485BPOS

                                                   1933 Act File No. 33-41004
                                                   1940 Act File No. 811-6307

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933             X
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    Pre-Effective Amendment No.       ......................      ___
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    Post-Effective Amendment No. __23_ .....................        X
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                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940     X
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    Amendment No. _20_ .....................................        X
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                FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

                  (Address of Principal Executive Offices)

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

                         John W. McGonigle, Esquire,
                           Federated Investors Tower,
                       Pittsburgh, Pennsylvania 15222-3779
                     (Name and Address of Agent for Service)

It is proposed that this filing will become effective:

X immediately upon filing pursuant to paragraph (b)
_ on _ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on pursuant to paragraph (a)(i).
75 days after filing pursuant to paragraph (a)(ii)
on ________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.

                                   Copies to:

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

Federated
World-Class Investment Manager

Federated Investors 50 Years of Growth & Innovation

Federated Intermediate Government Fund, Inc.

PROSPECTUS

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April 30, 2006

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INSTITUTIONAL SHARES

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A mutual fund seeking to provide total return by investing primarily in U.S. government and government agency securities, including mortgage-backed securities issued by U.S. government agencies and instrumentalities.

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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.

Not FDIC Insured * May Lose Value * No Bank Guarantee

CONTENTS

Risk/Return Summary 1

What are the Fund's Fees and Expenses? 5

What are the Fund's Investment Strategies? 6

What are the Principal Securities in Which the Fund Invests? 8

What are the Specific Risks of Investing in the Fund? 14

What Do Shares Cost? 16

How is the Fund Sold? 17

Payments to Financial Intermediaries 18

How to Purchase Shares 19

How to Redeem and Exchange Shares 21

Account and Share Information 24

Who Manages the Fund? 27

Legal Proceedings 28

Financial Information 30

Appendix A: Hypothetical Investment and Expense Information 32

Risk/Return Summary

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

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The Fund's investment objective is to provide total return. The Fund's total return will consist of two components: (1) changes in the market value of its portfolio securities (both realized and unrealized appreciation); and (2) income received from its portfolio securities. The Fund expects that, under normal market conditions, income will comprise the largest component of its total return. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this Prospectus.

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WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

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The Fund's overall strategy is to invest in a portfolio consisting primarily of U.S. Treasury securities, U.S. government agency securities (including mortgage-backed securities issued by U.S. government agencies or instrumentalities) and related derivative contracts. The Fund buys and sells portfolio securities based primarily on its market outlook and analysis of how securities may perform under different market conditions. The Fund evaluates its investment strategy by comparing the performance and composition of the Fund's portfolio to the performance and composition of an index composed of notes and bonds issued by the U.S. government and its agencies or instrumentalities with maturities of not less than one year and not more than ten years.

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The Fund intends to invest in securities issued or guaranteed by government-sponsored entities (GSEs), including GSE securities that are not backed by the full faith and credit of the United States. Such GSE securities are those issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Bank system. Such GSEs, however, are supported through federal subsidies, loans or other benefits. The Fund may also invest in GSE securities that are backed by the full faith and credit of the United States. Such GSE securities include those issued or guaranteed by the Department of Housing and Urban Development Association. Finally, the Fund may invest in GSE securities that have no explicit financial support, but that are regarded as having implied support because the federal government sponsors their activities. Such GSE securities include those issued or guaranteed by Federal Farm Credit Banks.

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WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

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

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• Interest Rate Risk. Prices of fixed-income securities generally fall when interest rates rise, which may result in a decrease in the value of Fund Shares.
  

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• Prepayment Risk. When homeowners prepay their mortgages in response to lower interest rates, the Fund will be required to reinvest the proceeds at the lower interest rates available. Also, when interest rates fall, the price of mortgage-backed securities may not rise to as great an extent as that of other fixed-income securities.
  

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• Risks Associated with Complex Collateralized Mortgage Obligations (CMOs). CMOs with complex or highly variable prepayment terms, such as companion classes, IOs, POs, Inverse Floaters and residuals, generally entail greater market, prepayment and liquidity risks than other mortgage-backed securities.
  

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• Risks of Investing in Derivative Contracts. Changes in the value of the derivative contract in which the Fund invests may not be correlated with changes in the value of the underlying asset or, if they are correlated, may move in the opposite direction than originally anticipated.
  

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The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency.

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Risk/Return Bar Chart and Table

The performance information shown below will help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-by-year basis. The Average Annual Total Return table shows returns averaged over the stated periods, and includes comparative performance information. The Fund's performance will fluctuate, and past performance (before and after taxes) is no guarantee of future results.

The Fund's Institutional Shares are sold without a sales charge (load). The total returns shown in the bar chart above are based upon net asset value.

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The Fund's Institutional Shares total return for the three-month period from January 1, 2006 to March 31, 2006 was 0. 03%.

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Within the period shown in the bar chart, the Fund's Institutional Shares highest quarterly return was 3.11% (quarter ended September 30, 2001). Its lowest quarterly return was (0.92)% (quarter ended June 30, 2004).

Average Annual Total Return Table

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Return Before Taxes is shown. In addition, Return After Taxes is shown for the Fund's Institutional Shares to illustrate the effect of federal taxes on Fund returns. Actual after-tax returns depend on each investor's personal tax situation, and are likely to differ from those shown. The table also shows returns for the Lehman Brothers 1-3 Year Government Index (LB1-3G) and the Lehman Brothers Intermediate Government Index (LBIG), each of which is a broad-based market index tracking U.S. government securities. Index returns do not reflect taxes, 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.

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(For the Periods Ended December 31, 2005)

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	1 Year	<R>5 Year</R>	Start of Performance 1
Fund:
Return Before Taxes	<R> 1.26%</R>	<R>3.42%</R>	<R> 3.86%</R>
Return After Taxes on Distributions 2	<R> (0.04)%</R>	<R>2.10%</R>	<R> 2.46%</R>
Return After Taxes on Distributions and Sale of Fund Shares 2	<R> 0.81%</R>	<R>2.13%</R>	<R> 2.45%</R>
LB1-3G 3	<R> 1.73%</R>	<R>3.83%</R>	<R> 4.29%</R>
LBIG 3	<R> 1.58%</R>	<R>5.50%</R>	<R> 6.07%</R>

1 The Fund's Institutional Shares start of performance was September 11, 2000.

2 After-tax returns are calculated using a standard set of assumptions. The stated returns assume the highest historical federal income and capital gains tax rates. Return After Taxes on Distributions assumes a continued investment in the Fund and shows the effect of taxes on Fund distributions. Return After Taxes on Distributions and Sale of Fund Shares assumes all Shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on Fund distributions. These after-tax returns do not reflect the effect of any applicable state and local taxes. After-tax returns are not relevant to investors holding Shares through tax-deferred programs, such as IRA or 401(k) plans.

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3 The Fund's Adviser changed the "Index" from the LB1-3G to the LBIG on May 1, 2005 because it is more representative of the Fund's current investment strategy.

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What are the Fund's Fees and Expenses?

FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

FEES AND EXPENSES

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

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 and Reimbursement) 1
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 2	0.40%
Distribution (12b-1) Fee	None
Other Expenses 3	1.05%
Total Annual Fund Operating Expenses	1.45%
1 The percentages shown are based on expenses for the entire fiscal year ended February 28, 2006. However, the rate at which expenses are accrued during the fiscal year may not be constant and, at any particular point, may be greater or less than the stated average percentage. Although not contractually obligated to do so, the Adviser, administrator, distributor and shareholder services provider waived and/or reimbursed certain amounts. These are shown below along with the net expenses the Fund actually paid for the fiscal year ended February 28, 2006.
Total Waivers and Reimbursement of Fund Expenses	1.15%
Total Actual Annual Fund Operating Expenses (after waivers and reimbursement)	0.30%
2 The Adviser voluntarily waived the management fee. The Adviser can terminate this voluntary waiver at any time. The management fee paid by the Fund (after the voluntary waiver) was 0.00% for the fiscal year ended February 28, 2006.
3 Includes a shareholder services fee/account administration fee which is used to compensate intermediaries for shareholder services or account administrative services. Please see "Payments to Financial Intermediaries" herein. The shareholder services provider voluntarily waived the shareholder services fee. This voluntary waiver can be terminated at any time. The administrator voluntarily waived a portion of its fee and the Adviser voluntarily reimbursed certain operating expenses of the Fund. The administrator and Adviser can terminate this voluntary waiver and reimbursement at any time. Total other operating expenses paid by the Fund's Institutional Shares (after the voluntary waivers and reimbursement) were 0.30% for the fiscal year ended February 28, 2006.

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 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 and reimbursement as shown in the table and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:

1 Year	<R> $ 148</R>
3 Years	<R> $ 459</R>
5 Years	<R> $ 792</R>
10 Years	<R> $1,735</R>

What are the Fund's Investment Strategies?

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The Fund is intended to provide returns consistent with investments in U.S. government and government agency securities. The Fund's overall strategy is therefore to invest in a portfolio consisting primarily of U.S. Treasury securities, U.S. government agency securities (including mortgage-backed securities issued by U.S. government agencies or instrumentalities) and related derivative contracts. A description of the principal types of securities and derivative contracts in which the Fund invests, other investment techniques principally used by the Fund, and their risks, immediately follows this strategy section.

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The Fund buys and sells portfolio securities based primarily on the Adviser's market outlook and analysis of how securities may perform under different market conditions. The Adviser's market outlook reflects multiple factors, including:

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• current and expected U.S. economic growth;
  

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• current and expected changes in the rate of inflation;
  

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• the level of interest rates in other countries as compared to U.S. interest rates;
  

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• the Federal Reserve Board's monetary policy; and
  

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• technical factors affecting the supply or demand for specific securities or types of securities.
  

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The Adviser's securities analysis considers, among other factors, the historical and expected performance of securities relative to their risks. Performance includes the potential for appreciation, as well as a security's expected yield. The analysis also considers some or all of the risks described below.

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The Adviser evaluates the investment strategy by comparing the performance and composition of the Fund's portfolio to the performance and composition of an index composed of notes and bonds issued by the U.S. government and its agencies or instrumentalities with maturities of not less than one year and not more than ten years (the "Index"). Although there can be no assurance that the Fund's total return will exceed the Index's during any period, the Fund's Adviser seeks to construct a portfolio that will perform favorably when compared to the Index over the long term. In pursuing this strategy, the composition of the Fund's portfolio will vary from the composition of the Index. The Fund's portfolio may also include individual securities not represented in the Index.

