less Luxembourg withholding tax. The
EAFE is monitored by Capital International, S.A., Geneva, Switzerland.

o RUSSELL 1000 INDEX measures the performance of the 1,000 largest companies
in the Russell 3000 Index, which represents approximately 90% of the total
market capitalization of the Russell 3000 Index.

o RUSSELL 2000 INDEX is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested
primarily in small capitalization common stocks.

o LEHMAN BROTHERS TREASURY INTERMEDIATE BOND INDEX (U.S. DOLLARS) is an index
composed of all bonds covered by the Lehman Brothers Treasury Bond Index
with maturities between one and 9.9 years. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.

o LEHMAN BROTHERS TREASURY LONG-TERM BOND INDEX (U.S. DOLLARS) is an index
composed of all bonds covered by the Lehman Brothers Treasury Bond Index
with maturities of 10 years or greater. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.

o J.P. MORGAN GLOBAL NON-U.S. GOVERNMENT BOND INDEX is a total return, market
capitalization weighted index, rebalanced monthly consisting of the
following countries:

Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan,
Netherlands, Spain, Sweden and United Kingdom.

o LEHMAN BROTHERS CORPORATE INTERMEDIATE BOND INDEX (U.S. DOLLARS) is a
subset of the Lehman Brothers Corporate Bond Index covering all corporate,
publicly issued, fixed-rate, nonconvertible U.S. debt issues rated at least
Baa with at least $50 million principal outstanding and maturity less than
10 years.

o LEHMAN BROTHERS CORPORATE B INDEX is an index composed of all bonds covered
by Lehman Brothers High Yield Index rated "B" by Moody's Investors Service.
Bonds have a minimum amount outstanding of $100 million and at least one
year to maturity. Total return comprises price appreciation/depreciation
and income as a percentage of the original investment. Indexes are
rebalanced monthly by market capitalization.

o LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX includes 15- and 30-year
fixed-rate securities backed by mortgage pools of the Government National
Mortgage Association , Federal Home Loan Mortgage Corporation , and Federal
National Mortgage Corporation . Graduated payment mortgages and balloons
are included in theindex.

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

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

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

o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.

WHO IS FEDERATED INVESTORS, INC.?

Federated Investors, Inc. is dedicated to meeting investor needs by making
structured, straightforward and consistent investment decisions. Federated
investment products have a history of competitive performance and have gained
the confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of talents and state-of-the-art industry tools
and resources. Federated's investment process involves teams of portfolio
managers and analysts, and investment decisions are executed by traders
dedicated to specific market sectors and who handle trillions of dollars in
annual trading volume.

FEDERATED FUNDS OVERVIEW

MUNICIPAL FUNDS

In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.

EQUITY FUNDS

In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.

CORPORATE BOND FUNDS

In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset-backed securities market, a market
totaling more than $209 billion.

GOVERNMENT FUNDS

In the government sector, as of December 31, 1998, Federated managed 9
mortgage-backed, 5 government/agency and 19 government money market mutual
funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion,
respectively. Federated trades approximately $425 million in U.S. government and
mortgage-backed securities daily and places approximately $25 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 approximately $43.2 billion in government funds within
these maturity ranges.

MONEY MARKET FUNDS

In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high yield - J. Thomas
Madden; U.S. fixed income -William D. Dawson, III; and global equities and fixed
income - Henry A. Frantzen. The Chief Investment Officers are Executive Vice
Presidents of the Federated advisory companies.

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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.

FEDERATED CLIENTS OVERVIEW

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

INSTITUTIONAL CLIENTS

Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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 advisers. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division, Federated Securities Corp.

BANK MARKETING

Other institutional clients include 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 ratings in several surveys performed by DALBAR,
Inc. DALBAR is recognized as the industry benchmark for service quality
measurement. The marketing effort to these firms is headed by James F. Getz,
President, Broker/Dealer Sales Division, Federated Securities Corp.

FINANCIAL INFORMATION

The Financial Statements for the Funds for the fiscal year ended November 30,
1999 are incorporated herein by reference to the Annual Reports to Shareholders
of the Funds dated November 30, 1999. [TO BE FILED BY AMENDMENT.]

<PAGE>

INVESTMENT RATINGS

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

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

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

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

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

BAA--Bonds which are rated BAA are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

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

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

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

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

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

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

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

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

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

g Leading market positions in well established industries.
g High rates of return on funds employed.

g Conservative capitalization structure with moderate reliance on debt and ample
asset protection. g Broad margins in earning coverage of fixed financial charges
and high internal cash generation. g Well established access to a range of
financial markets and assured sources of alternate liquidity.

