FEDERATED ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
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SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 2000

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At a Special Meeting of Shareholders to be held on September 6, 2000,
shareholders of the Fund will be asked to vote on the changes described below.
If approved by shareholders, these changes will take effect on or about
September 7, 2000. Shareholders will be notified if any of these changes are not
approved. Please keep this supplement for your records.

o     To make changes to the Fund's fundamental investment objective and
      fundamental investment policy:

          (a)  To amend the Fund's fundamental  investment  objective to provide
               as follows:  "The Fund's investment objective is to provide total
               return;" and

          (b)  To amend, and make non-fundamental,  the Fund's investment policy
               regarding acceptable investments to provide as follows: "The Fund
               pursues its objective by investing its assets in U.S.  government
               and  government  agency  securities,  including  mortgage  backed
               securities."

o     To transact such other business as may properly come before the meeting or
      any adjournment thereof.

                                                                   June 27, 2000


Cusip 314072109
25594 (4/00)