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The Adviser may seek to control risks by adopting policies that limit the extent to which the Fund's portfolio may vary from the Index. For example, under normal market conditions, the Adviser currently limits the effective duration of the Fund's portfolio to not less than 80% or more than 120% of the effective duration of the Index. Effective duration provides a measure of the price sensitivity of a fixed-income security or portfolio of fixed-income securities to changes in interest rates. The Adviser may change these limitations at any time without prior approval from the Fund's trustees or shareholders.

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Mortgage-backed, pass-through certificates are typically offered or traded on a "to-be-announced" or other delayed delivery basis. Other U.S. government securities may also be offered on a delayed delivery basis. The Fund will enter into trades on this basis in order to participate in these offerings or trade these securities. The Fund may also seek to increase its income by engaging in dollar-roll transactions.

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The Fund may use derivative contracts to implement elements of its investment strategy. For example, the Fund may use derivative contracts to:

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• increase or decrease the effective duration of the Fund's portfolio;
  

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• increase or decrease the Fund's exposure to different points on the yield curve; ¹
  

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• increase or decrease the allocation of the portfolio to securities or types of securities in which the Fund may invest directly; or
  

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• obtain premiums from the sale of derivative contracts.
  

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1 In descriptions of the Fund's investment strategy, the Adviser may refer to the relative interest rates of securities with longer and shorter durations within a sector as a "yield curve".

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There can be no assurance that the Fund's use of derivative contracts will work as intended.

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The Fund invests in overnight repurchase agreements or money market funds in order to maintain sufficient cash to pay for daily net redemptions and portfolio transactions.

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Because the Fund refers to U.S. government securities in its name, it will notify shareholders at least 60 days in advance of any change in its investment policies that would enable the Fund to invest, under normal circumstances, less than 80% of its assets in U.S. government investments.

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PORTFOLIO TURNOVER

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The Fund actively trades its portfolio securities in an attempt to achieve its investment objective. Active trading will cause the 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 the Fund's trading costs and may have an adverse impact on the Fund's performance.

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TEMPORARY DEFENSIVE INVESTMENTS

The Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term debt securities and similar obligations. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.

What are the Principal Securities in Which the Fund Invests?

FIXED-INCOME SECURITIES

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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.

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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.

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The following describes the types of fixed-income securities in which the Fund invests:

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Treasury Securities

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

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Agency Securities

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Agency securities are issued or guaranteed by a federal agency or other government sponsored entity (GSE) acting under federal authority. Some agency securities are supported by the full faith and credit of the United States. These include the Government National Mortgage Association, Small Business Administration, Farm Credit System Financial Assistance Corporation, Farmer's Home Administration, Federal Financing Bank, General Services Administration, Department of Housing and Urban Development, Export-Import Bank, Overseas Private Investment Corporation, and Washington Metropolitan Area Transit Authority Bonds.

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Other agency securities receive support through federal subsidies, loans or other benefits. For example, the U.S. Treasury is authorized to purchase specified amounts of securities issued by (or otherwise make funds available to) the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, and Tennessee Valley Authority in support of such obligations.

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A few agency securities have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. These include the Farm Credit System, Financing Corporation, and Resolution Funding Corporation.

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Investors regard agency securities as having low credit risks, but not as low as U.S. Treasury securities. A Fund treats mortgage-backed securities guaranteed by a GSE as agency securities. Although such a guarantee protects against credit risks, it does not reduce market and prepayment risks.

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Mortgage-Backed Securities

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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. Interest in pools of adjustable rate mortgages are know as ARMs.

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Mortgage-backed securities come in a variety of forms. The simplest form of mortgage-backed securities is pass-through certificates. Holders of pass-through certificates receive a pro rata share of all net interest and principal payments and prepayments from the underlying mortgages. As a result, the holders assume all the interest rate and prepayment risks of the underlying mortgages. Other mortgage-backed securities may have more complicated financial structures.

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COLLATERALIZED MORTGAGE OBLIGATIONS ( CMOS)

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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.

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Sequential CMOs

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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.

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PACs, TACs and Companion Classes

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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.

The degree of prepayment risk of CMOs depends upon the structure of the CMOs. However, the actual returns of any type of mortgage-backed security depends upon the performance of the underlying pool of mortgages, which no one can predict and will vary among pools.

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IOs and POs

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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. 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). In contrast, POs decrease in value when interest rates rise (and prepayments decrease).

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FLOATERS AND INVERSE FLOATERS

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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

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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.

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The degree of increased or decreased prepayment risks depends upon the structure of the CMOs. However, the actual returns on any type of mortgage-backed security depend upon the performance of the underlying pool of mortgages, which no one can predict and will vary among pools.

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Derivative Contracts

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Derivative contracts are financial instruments that require payments based upon changes in the values of designated (or underlying) securities, 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.

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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 with respect to exchange-traded contracts. Trading contracts on an exchange also allows investors to close out their contracts by entering into offsetting contracts.

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The Fund may also trade derivative contracts over-the-counter (OTC) in transactions negotiated directly between the Fund and another party commonly referred to as a 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.

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Depending upon how the Fund uses derivative contracts and the relationships between the market value of a derivative contract and the underlying asset, derivative contracts may increase or decrease the Fund's exposure to interest rate and credit risks, and may also expose the Fund to liquidity and leverage risks. OTC contracts also expose the Fund to credit risks in the event that a counterparty defaults on the contract .

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SPECIAL TRANSACTIONS

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Repurchase Agreements

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Repurchase agreements are transactions in which the Fund buys 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 Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. The Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser.

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The Fund's 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.

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.

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TO BE ANNOUNCED SECURITIES (TBAS)

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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.

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DOLLAR ROLLS

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Dollar rolls are transactions where the Fund sells 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 and credit risks.

Asset Coverage

In order to secure its obligations in connection with derivatives contracts or special transactions, the Fund 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 Fund's obligations. Unless the Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without entering into an offsetting derivative contract or terminating a special transaction. This may cause the Fund to miss favorable trading opportunities or to realize losses on derivative contracts or special transactions.

Securities Lending

The Fund may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, the Fund receives 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 Fund the equivalent of any dividends or interest received on the loaned securities.

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

Loans are subject to termination at the option of the Fund or the borrower. The Fund will not have the right to vote on securities while they are on loan, but it will terminate a loan in anticipation of any important vote. The Fund 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 and credit risks.

What are the Specific Risks of Investing in the Fund?

INTEREST RATE RISKS

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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.

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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.

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PREPAYMENT RISKS

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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.

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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.

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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.

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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.

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RISKS ASSOCIATED WITH COMPLEX CMOS

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CMOs with complex terms, such as companion classes, IOs, POs, and Inverse Floaters, generally entail greater market, prepayment and liquidity risks than other mortgage-backed securities. For example, their prices are more volatile and their trading market may be more limited .

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RISKS OF INVESTING IN DERIVATIVES CONTRACTS

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The Fund's use of derivative contracts involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. First, changes in the value of the derivative contracts in which the Fund invests may not be correlated with changes in the value of the underlying asset or if they are correlated, may move differently than originally anticipated. Second, while some strategies involving derivatives may reduce the risk of loss, they may also reduce potential gains or, in some cases, result in losses by offsetting favorable price movements in portfolio holdings. Third, there is a risk that derivatives contracts may be mispriced or improperly valued and, as a result, the Fund may need to make increased cash payments to the counterparty. Fourth, derivative contracts may cause the Fund to realize increased ordinary income or short-term capital gains (which are treated as ordinary income for Federal income tax purposes) and, as a result, may increase taxable distributions to shareholders. Any such termination of the Fund's OTC derivative contracts may adversely affect the Fund (for example, by increasing losses and/or costs, and/or preventing the Fund from fully implementing its investment strategies). Derivative contracts may also involve other risks such as interest rate, credit, liquidity and leverage risks.

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What Do Shares Cost?

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You can purchase, redeem or exchange Shares any day the New York Stock Exchange (NYSE) is open. When the Fund receives your transaction request in proper form (as described in this prospectus), it is processed at the next calculated net asset value (NAV). The Fund does not charge a front-end sales charge. NAV is determined as of the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time) each day the NYSE is open. The Fund's current NAV and public offering price may be found in the mutual funds section of certain local newspapers under "Federated. "

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The Fund generally values fixed-income securities according to prices furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase may be valued at amortized cost. For mortgage-backed securities, prices furnished by the independent pricing service are based on the aggregate investment value of the projected cash flows to be generated by the security. For other fixed-income securities, prices furnished by an independent pricing service are intended to be indicative of the bid price currently offered to institutional investors for the securities.

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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.

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If prices are not available from an independent pricing service, securities and derivatives contracts 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 security or contract as provided by an investment dealer or other financial institution that deals in the security or contract.

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Where a last sale price or market quotation for a portfolio security is not readily available, and no independent pricing service furnishes a price, the value of the security used in computing NAV is its fair value as determined in good faith under procedures approved by the Fund's Board.

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The Fund may use the fair value of a security to calculate its NAV when, for example : (1 ) a portfolio security is not traded in a public market or the principal market in which the security trades is closed ; (2) trading in a portfolio security is suspended and not resumed prior to the normal market close ; (3 ) a portfolio security is not traded in significant volume for a substantial period ; or (4 ) the Fund's Adviser determines that the quotation or price for a portfolio security provided by a dealer or independent pricing service is inaccurate.

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Fair valuation procedures are also used where a significant event affecting the value of a portfolio security is determined to have occurred between the time as of which the price of the portfolio security is determined and the NYSE closing time as of which the Fund's NAV is computed. An event is considered significant if there is both an affirmative expectation that the security's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Significant events include significant general securities market movements occurring between the time as of which the price of the portfolio security is determined and the close of trading on the NYSE. For domestic fixed-income securities, such events may occur where the cut-off time for the market information used by the independent pricing service is earlier than the end of regular trading on the NYSE. In such cases, use of fair valuation can reduce an investor's ability to seek to profit by estimating the Fund's NAV in advance of the time as of which NAV is calculated.