PRIME-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

<PAGE>

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

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

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

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

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

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

<PAGE>

ADDRESSES

FEDERATED MANAGED INCOME PORTFOLIO

FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO

FEDERATED MANAGED MODERATE GROWTH PORTFOLIO

FEDERATED MANAGED GROWTH PORTFOLIO

Institutional Shares
Select Shares

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower

1001 Liberty Avenue,
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER

Federated Investment Management Company
Federated Investors Tower

1001 Liberty Avenue,
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 PUBLIC ACCOUNTANTS

Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812

PART C. OTHER INFORMATION.

Item 23. EXHIBITS:

(a) (i) Conformed copy of Declaration of Trust of the Registrant (1);
(ii) Conformed copy of Amendment No. 1 to Declaration of Trust (1);
(iii) Conformed copy of Amendment No. 2 to Declaration of Trust (2);
(iv) Conformed copy of Amendment No. 4 to Declaration of Trust (5);

(b) Copy of By-Laws of the Registrant (1);
(i) Copy of Amendment No. 2 to the By-Laws; (9)
(ii) Copy of Amendment No. 3 to the By-Laws; (9)
(iii) Copy of Amendment No. 4 to the By-Laws; (9)

(c) Copy of Specimen Certificates for Shares of Beneficial
Interest of the Registrant (2);
(d) (i) Conformed copy of Investment Advisory Contract of
the Registrant (3);

(ii) Conformed copy of Sub-Advisory Contract (6);

(e) (i) Conformed copy of Distributor's Contract of the
Registrant (3);

(ii) The Registrant hereby incorporates the conformed
copy of the specimen Mutual Funds Sales and Service
Agreement; Mutual Fund 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);

(f) Not applicable;

(g) (i) Conformed copy of Custodian Agreement of the
Registrant (4);
(ii) Conformed copy of Custodian Fee Schedule (7);

-----------------------
+ All exhibits have been filed electronically.

(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 2, 1993 (File Nos. 33-51247 and
811-7129).

(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-51247
and 811-7129).

(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed March 2, 1994 (File Nos. 33-51247 and
811-7129).

(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129).

(5) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 5 on Form N-1A filed January 29, 1996 (File Nos. 33-51247 and
811-7129).

(6) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 6 on Form N-1A filed January 29, 1997 (File Nos. 33-51247 and
811-7129).

(7) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 7 on Form N-1A filed November 26, 1997 (File Nos. 33-51247
and 811-7129).

(9) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 9 on Form N-1A filed December 2, 1998 (File Nos. 33-51247 and
811-7129).

<PAGE>

(h) (i) Conformed copy of Agreement for Fund Accounting
Services, Administrative Services, Transfer Agency
Services, and Custody Services Procurement (6);

(ii) Conformed Copy of Amended and Restated Shareholder
Services Agreement (7);

(iii) The Registrant hereby incorporates the conformed
copy of the Shareholder Services Sub-Contract
between Fidelity and Federated Shareholder
Services from Item 24(b)(9)(iii) of the Federated
GNMA Trust Registration Statement of Form N-1A,
filed with the Commission on March 25, 1996.
(File Nos. 2-75670 and 811-3375);

(iv) The responses described in Item 23(e) (ii) are hereby
incorporated by reference;

(i) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered (2); (j) Conformed copy of
Consent of Independent Public Accountants (to be filed by
amendment); (k) Not applicable; (l) Conformed copy of Initial
Capital Understanding (2); (m) (i) Conformed copy of Distribution
Plan (4);

(ii) The responses described in Item 23(e)(ii) are
hereby incorporated by reference;

(n) 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);

(o) (i) Conformed copy of Power of Attorney (6);

(ii) Conformed copy of Power of Attorney to add new
Trustees, Treasurer and Chief Investment Officer of the
Registrant(10); (iii) Conformed copy of Limited Power of
Attorney. +

- -----------------------
+ 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 February 11, 1994 (File Nos. 33-51247
and 811-7129).

(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129).

(6) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 6 on Form N-1A filed January 30, 1997 (File Nos. 33-51247 and
811-7129).

(7) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 7 on Form N-1A filed November 26, 1997 (File Nos. 33-51247
and 811-7129).

(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed January 29, 1999 (File Nos. 33-51247
and 811-7129).

<PAGE>

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

None.

