FEDERATED MANAGED INCOME FUND FEDERATED MANAGED GROWTH AND INCOME FUND FEDERATED
MANAGED GROWTH FUND FEDERATED MANAGED AGGRESSIVE GROWTH FUND Institutional
Shares Select Shares (Portfolios of Managed Series Trust)
Supplement to Statement of Additional Information dated January 31, 1999
1. Please insert the following as a main section after the section entitled
"MORTGAGE BACKED SECURITIES" which begins on page 2 of the Statement of
Additional Information:
"MORTGAGE-RELATED ASSET BACKED SECURITIES
Asset backed securities are payable from pools of obligations other
than first lien mortgages. Most asset backed securities involve
consumer or commercial debts. The Fund will only 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 structured like Floaters, Inverse
Floaters, IOs and POs.
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."
2. Please insert the following as the last subsection to the section entitled
"Derivative Contracts" which begins on page 4 of the Statement of Additional
Information:
"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, the 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 Fund
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."
March 1, 1999
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
www.federatedinvestors.com
Cusip 56166K800 Cusip 56166K 701 Cusip 56166K 404 Cusip 56166K 305 Cusip 56166K
602 Cusip 56166K 503 Cusip 56166K 206 Cusip 56166K 107
G00251-10 (3/99)