In some cases, events affecting the issuer of a portfolio security may be considered significant events. Announcements concerning earnings, acquisitions, new products, management changes, litigation developments, a strike or natural disaster affecting the company's operations or regulatory changes or market developments affecting the issuer's industry occurring between the time as of which the price of the portfolio security is determined and the close of trading on the NYSE are examples of potentially significant events.

There can be no assurance that the Fund could purchase or sell a portfolio security at the price used to calculate the Fund's NAV. In the case of fair valued portfolio securities, lack of information and uncertainty as to the significance of information may lead to a conclusion that a prior valuation is the best indication of a portfolio security's present value. Fair valuations generally remain unchanged until new information becomes available. Consequently, changes in the fair valuation of portfolio securities may be less frequent and of greater magnitude than changes in the price of portfolio securities valued by an independent pricing service, or based on market quotations.

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How is the Fund Sold?

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The Fund offers two Share classes: Institutional Shares and Institutional Service Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Shares. All Share classes have different expenses which affect their performance. Contact your financial intermediary or call 1-800-341-7400 for more information concerning the other class.

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The Fund's Distributor, Federated Securities Corp., markets the Shares described in this prospectus to institutions acting in an agency or fiduciary capacity or to individuals, directly or through financial intermediaries. Under the Distributor's Contract with the Fund, the Distributor offers Shares on a continuous, best-efforts basis. The Distributor is a subsidiary of Federated Investors, Inc. (Federated).

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Payments to Financial Intermediaries

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The Fund and its affiliated service providers may pay fees as described below to financial intermediaries (such as broker-dealers, banks, investment advisers or third-party administrators) whose customers are shareholders of the Fund.

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SERVICE FEES

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The Fund may pay Service Fees of up to 0.25% of average net assets to financial intermediaries or to Federated Shareholder Services Company (FSSC), a subsidiary of Federated, for providing services to shareholders and maintaining shareholder accounts. Under certain agreements, rather than paying financial intermediaries directly, the Fund may pay Service Fees to FSSC and FSSC will use the fees to compensate financial intermediaries. If a financial intermediary receives Service Fees on an account, it is not eligible to also receive Account Administration Fees on that same account.

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ACCOUNT ADMINISTRATION FEES

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The Fund may pay Account Administration Fees of up to 0.25% of average net assets to financial intermediaries that are unregistered banks for providing administrative services to the Funds and shareholders. If a financial intermediary receives Account Administration Fees on an account, it is not eligible to also receive Service Fees or Recordkeeping Fees on that same account.

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NETWORKING FEES

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The Fund may reimburse Networking Fees on a per account per year basis to financial intermediaries for providing administrative services to the Funds and shareholders on certain non-omnibus accounts. If a financial intermediary receives Networking Fees on an account, it is not eligible to also receive Recordkeeping Fees on that same account.

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ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES

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The Distributor may pay out of its own resources amounts (including items of material value) to certain financial intermediaries that support the sale of Shares or provide services to Fund shareholders. The amounts of these payments could be significant, and may create an incentive for the financial intermediary or its employees or associated persons to recommend or sell Shares of the Fund to you. In some cases, such payments may be made by or funded from the resources of companies affiliated with the Distributor (including the Adviser). These payments are not reflected in the fees and expenses listed in the fee table section of the Fund's prospectus and described above because they are not paid by the Fund.

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These payments are negotiated and may be based on such factors as the number or value of Shares that the financial intermediary sells or may sell; the value of client assets invested; or the type and nature of services or support furnished by the financial intermediary. These payments may be in addition to payments made by the Fund to the financial intermediary under a Service Fees arrangement. In connection with these payments, the financial intermediary may elevate the prominence or profile of the Fund and/or other Federated funds within the financial intermediary's organization by, for example, placement on a list of preferred or recommended funds, and/or granting the Distributor preferential or enhanced opportunities to promote the funds in various ways within the financial intermediary's organization. You can ask your financial intermediary for information about any payments it receives from the Distributor or the Fund and any services provided.

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How to Purchase Shares

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You may purchase Shares through a financial intermediary, directly from the Fund or through an exchange from another Federated fund. The Fund reserves the right to reject any request to purchase or exchange Shares.

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The required minimum initial investment for Fund Shares is $100,000. The required minimum subsequent investment amount is $100.

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An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through financial intermediaries may be subject to a smaller minimum investment amount. Keep in mind that financial intermediaries may charge you fees for their services in connection with your Share transactions.

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THROUGH A FINANCIAL INTERMEDIARY

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• Establish an account with the financial intermediary; and
  

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• Submit your purchase order to the financial intermediary 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 financial intermediary forwards the order to the Fund on the same day and the Fund receives payment within one business days. You will become the owner of Shares and receive dividends when the Fund receives your payment.
  

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Financial intermediaries should send payments according to the instructions in the sections "By Wire" or "By Check."

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DIRECTLY FROM THE FUND

• Establish your account with the Fund by submitting a completed New Account Form; and
  
• Send your payment to the 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 the 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 the Fund or State Street Bank and Trust Company, the Fund's transfer agent.

An institution may establish an account and place an order by calling the Fund and the Shares will be priced at the next calculated NAV after the 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 send it to:

The Federated Funds
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, send it to:

The Federated Funds
66 Brooks Drive
Braintree, MA 02184

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund reserves the right to reject any purchase request. For example, to protect against check fraud the Fund may reject any purchase request involving a check that is not made payable to The Federated Funds (including, but not limited to, requests to purchase Shares using third-party checks), or involving temporary checks or credit card checks.

BY AUTOMATED CLEARING HOUSE (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.

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How to Redeem and Exchange Shares

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You should redeem or exchange Shares:

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• through a financial intermediary if you purchased Shares through a financial intermediary; or
  

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• directly from the Fund if you purchased Shares directly from the Fund.
  

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Shares of the Fund may be redeemed for cash or exchanged for shares of the same class of other Federated funds on days on which the Fund computes its NAV. Redemption requests may be made by telephone or in writing.

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THROUGH A FINANCIAL INTERMEDIARY

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Submit your redemption or exchange request to your financial intermediary 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 the Fund receives the order from your financial intermediary.

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DIRECTLY FROM THE FUND

By Telephone

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You may redeem or exchange Shares by simply calling the Fund at 1-800-341-7400.

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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.

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By Mail

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You may redeem or exchange Shares by sending a written request to the Fund.

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You will receive a redemption amount based on the next calculated NAV after the Fund receives your written request in proper form.

Send requests by mail to:

The Federated Funds
P.O. Box 8600
Boston, MA 02266-8600

Send requests by private courier or overnight delivery service to:

The Federated Funds
66 Brooks Drive
Braintree, MA 02184

All requests must include:

• Fund Name and Share Class, account number and account registration;
  

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• amount to be redeemed or exchanged;
  

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• signatures of all shareholders exactly as registered ; and
  

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• if exchanging , the Fund Name and Share Class, account number and account registration into which you are exchanging.
  

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Call your financial intermediary or the Fund if you need special instructions.

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Signature Guarantees

Signatures must be guaranteed by a financial institution which is a participant in a Medallion signature guarantee program if:

• your redemption will be sent to an address other than the address of record;
  
• your redemption will be sent to an address of record that was changed within the last 30 days;
  

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• a redemption is payable to someone other than the shareholder(s) of record ; or
  

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• if exchanging (transferring) into another fund with a different shareholder registration.
  

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A Medallion signature guarantee is designed to protect your account from fraud. Obtain a Medallion 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:

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

Redemption in Kind

Although the 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 the 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:

• to allow your purchase to clear;
  
• during periods of market volatility; or
  
• when a shareholder's trade activity or amount adversely impacts the Fund's ability to manage its assets.
  

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

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EXCHANGE PRIVILEGE

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You may exchange Shares of the Fund for shares of any Federated fund or share class that does not have a stated sales charge or contingent deferred sales charge, except Liberty U.S. Government Money Market Trust and Class K Shares. To do this, you must:

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• ensure that the account registrations are identical;
  

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• meet any minimum initial investment requirements; and
  

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• receive a prospectus for the fund into which you wish to exchange.
  

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An exchange is treated as a redemption and a subsequent purchase, and is a taxable transaction.

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The Fund may modify or terminate the exchange privilege at any time. In addition, the Fund may terminate your exchange privilege if your exchange activity is found to be excessive under the Fund's frequent trading policies. See "Account and Share Information - Frequent Trading Policies."

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ADDITIONAL CONDITIONS

Telephone Transactions

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

Share Certificates

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

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Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

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You will receive confirmation of purchases, redemptions and exchanges. In addition, you will receive periodic statements reporting all account activity, including dividends and capital gains paid.

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ACCOUNT ACTIVITY

Dividends and Capital Gains

The Fund declares any dividends daily and pays them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after the Fund receives your check. In either case, you earn dividends through the day your redemption request is received.

In addition, the Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.

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If you have elected to receive dividends and/or capital gain distributions in cash, and your check is returned by the postal or other delivery service as "undeliverable," or you do not respond to mailings from Federated with regard to uncashed distribution checks, your distribution option will automatically be converted to having all dividends and capital gains reinvested in additional shares. No interest will accrue on amounts represented by uncashed distribution checks.

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If you purchase Shares just before the record date for a 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 the record date for a capital gain. Contact your financial intermediary or the Fund for information concerning when dividends and capital gains will be paid.

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ACCOUNTS WITH LOW BALANCES

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Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions or exchanges 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.

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TAX INFORMATION

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The Fund sends 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 Fund. Dividends are taxable at different rates depending on the source of dividend income . Capital gains are taxable at different rates depending upon the length of time the Fund holds its assets.

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

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FREQUENT TRADING POLICIES

Frequent or short-term trading into and out of the Fund can have adverse consequences for the Fund and shareholders who use the Fund as a long-term investment vehicle. Such trading in significant amounts can disrupt the Fund's investment strategies (e.g., by requiring it to sell investments at inopportune times or maintain excessive short-term or cash positions to support redemptions), increase brokerage and administrative costs and affect the timing and amount of taxable gains distributed by the Fund. Investors engaged in such trading may also seek to profit by anticipating changes in the Fund's NAV in advance of the time as of which NAV is calculated.