Item 25. INDEMNIFICATION: Response is incorporated by reference to
Registrant's Pre-Effective Amendment No. 1 on Form N-1A filed
February 11, 1994 (File Nos. 33-51247 and 811-7129).

Item 26. Business and Other Connections of Investment Adviser:

For a description of the other business of the investment adviser,
see the section entitled "Who Manages 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 "Who Manages and Provides Services to
the Fund?" 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.

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
David A. Briggs
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Jeffrey A. Kozemchak
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski

Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
G. Andrew Bonnewell
Micheal W. Casey
Robert E. Cauley
Alexandre de Bethmann
B. Anthony Delserone, Jr.

Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
James E. Grefenstette
Marc Halperin
Patricia L. Heagy
Susan R. Hill
William R. Jamison
Constantine J. Kartsonas
Robert M. Kowit
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
William M. Painter
Jeffrey A. Petro
Keith J. Sabol
Frank Semack
Aash M. Shah
Michael W. Sirianni, Jr.
Christopher Smith
Edward J. Tiedge
Leonardo A. Vila
Paige M. Wilhelm
George B. Wright

Assistant Vice Presidents: Arminda Aviles
Nancy J. Belz
Lee R. Cunningham, II
James H. Davis, II
Jacqueline A. Drastal
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
Gary E. Farwell
Eamonn G. Folan
John T. Gentry
John W. Harris
Nathan H. Kehm
John C. Kerber
Grant K. McKay
Christopher Matyszewski
Natalie F. Metz
Thomas Mitchell
Joseph M. Natoli
Trent Neville
Ihab Salib
Roberto Sanchez-Dahl, Sr.
James W. Schaub
John Sheehy
John Sidawi
Matthew K. Stapen
Diane Tolby
Timothy G. Trebilcock
Steven J. Wagner
Lori A. Wolff

Secretary: G. Andrew Bonnewell

Treasurer: Thomas R. Donahue

Assistant Secretaries: C. Grant Anderson
Karen M. Brownlee
Leslie K. Ross

Assistant Treasurer: Dennis McAuley, III

The business address of each of the Officers of the investment
adviser is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the investment
companies in the Federated Fund Complex described in Part B of this
Registration Statement.

ITEM 27. 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:

Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; 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 Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal 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.; Fixed Income
Securities, Inc.; ; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
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; Regions Funds; RIGGS Funds;
SouthTrust Funds; Tax-Free Instruments Trust; The Planters Funds; The Wachovia
Funds; The Wachovia Municipal Funds; Vision Group of Funds, Inc.; World
Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
DG Investor Series; High Yield Cash Trust; Investment Series Trust; Star Funds;
Targeted Duration Trust; The Virtus Funds; Trust for Financial Institutions;

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 Chairman, Chief Executive Vice President
Federated Investors Tower Officer, Chief Operating
1001 Liberty Avenue Officer
Pittsburgh, PA 15222-3779 Federated Securities Corp.

Arthur L. Cherry Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ronald M. Petnuch Senior Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(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.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Dennis M. Laffey Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Amy Michalisyn Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Larry Sebbens Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Timothy S. Johnson Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Dennis McAuley Assistant Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

</TABLE>

Item 28. 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 Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

(Notices should be sent to the Agent for Service at above address)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
("Transfer Agent and

Dividend Disbursing Agent")

Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Federated Investment Federated Investors Tower
Management Company 1001 Liberty Avenue
("Adviser") Pittsburgh, PA 15222-3779

State Street Bank and Pittsburgh, PA 15222-3779
Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600

Item 29. MANAGEMENT SERVICES: Not applicable.

Item 30. UNDERTAKINGS:

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, FEDERATED MANAGED ALLOCATION PORTFOLIOS
(formerly, Managed Series Trust), has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
29th day of November, 1999.

FEDERATED MANAGED ALLOCATION PORTFOLIOS

(formerly, Managed Series Trust)

BY: /s/ C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue

November 29, 1999

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/ C. Grant Anderson
C. Grant Anderson Attorney In Fact November 29, 1999
ASSISTANT SECRETARY For the Persons

Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

J. Thomas Madden* Chief Investment Officer

Glen R. Johnson* President and Trustee

Richard J. Thomas* Treasurer
(Principal Financial and
Accounting Officer)

Thomas G. Bigley * Trustee

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

John F. Cunningham* Trustee

Lawrence D. Ellis, M.D.* Trustee

Peter E. Madden* Trustee

Charles F. Mansfield, Jr.* Trustee

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

Marjorie P. Smuts* Trustee

John S. Walsh* Trustee

* By Power of Attorney

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

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, dated as of January 7, 1999, that
Managed Series Trust, a Trust duly organized under the laws of the Commonwealth
of Massachusetts (the "Trust"), does hereby nominate, constitute and appoint
Federated Global Investment Management Corp., a corporation duly organized under
the laws of the Delaware (the "Subadviser"), to act hereunder as the true and
lawful agent and attorney-in-fact of the Trust, acting on behalf of each of the
series portfolios for which the Subadviser acts as investment adviser shown on
Schedule 1 attached hereto and incorporated by reference herein (each such
series portfolio being hereinafter referred to as a "Fund" and collectively as
the "Funds"), for the specific purpose of executing and delivering all such
agreements, instruments, contracts, assignments, bond powers, stock powers,
transfer instructions, receipts, waivers, consents and other documents, and
performing all such acts, as the Subadviser may deem necessary or reasonably
desirable, related to the acquisition, disposition and/or reinvestment of the
funds and assets of a Fund of the Trust in accordance with Subadviser's
supervision of the investment, sale and reinvestment of the funds and assets of
each Fund pursuant to the authority granted to the Subadviser as investment
adviser of each Fund under that certain subadvisory contract dated November 20,
1995 by and between the Subadviser and the Trust (such subadvisory contract, as
may be amended, supplemented or otherwise modified from time to time is
hereinafter referred to as the "Subadvisory Contract").

The Subadviser shall exercise or omit to exercise the powers and
authorities granted herein in each case as the Subadviser in its sole and
absolute discretion deems desirable or appropriate under existing circumstances.
The Trust hereby ratifies and confirms as good and effectual, at law or in
equity, all that the Subadviser, and its officers and employees, may do by
virtue hereof. However, despite the above provisions, nothing herein shall be
construed as imposing a duty on the Subadviser to act or assume responsibility
for any matters referred to above or other matters even though the Subadviser
may have power or authority hereunder to do so. Nothing in this Limited Power of
Attorney shall be construed (i) to be an amendment or modifications of, or
supplement to, the Subadvisory Contract, (ii) to amend, modify, limit or
denigrate any duties, obligations or liabilities of the Subadviser under the
terms of the Subadvisory Contract or (iii) exonerate, relieve or release the
Subadviser any losses, obligations, penalties, actions, judgments and suits and
other costs, expenses and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Subadviser (x) under the
terms of the Subadvisory Contract or (y) at law, or in equity, for the
performance of its duties as the investment adviser of any of the Funds.

The Trust hereby agrees to indemnify and save harmless the Subadviser
and its trustees, officers and employees (each of the foregoing an "Indemnified
Party" and collectively the "Indemnified Parties") against and from any and all
losses, obligations, penalties, actions, judgments and suits and other costs,
expenses and disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against an Indemnified Party, other than as a
consequence of gross negligence or willful misconduct on the part of an
Indemnified Party, arising out of or in connection with this Limited Power of
Attorney or any other agreement, instrument or document executed in connection
with the exercise of the authority granted to the Subadviser herein to act on
behalf of the Trust, including without limitation the reasonable costs, expenses
and disbursements in connection with defending such Indemnified Party against
any claim or liability related to the exercise or performance of any of the
Subadviser's powers or duties under this Limited Power of Attorney or any of the
other agreements, instruments or documents executed in connection with the
exercise of the authority granted to the Subadviser herein to act on behalf of
the Trust, or the taking of any action under or in connection with any of the
foregoing. The obligations of the Trust under this paragraph shall survive the
termination of this Limited Power of Attorney with respect to actions taken by
the Subadviser on behalf of the Trust during the term of this Limited Power of
Attorney. No Fund shall have any joint or several obligation with any other Fund
to reimburse or indemnify an Indemnified Party for any action, event, matter or
occurrence performed or omitted by or on behalf of the Subadviser in its
capacity as agent or attorney-in-fact of Trust acting on behalf of any other
Fund hereunder.

Any person, partnership, Trust or other legal entity dealing with the
Subadviser in its capacity as attorney-in-fact hereunder for the Trust is hereby
expressly put on notice that the Subadviser is acting solely in the capacity as
an agent of the Trust and that any such person, partnership, Trust or other
legal entity must look solely to the Trust in question for enforcement of any
claim against the Trust, as the Subadviser assumes no personal liability
whatsoever for obligations of the Trust entered into by the Subadviser in its
capacity as attorney-in-fact for the Trust.