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The Fund's Board has approved policies and procedures intended to discourage excessive frequent or short-term trading of the Fund's Shares. The Fund monitors trading in Fund Shares in an effort to identify disruptive trading activity. The Fund monitors trades into and out of the Fund within a period of 30 days or less. The size of Share transactions subject to monitoring varies. However, where it is determined that a shareholder has exceeded the detection amounts twice within a period of 12 months, the shareholder will be precluded from making further purchases or exchanges of Fund Shares. The Fund may also monitor trades into and out of the Fund over periods longer than 30 days, and if potentially disruptive trading activity is detected, the shareholder will be precluded from making further purchases or exchanges of Fund Shares. Whether or not the specific monitoring limits are exceeded, the Fund's management or the Adviser may determine from the amount, frequency or pattern of purchases and redemptions or exchanges that a shareholder is engaged in excessive trading that is or could be detrimental to the Fund and other shareholders and may preclude the shareholder from making further purchases or exchanges of Fund Shares. No matter how the Fund defines its limits on frequent trading of Fund Shares, other purchases and sales of Fund Shares may have adverse effects on the management of the Fund's portfolio and its performance.

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The Fund's frequent trading restrictions do not apply to purchases and sales of Fund Shares by other Federated funds. These funds impose the same frequent trading restrictions as the Fund at their shareholder level. In addition, allocation changes of the investing Federated fund are monitored, and the managers of the recipient fund must determine that there is no disruption to their management activity. The intent of this exception is to allow investing fund managers to accommodate cash flows that result from non-abusive trading in the investing fund, without being stopped from such trading because the aggregate of such trades exceeds the monitoring limits. Nonetheless, as with any trading in Fund Shares, purchases and redemptions of Fund Shares by other Federated funds could adversely affect the management of the Fund's portfolio and its performance.

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The Fund's objective is that its restrictions on short-term trading should apply to all shareholders, regardless of the number or type of accounts in which Shares are held. However, the Fund anticipates that limitations on its ability to identify trading activity to specific shareholders, including where shares are held through intermediaries in multiple or omnibus accounts, will mean that these restrictions may not be able to be applied uniformly in all cases.

PORTFOLIO HOLDINGS INFORMATION

Information concerning the Fund's portfolio holdings is available in the "Products" section of Federated's website at FederatedInvestors.com .. A complete listing of the Fund's portfolio holdings as of the end of each calendar quarter is posted on the website 30 days (or the next business day) after the end of the quarter and remains posted until replaced by the information for the succeeding quarter. Summary portfolio composition information as of the close of each month is posted on the website 15 days (or the next business day) after month-end and remains until replaced by the information for the succeeding month. The summary portfolio composition information may include percentage breakdowns of the portfolio by type of security.

To access this information from the "Products" section of the website, click on "Portfolio Holdings" and select the appropriate link opposite the name of the Fund, or select the name of the Fund from the menus on the "Products" section, and from the Fund's page click on the "Portfolio Holdings" or "Composition" link. A user is required to register on the website the first time the user accesses this information.

You may also access from the "Products" section of the website portfolio information as of the end of the Fund's fiscal quarters. The Fund's annual and semi-annual reports, which contain complete listings of the Fund's portfolio holdings as of the end of the Fund's second and fourth fiscal quarters, may be accessed by selecting the name of the Fund, clicking on "Prospectuses and Regulatory Reports" and selecting the link to the appropriate PDF. Complete listings of the Fund's portfolio holdings as of the end of the Fund's first and third fiscal quarters may be accessed by selecting "Portfolio Holdings" from the "Products" section and then selecting the appropriate link opposite the name of the Fund. Fiscal quarter information is made available on the website within 70 days after the end of the fiscal quarter. This information is also available in reports filed with the SEC at the SEC's website at www.sec.gov.

Who Manages the Fund?

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The Board of Directors (the "Board") governs the Fund. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Fund's assets, including buying and selling portfolio securities. Federated Advisory Services Company (FASC), an affiliate of the Adviser, provides certain support services to the Adviser. The fee for these services is paid by the Adviser and not by the Fund. The address of the Adviser and FASC is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

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The Adviser and other subsidiaries of Federated advise approximately 136 equity, fixed-income, and money market mutual funds as well as a variety of customized separately managed accounts, which totaled approximately $ 213 billion in assets as of December 31, 2005. Federated was established in 1955 and is one of the largest investment managers in the United States with approximately 1, 305 employees. Federated provides investment products to more than 5, 500 investment professionals and institutions.

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PORTFOLIO MANAGEMENT INFORMATION

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Liam O'Connell

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Liam O'Connell has been a portfolio manager of the Fund since June 2005. Mr. O'Connell joined Federated in September 2003 as an Investment Analyst of the Fund's Adviser. He was named an Assistant Vice President of the Adviser in January 2005. From 2001 to 2003, Mr. O'Connell attended MIT's Sloan School of Management, receiving his M.B.A. Mr. O'Connell served as an engineer with the Naval Surface Warfare Center from 1998 to 2001. Mr. O'Connell also holds a B.S. in Naval Architecture and Marine Engineering from the Webb Institute of Naval Architecture, and an M.S. from the Johns Hopkins University.

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The Fund's SAI provides additional information about the Portfolio Managers' compensation, management of other accounts, and ownership of securities in the Fund.

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ADVISORY FEES

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The Adviser receives an annual investment advisory fee of 0.40% of the Fund's average daily net assets. The Adviser may voluntarily waive a portion of its fee or reimburse the Fund for certain operating expenses.

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A discussion of the Board's review of the Fund's investment advisory contract is available in the Fund's Annual Report dated February 28, 2006.

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Legal Proceedings

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Since October 2003, Federated and related entities (collectively, "Federated"), and various Federated funds ("Funds"), have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Funds from the SEC, the Office of the New York State Attorney General ("NYAG"), and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. Specifically, the SEC and NYAG settled proceedings against three Federated subsidiaries involving undisclosed market timing arrangements and late trading. The SEC made findings: that Federated Investment Management Company ("FIMC"), an SEC-registered investment adviser to various Funds, and Federated Securities Corp., an SEC-registered broker-dealer and distributor for the Funds, violated provisions of the Investment Advisers Act and Investment Company Act by approving, but not disclosing, three market timing arrangements, or the associated conflict of interest between FIMC and the funds involved in the arrangements, either to other fund shareholders or to the funds' board; and that Federated Shareholder Services Company, formerly an SEC-registered transfer agent, failed to prevent a customer and a Federated employee from late trading in violation of provisions of the Investment Company Act. The NYAG found that such conduct violated provisions of New York State law. Federated entered into the settlements without admitting or denying the regulators' findings. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay disgorgement and a civil money penalty in the aggregate amount of an additional $72 million and, among other things, agreed that it would not serve as investment adviser to any registered investment company unless: (i) at least 75% of the fund's directors are independent of Federated; (ii) the chairman of each such fund is independent of Federated; (iii) no action may be taken by the fund's board or any committee thereof unless approved by a majority of the independent trustees of the fund or committee, respectively; and (iv) the fund appoints a "senior officer" who reports to the independent trustees and is responsible for monitoring compliance by the fund with applicable laws and fiduciary duties and for managing the process by which management fees charged to a fund are approved. The settlements are described in Federated's announcement which, along with previous press releases and related communications on those matters, is available in the "About Us" section of Federated's website at FederatedInvestors.com ..

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Federated and various Funds have also been named as defendants in several additional lawsuits, the majority of which are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees.

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The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees, and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

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Financial Information

FINANCIAL HIGHLIGHTS

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The Financial Highlights will help you understand the Fund's financial performance for its past five fiscal years. 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 the Fund, assuming reinvestment of any dividends and capital gains.

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This information for the fiscal year ended February 28, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the Fund's audited financial statements, is included in the Annual Report. As discussed in the Annual Report, the information for prior years was audited by Deloitte & Touche LLP, another independent registered public accounting firm.

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Financial Highlights

(For a Share Outstanding Throughout Each Period)

Year Ended February 28 or 29	2006 1			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$9.54			$9.75			$9.77			$9.60			$9.52
Income From Investment Operations:
Net investment income	0.37			0.23			0.20			0.32			0.51
Net realized and unrealized gain (loss) on investments	(0.21	)		(0.21	)		(0.01	)		0.17			0.08
TOTAL FROM INVESTMENT OPERATIONS	0.16			0.02			0.19			0.49			0.59
Less Distributions:
Distributions from net investment income	(0.37	)		(0.23	)		(0.21	)		(0.32	)		(0.51	)
Net Asset Value, End of Period	$9.33			$9.54			$9.75			$9.77			$9.60
Total Return 2	1.73	%		0.21	%		1.92	%		5.21	%		6.33	%
Ratios to Average Net Assets:
Net expenses	0.30	%		0.30	%		0.30	%		0.30	%		0.30	%
Net investment income	3.76	%		2.34	%		2.12	%		3.35	%		5.08	%
Expense waiver/reimbursement 3	1.15	%		0.89	%		0.71	%		0.76	%		0.82	%
Supplemental Data:
Net assets, end of period (000 omitted)	$7,327		$10,385			$19,978			$43,513			$7,290
Portfolio turnover	140	%		164	%		116	%		110	%		71	%

1 Beginning with the year ended February 28, 2006, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

2 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

3 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

Further information about the Fund's performance is contained in the Fund's Annual Report, dated February 28, 2006, which can be obtained free of charge.

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Appendix A: Hypothetical Investment and Expense Information

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The following chart provides additional hypothetical information about the effect of the Fund's expenses, including investment advisory fees and other Fund costs, on the Fund's assumed returns over a 10-year period. The chart shows the estimated expenses that would be incurred in respect of a hypothetical investment of $10,000, assuming a 5% return each year, and no redemption of Shares. The chart also assumes that the Fund's annual expense ratio stays the same throughout the 10-year period and that all dividends and distributions are reinvested. The annual expense ratio used in the chart is the same as stated in the "Fees and Expenses" table of this prospectus (and thus may not reflect any fee waiver or expense reimbursement currently in effect). The maximum amount of any sales charge that might be imposed on the purchase of Shares (and deducted from the hypothetical initial investment of $10,000; the "Front-End Sales Charge") is reflected in the "Hypothetical Expenses" column. The hypothetical investment information does not reflect the effect of charges (if any) normally applicable to redemptions of Shares (e.g., deferred sales charges, redemption fees). Mutual fund returns, as well as fees and expenses, may fluctuate over time, and your actual investment returns and total expenses may be higher or lower than those shown below.

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FEDERATED INTERMEDIATE GOVERNMENT FUND, INC. - INSTITUTIONAL SHARES
ANNUAL EXPENSE RATIO: 1.45%
MAXIMUM FRONT-END SALES CHARGE: 0.00%

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<R>Year</R>	<R>Hypothetical Beginning Investment</R>	<R>Hypothetical Performance Earnings</R>	<R>Investment After Returns</R>	<R>Hypothetical Expenses </R>	<R>Hypothetical Ending Investment</R>
<R>1</R>	<R>$10,000.00</R>	<R>$ 500.00</R>	<R>$10,500.00</R>	<R>$ 147.57</R>	<R>$10,355.00</R>
<R>2</R>	<R>$10,355.00</R>	<R>$ 517.75</R>	<R>$10,872.75</R>	<R>$ 152.81</R>	<R>$10,722.60</R>
<R>3</R>	<R>$10,722.60</R>	<R>$ 536.13</R>	<R>$11,258.73</R>	<R>$ 158.24</R>	<R>$11,103.25</R>
<R>4</R>	<R>$11,103.25</R>	<R>$ 555.16</R>	<R>$11,658.41</R>	<R>$ 163.85</R>	<R>$11,497.42</R>
<R>5</R>	<R>$11,497.42</R>	<R>$ 574.87</R>	<R>$12,072.29</R>	<R>$ 169.67</R>	<R>$11,905.58</R>
<R>6</R>	<R>$11,905.58</R>	<R>$ 595.28</R>	<R>$12,500.86</R>	<R>$ 175.70</R>	<R>$12,328.23</R>
<R>7</R>	<R>$12,328.23</R>	<R>$ 616.41</R>	<R>$12,944.64</R>	<R>$ 181.93</R>	<R>$12,765.88</R>
<R>8</R>	<R>$12,765.88</R>	<R>$ 638.29</R>	<R>$13,404.17</R>	<R>$ 188.39</R>	<R>$13,219.07</R>
<R>9</R>	<R>$13,219.07</R>	<R>$ 660.95</R>	<R>$13,880.02</R>	<R>$ 195.08</R>	<R>$13,688.35</R>
<R>10</R>	<R>$13,688.35</R>	<R>$ 684.42</R>	<R>$14,372.77</R>	<R>$ 202.00</R>	<R>$14,174.29</R>
<R>Cumulative</R>		<R>$5,879.26</R>		<R>$1,735.24</R>

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A Statement of Additional Information (SAI) dated April 30, 2006, is incorporated by reference into this prospectus. Additional information about the Fund and its investments is contained in the Fund's SAI and Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report's Management's Discussion of Fund Performance discusses market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The SAI contains a description of the Fund's policies and procedures with respect to the disclosure of its portfolio securities. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and to make inquiries, call your financial intermediary or the Fund at 1-800-341-7400.

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These documents, as well as additional information about the Fund (including portfolio holdings, performance and distributions), are also available on Federated's website at FederatedInvestors.com.

You can obtain information about the Fund (including the SAI) by writing to or visiting the SEC's Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's website at www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.

Investment Company Act File No. 811-6307

Federated
World-Class Investment Manager

Federated Intermediate Government Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31420H109

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25745 (4/ 06)

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Federated is a registered mark of Federated Investors, Inc. 2006 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated Investors 50 Years of Growth & Innovation

Federated Intermediate Government Fund, Inc.

PROSPECTUS

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April 30, 2006

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INSTITUTIONAL SERVICE SHARES

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A mutual fund seeking to provide total return by investing primarily in U.S. government and government agency securities, including mortgage-backed securities issued by U.S. government agencies and instrumentalities.

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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.

Not FDIC Insured * May Lose Value * No Bank Guarantee

CONTENTS

Risk/Return Summary 1

What are the Fund's Fees and Expenses? 5

What are the Fund's Investment Strategies? 6

What are the Principal Securities in Which the Fund Invests? 8

What are the Specific Risks of Investing in the Fund? 14

What Do Shares Cost? 16

How is the Fund Sold? 17

Payments to Financial Intermediaries 18

How to Purchase Shares 19

How to Redeem and Exchange Shares 21

Account and Share Information 24

Who Manages the Fund? 28

Legal Proceedings 29

Financial Information 30

Appendix A: Hypothetical Investment and Expense Information 32

Risk/Return Summary

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

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The Fund's investment objective is to provide total return. The Fund's total return will consist of two components: (1) changes in the market value of its portfolio securities (both realized and unrealized appreciation); and (2) income received from its portfolio securities. The Fund expects that, under normal market conditions, income will comprise the largest component of its total return. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this Prospectus.

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WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

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The Fund's overall strategy is to invest in a portfolio consisting primarily of U.S. Treasury securities, U.S. government agency securities (including mortgage-backed securities issued by U.S. government agencies or instrumentalities) and related derivative contracts. The Fund buys and sells portfolio securities based primarily on its market outlook and analysis of how securities may perform under different market conditions. The Fund evaluates its investment strategy by comparing the performance and composition of the Fund's portfolio to the performance and composition of an index composed of notes and bonds issued by the U.S. government and its agencies or instrumentalities with maturities of not less than one year and not more than ten years.

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The Fund intends to invest in securities issued or guaranteed by government-sponsored entities (GSEs), including GSE securities that are not backed by the full faith and credit of the United States. Such GSE securities are those issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Bank system. Such GSEs, however, are supported through federal subsidies, loans or other benefits. The Fund may also invest in GSE securities that are backed by the full faith and credit of the United States. Such GSE securities include those issued or guaranteed by the Department of Housing and Urban Development Association. Finally, the Fund may invest in GSE securities that have no explicit financial support, but that are regarded as having implied support because the federal government sponsors their activities. Such GSE securities include those issued or guaranteed by Federal Farm Credit Banks.

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WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

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

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• Interest Rate Risk. Prices of fixed-income securities generally fall when interest rates rise, which may result in a decrease in the value of Fund Shares.
  

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• Prepayment Risk. When homeowners prepay their mortgages in response to lower interest rates, the Fund will be required to reinvest the proceeds at the lower interest rates available. Also, when interest rates fall, the price of mortgage-backed securities may not rise to as great an extent as that of other fixed-income securities.
  

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• Risks Associated with Complex Collateralized Mortgage Obligations (CMOs). CMOs with complex or highly variable prepayment terms, such as companion classes, IOs, POs, Inverse Floaters and residuals, generally entail greater market, prepayment and liquidity risks than other mortgage-backed securities.
  

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• Risks of Investing in Derivative Contracts. Changes in the value of the derivative contract in which the Fund invests may not be correlated with changes in the value of the underlying asset or, if they are correlated, may move in the opposite direction than originally anticipated.
  

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The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency.

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Risk/Return Bar Chart and Table

The performance information shown below will help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the variability of the Fund's Institutional Service Shares total returns on a calendar year-by-year basis. The Average Annual Total Return table shows returns averaged over the stated periods, and includes comparative performance information. The Fund's performance will fluctuate, and past performance (before and after taxes) is no guarantee of future results.

The Fund's Institutional Service Shares are sold without a sales charge (load). The total returns shown in the bar chart above are based upon net asset value.

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The Fund's Institutional Service Shares total return for the three-month period from January 1, 2006 to March 31, 2006 was (0. 04)%.

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Within the period shown in the bar chart, the Fund's Institutional Service Shares highest quarterly return was 3. 05% (quarter ended September 30, 2001). Its lowest quarterly return was (0.98)% (quarter ended June 30, 2004).

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Average Annual Total Return Table

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Return Before Taxes is shown. In addition, Return After Taxes is shown for the Fund's Institutional Service Shares to illustrate the effect of federal taxes on Fund returns. Actual after-tax returns depend on each investor's personal tax situation, and are likely to differ from those shown. The table also shows returns for the Lehman Brothers 1-3 Year Government Index (LB1-3G ) and the Lehman Brothers Intermediate Government Index (LBIG), each of which is a broad-based market index tracking U.S. government securities. Index returns do not reflect taxes, 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.

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(For the Periods Ended December 31, 2005)

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	1 Year	5 Years	10 Years
Fund:
Return Before Taxes	<R> 1. 01%</R>	<R> 3. 17%</R>	<R>4. 21%</R>
Return After Taxes on Distributions 1	<R>(0. 19)%</R>	<R> 1. 94%</R>	<R> 2. 49%</R>
Return After Taxes on Distributions and Sale of Fund Shares 1	<R>0. 65%</R>	<R> 1. 96%</R>	<R> 2. 52%</R>
LB1-3G 2	<R>1. 73%</R>	<R> 3. 83%</R>	<R> 4. 89%</R>
LBIG 2	<R> 1. 58%</R>	<R> 5. 50%</R>	<R> 5. 80%</R>

1 After-tax returns are calculated using a standard set of assumptions. The stated returns assume the highest historical federal income and capital gains tax rates. Return After Taxes on Distributions assumes a continued investment in the Fund and shows the effect of taxes on Fund distributions. Return After Taxes on Distributions and Sale of Fund Shares assumes all Shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on Fund distributions. These after-tax returns do not reflect the effect of any applicable state and local taxes. After-tax returns are not relevant to investors holding Shares through tax-deferred programs, such as IRA or 401(k) plans.

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2 The Fund's Adviser changed the "Index" from the LB1-3G to the LBIG on May 1, 2005 because it is more representative of the Fund's current investment strategy.

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What are the Fund's Fees and Expenses?

FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

FEES AND EXPENSES

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

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 and Reimbursement) 1
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 2	0.40%
Distribution (12b-1) Fee 3	0.25%
Other Expenses 4	1.05%
Total Annual Fund Operating Expenses	1.70%
1 The percentages shown are based on expenses for the entire fiscal year ended February 28, 2006. However, the rate at which expenses are accrued during the fiscal year may not be constant and, at any particular point, may be greater or less than the stated average percentage. Although not contractually obligated to do so, the Adviser, the administrator and the distributor waived and/or reimbursed certain amounts. These are shown below along with the net expenses the Fund actually paid for the fiscal year ended February 28, 2006.
Total Waivers and Reimbursement of Fund Expenses	1.15%
Total Actual Annual Fund Operating Expenses (after waivers and reimbursement)	0.55%
2 The Adviser has voluntarily waived the management fee. The Adviser can terminate this voluntary waiver at any time. The management fee paid by the Fund (after the voluntary waiver) was 0.00% for the fiscal year ended February 28, 2006.
3 The distribution (12b-1) fee has been voluntarily waived. This voluntary waiver can be terminated at any time. The distribution (12b-1) fee paid by the Fund's Institutional Services Shares (after the voluntary waiver) was 0.00% for the fiscal year ended February 28, 2006.
4 Includes a shareholder services fee/account administration fee which is used to compensate intermediaries for shareholder services or account administrative services. Please see "Payments to Financial Intermediaries" herein. The administrator voluntarily waived a portion of its fee and the Adviser voluntarily reimbursed certain operating expenses of the Fund. The administrator and Adviser can terminate this voluntary waiver and reimbursement at any time. Total other operating expenses paid by the Fund's Institutional Service Shares (after the voluntary waiver and reimbursement) were 0.55% for the fiscal year ended February 28, 2006.

EXAMPLE

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

The Example assumes that you invest $10,000 in the Fund's Institutional Service Shares for the time periods indicated and then redeem all of your 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 Service Shares operating expenses are before waivers and reimbursement as shown in the table and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:

1 Year	$	<R> 173</R>
3 Years	$	<R> 536</R>
5 Years	$	<R> 923</R>
10 Years	$	<R> 2, 009</R>

What are the Fund's Investment Strategies?

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The Fund is intended to provide returns consistent with investments in U.S. government and government agency securities. The Fund's overall strategy is therefore to invest in a portfolio consisting primarily of U.S. Treasury securities, U.S. government agency securities (including mortgage-backed securities issued by U.S. government agencies or instrumentalities) and related derivative contracts. A description of the principal types of securities and derivative contracts in which the Fund invests, other investment techniques principally used by the Fund, and their risks, immediately follows this strategy section.

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The Fund buys and sells portfolio securities based primarily on the Adviser's market outlook and analysis of how securities may perform under different market conditions. The Adviser's market outlook reflects multiple factors, including:

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• current and expected U.S. economic growth;
  

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• current and expected changes in the rate of inflation;
  

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• the level of interest rates in other countries as compared to U.S. interest rates;
  

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• the Federal Reserve Board's monetary policy; and
  

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• technical factors affecting the supply or demand for specific securities or types of securities.
  

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The Adviser's securities analysis considers, among other factors, the historical and expected performance of securities relative to their risks. Performance includes the potential for appreciation, as well as a security's expected yield. The analysis also considers some or all of the risks described below.

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The Adviser evaluates the investment strategy by comparing the performance and composition of the Fund's portfolio to the performance and composition of an index composed of notes and bonds issued by the U.S. government and its agencies or instrumentalities with maturities of not less than one year and not more than ten years (the "Index"). Although there can be no assurance that the Fund's total return will exceed the Index's during any period, the Fund's Adviser seeks to construct a portfolio that will perform favorably when compared to the Index over the long-term. In pursuing this strategy, the composition of the Fund's portfolio will vary from the composition of the Index. The Fund's portfolio may also include individual securities not represented in the Index.

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The Adviser may seek to control risks by adopting policies that limit the extent to which the Fund's portfolio may vary from the Index. For example, under normal market conditions, the Adviser currently limits the effective duration of the Fund's portfolio to not less than 80% or more than 120% of the effective duration of the Index. Effective duration provides a measure of the price sensitivity of a fixed-income security or portfolio of fixed-income securities to changes in interest rates. The Adviser may change these limitations at any time without prior approval from the Fund's trustees or shareholders.

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Mortgage-backed pass-through certificates are typically offered or traded on a "to-be-announced" or other delayed delivery basis. Other U.S. government securities may also be offered on a delayed delivery basis. The Fund will enter into trades on this basis in order to participate in these offerings or trade these securities. The Fund may also seek to increase its income by engaging in dollar-roll transactions.

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The Fund may use derivative contracts to implement elements of its investment strategy. For example, the Fund may use derivative contracts to:

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• increase or decrease the effective duration of the Fund's portfolio;
  

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• increase or decrease the Fund's exposure to different points on the yield curve; ¹
  

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• increase or decrease the allocation of the portfolio to securities or types of securities in which the Fund may invest directly; or
  

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• obtain premiums from the sale of derivative contracts.
  

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1 In descriptions of the Fund's investment strategy, the Adviser may refer to the relative interest rates of securities with longer and shorter durations within a sector as a "yield curve".

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There can be no assurance that the Fund's use of derivative contracts will work as intended.

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The Fund invests in overnight repurchase agreements or money market funds in order to maintain sufficient cash to pay for daily net redemptions and portfolio transactions.

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Because the Fund refers to U.S. government securities in its name, it will notify shareholders at least 60 days in advance of any change in its investment policies that would enable the Fund to invest, under normal circumstances, less than 80% of its assets in U.S. government investments.

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PORTFOLIO TURNOVER

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The Fund actively trades its portfolio securities in an attempt to achieve its investment objective. Active trading will cause the 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 the Fund's trading costs and may have an adverse impact on the Fund's performance.

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TEMPORARY DEFENSIVE INVESTMENTS

The Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term debt securities and similar obligations. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.

What are the Principal Securities in Which the Fund Invests?

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 Fund invests:

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Treasury Securities

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

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Agency Securities

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Agency securities are issued or guaranteed by a federal agency or other government sponsored entity (GSE) acting under federal authority. Some agency securities are supported by the full faith and credit of the United States. These include the Government National Mortgage Association, Small Business Administration, Farm Credit System Financial Assistance Corporation, Farmer's Home Administration, Federal Financing Bank, General Services Administration, Department of Housing and Urban Development, Export-Import Bank, Overseas Private Investment Corporation, and Washington Metropolitan Area Transit Authority Bonds.

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Other agency securities receive support through federal subsidies, loans or other benefits. For example, the U.S. Treasury is authorized to purchase specified amounts of securities issued by (or otherwise make funds available to) the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, and Tennessee Valley Authority in support of such obligations.

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A few agency securities have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. These include the Farm Credit System, Financing Corporation, and Resolution Funding Corporation.

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Investors regard agency securities as having low credit risks, but not as low as U.S. Treasury securities. A Fund treats mortgage-backed securities guaranteed by a GSE as agency securities. Although such a guarantee protects against credit risks, it does not reduce market and prepayment risks.

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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. Interest in pools of adjustable rate mortgages are know as ARMs.

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Mortgage-backed securities come in a variety of forms. The simplest form of mortgage-backed securities is pass-through certificates. Holders of pass-through certificates receive a pro rata share of all net interest and principal payments and prepayments from the underlying mortgages. As a result, the holders assume all the interest rate and prepayment risks of the underlying mortgages. Other mortgage-backed securities may have more complicated financial structures.

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COLLATERALIZED MORTGAGE OBLIGATIONS ( CMOS)

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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.

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Sequential CMOs

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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.

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PACs, TACs and Companion Classes

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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.

The degree of prepayment risk of CMOs depends upon the structure of the CMOs. However, the actual returns of any type of mortgage-backed security depends upon the performance of the underlying pool of mortgages, which no one can predict and will vary among pools.

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IOs and POs

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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. 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). In contrast, POs decrease in value when interest rates rise (and prepayments decrease).

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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.

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The degree of increased or decreased prepayment risks depends upon the structure of the CMOs. However, the actual returns on any type of mortgage-backed security depend upon the performance of the underlying pool of mortgages, which no one can predict and will vary among pools.

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Derivative Contracts

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Derivative contracts are financial instruments that require payments based upon changes in the values of designated (or underlying) securities, 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.

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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 with respect to exchange-traded contracts. Trading contracts on an exchange also allows investors to close out their contracts by entering into offsetting contracts.

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The Fund may also trade derivative contracts over-the-counter (OTC) in transactions negotiated directly between the Fund and another party commonly referred to as a 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.

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Depending upon how the Fund uses derivative contracts and the relationships between the market value of a derivative contract and the underlying asset, derivative contracts may increase or decrease the Fund's exposure to interest rate and credit risks, and may also expose the Fund to liquidity and leverage risks. OTC contracts also expose the Fund to credit risks in the event that a counterparty defaults on the contract.

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SPECIAL TRANSACTIONS

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Repurchase Agreements

Repurchase agreements are transactions in which the Fund buys 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 Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. The Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser.

The Fund's 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.

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.

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TO BE ANNOUNCED SECURITIES ( TBAS)

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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.

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DOLLAR ROLLS

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Dollar rolls are transactions where the Fund sells 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 and credit risks.

Asset Coverage

In order to secure its obligations in connection with derivatives contracts or special transactions, the Fund 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 Fund's obligations. Unless the Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without entering into an offsetting derivative contract or terminating a special transaction. This may cause the Fund to miss favorable trading opportunities or to realize losses on derivative contracts or special transactions.

Securities Lending

The Fund may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, the Fund receives 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 Fund the equivalent of any dividends or interest received on the loaned securities.

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

Loans are subject to termination at the option of the Fund or the borrower. The Fund will not have the right to vote on securities while they are on loan, but it will terminate a loan in anticipation of any important vote. The Fund 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 and credit risks.

What are the Specific Risks of Investing in the Fund?

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.

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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.

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PREPAYMENT RISKS

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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.

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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.

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.

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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.

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RISKS ASSOCIATED WITH COMPLEX CMOS

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CMOs with complex terms, such as companion classes, IOs, POs, and Inverse Floaters, generally entail greater market, prepayment and liquidity risks than other mortgage-backed securities. For example, their prices are more volatile and their trading market may be more limited.