Each person, partnership, Trust or other legal entity which deals with a
Fund of the Trust through the Subadviser in its capacity as agent and
attorney-in-fact of the Trust, is hereby expressly put on notice (i) that all
persons or entities dealing with the Trust must look solely to the assets of the
Fund of the Trust on whose behalf the Subadviser is acting pursuant to its
powers hereunder for enforcement of any claim against the Trust, as the
Directors, officers and/or agents of such Trust, the shareholders of the various
classes of shares of the Trust and the other Funds of the Trust assume no
personal liability whatsoever for obligations entered into on behalf of such
Fund of the Trust, and (ii) that the rights, liabilities and obligations of any
one Fund are separate and distinct from those of any other Fund of the Trust.

The execution of this Limited Power of Attorney by the Trust acting on
behalf of the several Funds shall not be deemed to evidence the existence of any
express or implied joint undertaking or appointment by and among any or all of
the Funds. Liability for or recourse under or upon any undertaking of the
Subadviser pursuant to the power or authority granted to the Subadviser under
this Limited Power of Attorney under any rule of law, statute or constitution or
by the enforcement of any assessment or penalty or by legal or equitable
proceedings or otherwise shall be limited only to the assets of the Fund of the
Trust on whose behalf the Subadviser was acting pursuant to the authority
granted hereunder.

The Trust hereby agrees that no person, partnership, Trust or other
legal entity dealing with the Subadviser shall be bound to inquire into the
Subadviser's power and authority hereunder and any such person, partnership,
Trust or other legal entity shall be fully protected in relying on such power or
authority unless such person, partnership, Trust or other legal entity has
received prior written notice from the Trust that this Limited Power of Attorney
has been revoked. This Limited Power of Attorney shall be revoked and terminated
automatically upon the cancellation or termination of the Subadvisory Contract
between the Trust and the Subadviser. Except as provided in the immediately
preceding sentence, the powers and authorities herein granted may be revoked or
terminated by the Trust at any time provided that no such revocation or
termination shall be effective until the Subadviser has received actual notice
of such revocation or termination in writing from the Trust.

This Limited Power of Attorney constitutes the entire agreement between
the Trust and the Subadviser, may be changed only by a writing signed by both of
them, and shall bind and benefit their respective successors and assigns;
provided, however, the Subadviser shall have no power or authority hereunder to
appoint a successor or substitute attorney in fact for the Trust.

This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflicts of laws. If any provision hereof, or any power or
authority conferred upon the Subadviser herein, would be invalid or
unexercisable under applicable law, then such provision, power or authority
shall be deemed modified to the extent necessary to render it valid or
exercisable while most nearly preserving its original intent, and no provision
hereof, or power or authority conferred upon the Subadviser herein, shall be
affected by the invalidity or the non-exercisability of another provision
hereof, or of another power or authority conferred herein.

This Limited Power of Attorney may be executed in as many identical
counterparts as may be convenient and by the different parties hereto on
separate counterparts. This Limited Power of Attorney shall become binding on
the Trust when the Trust shall have executed at least one counterpart and the
Subadviser shall have accepted its appointment by executing this Limited Power
of Attorney. Immediately after the execution of a counterpart original of this
Limited Power of Attorney and solely for the convenience of the parties hereto,
the Trust and the Subadviser will execute sufficient counterparts so that the
Subadviser shall have a counterpart executed by it and the Trust, and the Trust
shall have a counterpart executed by the Trust and the Subadviser. Each
counterpart shall be deemed an original and all such taken together shall
constitute but one and the same instrument, and it shall not be necessary in
making proof of this Limited Power of Attorney to produce or account for more
than one such counterpart.

IN WITNESS WHEREOF, the Trust has caused this Limited Power of Attorney
to be executed by its duly authorized officer as of the date first written
above.

MANAGED SERIES TRUST

By: /S/ JOHN W. MCGONIGLE

Name: John W. McGonigle
Title: Executive Vice President

Accepted and agreed to January 7, 1999

FEDERATED GLOBAL INVESTMENT
MANAGEMENT CORP.

By: /S/J. CHRISTOPHER DONAHUE

Name: J. Christopher Donahue
Title: President

<PAGE>

Schedule 1
to Limited Power of Attorney

dated as of January 7, 1999

by Managed Series Trust
(the Trust "), acting on

behalf of each of the series portfolios
listed below, and appointing

Federated Global Investment Management Corp.
the attorney-in-fact of the

Trust

LIST OF SERIES PORTFOLIOS

Federated Managed Aggressive Growth Fund
Federated Managed Growth and Income Fund

Federated Managed Growth Fund

Federated Managed Income Fund