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RISKS OF INVESTING IN DERIVATIVES CONTRACTS

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The Fund's use of derivative contracts involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. First, changes in the value of the derivative contracts in which the Fund invests may not be correlated with changes in the value of the underlying asset or if they are correlated, may move differently than originally anticipated. Second, while some strategies involving derivatives may reduce the risk of loss, they may also reduce potential gains or, in some cases, result in losses by offsetting favorable price movements in portfolio holdings. Third, there is a risk that derivative contracts may be mispriced or improperly valued and, as a result, the Fund may need to make increased cash payments to the counterparty. Fourth, derivative contracts may cause the Fund to realize increased ordinary income or short-term capital gains (which are treated as ordinary income for Federal income tax purposes) and, as a result, may increase taxable distributions to shareholders. Any such termination of the Fund's OTC derivative contracts may adversely affect the Fund (for example, by increasing losses and/or costs, and/or preventing the Fund from fully implementing its investment strategies). Derivative contracts may also involve other risks such as interest rate, credit, liquidity and leverage risks.

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What Do Shares Cost?

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You can purchase, redeem or exchange Shares any day the New York Stock Exchange (NYSE) is open. When the Fund receives your transaction request in proper form (as described in this prospectus), it is processed at the next calculated net asset value (NAV). The Fund does not charge a front-end sales charge. NAV is determined as of the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time) each day the NYSE is open. The Fund's current NAV and public offering price may be found in the mutual funds section of certain local newspapers under "Federated."

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The Fund generally values fixed-income securities according to prices furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase may be valued at amortized cost. For mortgage-backed securities, prices furnished by the independent pricing service are based on the aggregate investment value of the projected cash flows to be generated by the security. For other fixed-income securities, prices furnished by an independent pricing service are intended to be indicative of the bid price currently offered to institutional investors for the securities.

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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.

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If prices are not available from an independent pricing service, securities and derivatives, contracts 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 security or contract as provided by an investment dealer or other financial institution that deals in the security or contract.

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Where a last sale price or market quotation for a portfolio security is not readily available, and no independent pricing service furnishes a price, the value of the security used in computing NAV is its fair value as determined in good faith under procedures approved by the Fund's Board.

The Fund may use the fair value of a security to calculate its NAV when, for example: (1) a portfolio security is not traded in a public market or the principal market in which the security trades is closed; (2) trading in a portfolio security is suspended and not resumed prior to the normal market close; (3) a portfolio security is not traded in significant volume for a substantial period; or (4) the Fund's Adviser determines that the quotation or price for a portfolio security provided by a dealer or independent pricing service is inaccurate.

Fair valuation procedures are also used where a significant event affecting the value of a portfolio security is determined to have occurred between the time as of which the price of the portfolio security is determined and the NYSE closing time as of which the Fund's NAV is computed. An event is considered significant if there is both an affirmative expectation that the security's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Significant events include significant general securities market movements occurring between the time as of which the price of the portfolio security is determined and the close of trading on the NYSE. For domestic fixed-income securities, such events may occur where the cut-off time for the market information used by the independent pricing service is earlier than the end of regular trading on the NYSE. In such cases, use of fair valuation can reduce an investor's ability to seek to profit by estimating the Fund's NAV in advance of the time as of which NAV is calculated.

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In some cases, events affecting the issuer of a portfolio security may be considered significant events. Announcements concerning earnings, acquisitions, new products, management changes, litigation developments, a strike or natural disaster affecting the company's operations or regulatory changes or market developments affecting the issuer's industry occurring between the time as of which the price of the portfolio security is determined and the close of trading on the NYSE are examples of potentially significant events.

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There can be no assurance that the Fund could purchase or sell a portfolio security at the price used to calculate the Fund's NAV. In the case of fair valued portfolio securities, lack of information and uncertainty as to the significance of information may lead to a conclusion that a prior valuation is the best indication of a portfolio security's present value. Fair valuations generally remain unchanged until new information becomes available. Consequently, changes in the fair valuation of portfolio securities may be less frequent and of greater magnitude than changes in the price of portfolio securities valued by an independent pricing service, or based on market quotations.

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How is the Fund Sold?

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The Fund offers two Share classes: Institutional Shares and Institutional Service Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Service Shares. All Share classes have different expenses which affect their performance. Contact your financial intermediary or call 1-800-341-7400 for more information concerning the other class.

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The Fund's Distributor, Federated Securities Corp., markets the Shares described in this prospectus to individuals, directly or through financial intermediaries. Under the Distributor's Contract with the Fund, the Distributor offers Shares on a continuous, best-efforts basis. The Distributor is a subsidiary of Federated Investors, Inc. (Federated).

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Payments to Financial Intermediaries

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The Fund and its affiliated service providers may pay fees as described below to financial intermediaries (such as broker-dealers, banks, investment advisers or third-party administrators) whose customers are shareholders of the Fund.

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RULE 12B-1 FEES

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The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees of up to 0.25% of average net assets to the Distributor for the sale, distribution, administration and customer servicing of the Fund's Institutional Service Shares. When the Distributor receives Rule 12b-1 Fees, it may pay some or all of them to financial intermediaries whose customers purchase Shares. Because these Shares pay marketing fees on an ongoing basis, your investment cost may be higher over time than other shares with different marketing fees.

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SERVICE FEES

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The Fund may pay Service Fees of up to 0.25% of average net assets to financial intermediaries or to Federated Shareholder Services Company (FSSC), a subsidiary of Federated, for providing services to shareholders and maintaining shareholder accounts. Under certain agreements, rather than paying financial intermediaries directly, the Fund may pay Service Fees to FSSC and FSSC will use the fees to compensate financial intermediaries. If a financial intermediary receives Service Fees on an account, it is not eligible to also receive Account Administration Fees on that same account.

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ACCOUNT ADMINISTRATION FEES

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The Fund may pay Account Administration Fees of up to 0.25% of average net assets to financial intermediaries that are unregistered banks for providing administrative services to the Funds and shareholders. If a financial intermediary receives Account Administration Fees on an account, it is not eligible to also receive Service Fees or Recordkeeping Fees on that same account.

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NETWORKING FEES

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The Fund may reimburse Networking Fees on a per account per year basis to financial intermediaries for providing administrative services to the Funds and shareholders on certain non-omnibus accounts. If a financial intermediary receives Networking Fees on an account, it is not eligible to also receive Recordkeeping Fees on that same account.

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ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES

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The Distributor may pay out of its own resources amounts (including items of material value) to certain financial intermediaries that support the sale of Shares or provide services to Fund shareholders. The amounts of these payments could be significant, and may create an incentive for the financial intermediary or its employees or associated persons to recommend or sell Shares of the Fund to you. In some cases, such payments may be made by or funded from the resources of companies affiliated with the Distributor (including the Adviser). These payments are not reflected in the fees and expenses listed in the fee table section of the Fund's prospectus and described above because they are not paid by the Fund.

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These payments are negotiated and may be based on such factors as the number or value of Shares that the financial intermediary sells or may sell; the value of client assets invested; or the type and nature of services or support furnished by the financial intermediary. These payments may be in addition to payments made by the Fund to the financial intermediary under a Rule 12b-1 Plan and/or Service Fees arrangement. In connection with these payments, the financial intermediary may elevate the prominence or profile of the Fund and/or other Federated funds within the financial intermediary's organization by, for example, placement on a list of preferred or recommended funds, and/or granting the Distributor preferential or enhanced opportunities to promote the funds in various ways within the financial intermediary's organization. You can ask your financial intermediary for information about any payments it receives from the Distributor or the Fund and any services provided.

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How to Purchase Shares

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You may purchase Shares through a financial intermediary, directly from the Fund or through an exchange from another Federated fund. The Fund reserves the right to reject any request to purchase or exchange Shares.

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The required minimum initial investment for Fund Shares is $25,000. The required minimum subsequent investment amount is $100.

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An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through financial intermediaries may be subject to a smaller minimum investment amount. Keep in mind that financial intermediaries may charge you fees for their services in connection with your Share transactions.

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THROUGH A FINANCIAL INTERMEDIARY

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• Establish an account with the financial intermediary; and
  

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• Submit your purchase order to the financial intermediary 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 financial intermediary forwards the order to the Fund on the same day and the Fund receives payment within one business days. You will become the owner of Shares and receive dividends when the Fund receives your payment.
  

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Financial intermediaries should send payments according to the instructions in the sections "By Wire" or "By Check."

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DIRECTLY FROM THE FUND

• Establish your account with the Fund by submitting a completed New Account Form; and
  
• Send your payment to the 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 the 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 the Fund or State Street Bank and Trust Company, the Fund's transfer agent.

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

By Wire

Send your wire to:

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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

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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 send it to:

The Federated Funds
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, send it to:

The Federated Funds
66 Brooks Drive
Braintree, MA 02184

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund reserves the right to reject any purchase request. For example, to protect against check fraud the Fund may reject any purchase request involving a check that is not made payable to The Federated Funds (including, but not limited to, requests to purchase Shares using third-party checks), or involving temporary checks or credit card checks.

BY AUTOMATED CLEARING HOUSE (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.

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How to Redeem and Exchange Shares

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You should redeem or exchange Shares:

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• through a financial intermediary if you purchased Shares through a financial intermediary; or
  

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• directly from the Fund if you purchased Shares directly from the Fund.
  

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Shares of the Fund may be redeemed for cash or exchanged for shares of the same class of other Federated funds on days on which the Fund computes its NAV. Redemption requests may be made by telephone or in writing.

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THROUGH A FINANCIAL INTERMEDIARY

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Submit your redemption or exchange request to your financial intermediary 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 the Fund receives the order from your financial intermediary.

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DIRECTLY FROM THE FUND

By Telephone

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You may redeem or exchange Shares by simply calling the Fund at 1-800-341-7400.

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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

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You may redeem or exchange Shares by sending a written request to the Fund.

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You will receive a redemption amount based on the next calculated NAV after the Fund receives your written request in proper form.

Send requests by mail to:

The Federated Funds
P.O. Box 8600
Boston, MA 02266-8600

Send requests by private courier or overnight delivery service to:

The Federated Funds
66 Brooks Drive
Braintree, MA 02184

All requests must include:

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• Fund Name and Share Class, account number and account registration;
  

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• amount to be redeemed or exchanged;
  

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• signatures of all shareholders exactly as registered ; and
  

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• if exchanging , the Fund Name and Share Class, account number and account registration into which you are exchanging.
  

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Call your financial intermediary or the Fund if you need special instructions.

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Signature Guarantees

Signatures must be guaranteed by a financial institution which is a participant in a Medallion signature guarantee program if:

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

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• your redemption will be sent to an address of record that was changed within the last 30 days ;
  

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• a redemption is payable to someone other than the shareholder(s) of record ; or
  

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• if exchanging (transferring) into another fund with a different shareholder registration.
  

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A Medallion signature guarantee is designed to protect your account from fraud. Obtain a Medallion 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:

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

Redemption in Kind

Although the 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 the 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:

• to allow your purchase to clear;
  
• during periods of market volatility; or
  
• when a shareholder's trade activity or amount adversely impacts the Fund's ability to manage its assets.
  

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

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EXCHANGE PRIVILEGE

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You may exchange Shares of the Fund for shares of any Federated fund or share class that does not have a stated sales charge or contingent deferred sales charge, except Liberty U.S. Government Money Market Trust and Class K Shares. To do this, you must:

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• ensure that the account registrations are identical;
  

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• meet any minimum initial investment requirements; and
  

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• receive a prospectus for the fund into which you wish to exchange.
  

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An exchange is treated as a redemption and a subsequent purchase, and is a taxable transaction.

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The Fund may modify or terminate the exchange privilege at any time. In addition, the Fund may terminate your exchange privilege if your exchange activity is found to be excessive under the Fund's frequent trading policies. See "Account and Share Information - Frequent Trading Policies."

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ADDITIONAL CONDITIONS

Telephone Transactions

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

Share Certificates

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

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Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

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You will receive confirmation of purchases, redemptions and exchanges. In addition, you will receive periodic statements reporting all account activity, including dividends and capital gains paid.

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DIVIDENDS AND CAPITAL GAINS

The Fund declares any dividends daily and pays them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after the Fund receives your check. In either case, you earn dividends through the day your redemption request is received.

In addition, the Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.

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If you have elected to receive dividends and/or capital gain distributions in cash, and your check is returned by the postal or other delivery service as "undeliverable," or you do not respond to mailings from Federated with regard to uncashed distribution checks, your distribution option will automatically be converted to having all dividends and capital gains reinvested in additional shares. No interest will accrue on amounts represented by uncashed distribution checks.

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If you purchase Shares just before the record date for a 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 the record date for a capital gain. Contact your financial intermediary or the Fund for information concerning when dividends and capital gains will be paid.

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ACCOUNTS WITH LOW BALANCES

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Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions or exchanges 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.

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TAX INFORMATION

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The Fund sends 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 Fund. Dividends are taxable at different rates depending on the source of dividend income . Capital gains are taxable at different rates depending upon the length of time the Fund holds its assets.

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

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FREQUENT TRADING POLICIES

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Frequent or short-term trading into and out of the Fund can have adverse consequences for the Fund and shareholders who use the Fund as a long-term investment vehicle. Such trading in significant amounts can disrupt the Fund's investment strategies (e.g., by requiring it to sell investments at inopportune times or maintain excessive short-term or cash positions to support redemptions), increase brokerage and administrative costs and affect the timing and amount of taxable gains distributed by the Fund. Investors engaged in such trading may also seek to profit by anticipating changes in the Fund's NAV in advance of the time as of which NAV is calculated.

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The Fund's Board has approved policies and procedures intended to discourage excessive frequent or short-term trading of the Fund's Shares. The Fund monitors trading in Fund Shares in an effort to identify disruptive trading activity. The Fund monitors trades into and out of the Fund within a period of 30 days or less. The size of Share transactions subject to monitoring varies. However, where it is determined that a shareholder has exceeded the detection amounts twice within a period of 12 months, the shareholder will be precluded from making further purchases or exchanges of Fund Shares. The Fund may also monitor trades into and out of the Fund over periods longer than 30 days, and if potentially disruptive trading activity is detected, the shareholder will be precluded from making further purchases or exchanges of Fund Shares. Whether or not the specific monitoring limits are exceeded, the Fund's management or the Adviser may determine from the amount, frequency or pattern of purchases and redemptions or exchanges that a shareholder is engaged in excessive trading that is or could be detrimental to the Fund and other shareholders and may preclude the shareholder from making further purchases or exchanges of Fund Shares. No matter how the Fund defines its limits on frequent trading of Fund Shares, other purchases and sales of Fund Shares may have adverse effects on the management of the Fund's portfolio and its performance.

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The Fund's frequent trading restrictions do not apply to purchases and sales of Fund Shares by other Federated funds. These funds impose the same frequent trading restrictions as the Fund at their shareholder level. In addition, allocation changes of the investing Federated fund are monitored, and the managers of the recipient fund must determine that there is no disruption to their management activity. The intent of this exception is to allow investing fund managers to accommodate cash flows that result from non-abusive trading in the investing fund, without being stopped from such trading because the aggregate of such trades exceeds the monitoring limits. Nonetheless, as with any trading in Fund Shares, purchases and redemptions of Fund Shares by other Federated funds could adversely affect the management of the Fund's portfolio and its performance.

</R>

The Fund's objective is that its restrictions on short-term trading should apply to all shareholders, regardless of the number or type of accounts in which Shares are held. However, the Fund anticipates that limitations on its ability to identify trading activity to specific shareholders, including where shares are held through intermediaries in multiple or omnibus accounts, will mean that these restrictions may not be able to be applied uniformly in all cases.

PORTFOLIO HOLDINGS INFORMATION

<R>

Information concerning the Fund's portfolio holdings is available in the "Products" section of Federated's website at FederatedInvestors.com. A complete listing of the Fund's portfolio holdings as of the end of each calendar quarter is posted on the website 30 days (or the next business day) after the end of the quarter and remains posted until replaced by the information for the succeeding quarter. Summary portfolio composition information as of the close of each month is posted on the website 15 days (or the next business day) after month-end and remains until replaced by the information for the succeeding month. The summary portfolio composition information may include percentage breakdowns of the portfolio by type of security.

</R>

To access this information from the "Products" section of the website, click on "Portfolio Holdings" and select the appropriate link opposite the name of the Fund, or select the name of the Fund from the menus on the "Products" section, and from the Fund's page click on the "Portfolio Holdings" or "Composition" link. A user is required to register on the website the first time the user accesses this information.

You may also access from the "Products" section of the website portfolio information as of the end of the Fund's fiscal quarters. The Fund's annual and semiannual reports, which contain complete listings of the Fund's portfolio holdings as of the end of the Fund's second and fourth fiscal quarters, may be accessed by selecting the name of the Fund, clicking on "Prospectuses and Regulatory Reports" and selecting the link to the appropriate PDF. Complete listings of the Fund's portfolio holdings as of the end of the Fund's first and third fiscal quarters may be accessed by selecting "Portfolio Holdings" from the "Products" section and then selecting the appropriate link opposite the name of the Fund. Fiscal quarter information is made available on the website within 70 days after the end of the fiscal quarter. This information is also available in reports filed with the SEC at the SEC's website at www.sec.gov.

Who Manages the Fund?

The Board of Directors (the "Board") governs the Fund. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Fund's assets, including buying and selling portfolio securities. Federated Advisory Services Company (FASC), an affiliate of the Adviser, provides certain support services to the Adviser. The fee for these services is paid by the Adviser and not by the Fund. The address of the Adviser and FASC is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

<R>

The Adviser and other subsidiaries of Federated advise approximately 136 equity, fixed-income, and money market mutual funds as well as a variety of customized separately managed accounts, which totaled approximately $ 213 billion in assets as of December 31, 2005. Federated was established in 1955 and is one of the largest investment managers in the United States with approximately 1, 305 employees. Federated provides investment products to more than 5, 500 investment professionals and institutions.

</R>

PORTFOLIO MANAGEMENT INFORMATION

<R>

Liam O'Connell

</R>
<R>

Liam O'Connell has been the portfolio manager of the Fund since June 2005. Mr. O'Connell joined Federated in September 2003 as an Investment Analyst of the Fund's Adviser. He was named an Assistant Vice President of the Adviser in January 2005. From 2001 to 2003, Mr. O'Connell attended MIT's Sloan School of Management, receiving his M.B.A. Mr. O'Connell served as an engineer with the Naval Surface Warfare Center from 1998 to 2001. Mr. O'Connell also holds a B.S. in Naval Architecture and Marine Engineering from the Webb Institute of Naval Architecture, and an M.S. from the Johns Hopkins University.

</R>

The Fund's SAI provides additional information about the Portfolio Managers' compensation, management of other accounts, and ownership of securities in the Fund.

ADVISORY FEES

The Adviser receives an annual investment advisory fee of 0.40% of the Fund's average daily net assets. The Adviser may voluntarily waive a portion of its fee or reimburse the Fund for certain operating expenses.

<R>

A discussion of the Board's review of the Fund's investment advisory contract is available in the Fund's Annual Report dated February 28, 2006.

</R>

Legal Proceedings

<R>

Since October 2003, Federated and related entities (collectively, "Federated"), and various Federated funds ("Funds"), have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Funds from the SEC, the Office of the New York State Attorney General ("NYAG"), and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. Specifically, the SEC and NYAG settled proceedings against three Federated subsidiaries involving undisclosed market timing arrangements and late trading. The SEC made findings: that Federated Investment Management Company ("FIMC"), an SEC-registered investment adviser to various Funds, and Federated Securities Corp., an SEC-registered broker-dealer and distributor for the Funds, violated provisions of the Investment Advisers Act and Investment Company Act by approving, but not disclosing, three market timing arrangements, or the associated conflict of interest between FIMC and the funds involved in the arrangements, either to other fund shareholders or to the funds' board; and that Federated Shareholder Services Company, formerly an SEC-registered transfer agent, failed to prevent a customer and a Federated employee from late trading in violation of provisions of the Investment Company Act. The NYAG found that such conduct violated provisions of New York State law. Federated entered into the settlements without admitting or denying the regulators' findings. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay disgorgement and a civil money penalty in the aggregate amount of an additional $72 million and, among other things, agreed that it would not serve as investment adviser to any registered investment company unless: (i) at least 75% of the fund's directors are independent of Federated; (ii) the chairman of each such fund is independent of Federated; (iii) no action may be taken by the fund's board or any committee thereof unless approved by a majority of the independent trustees of the fund or committee; respectively, and (iv) the fund appoints a "senior officer" who reports to the independent trustees and is responsible for monitoring compliance by the fund with applicable laws and fiduciary duties and for managing the process by which management fees charged to a fund are approved. The settlements are described in Federated's announcement which, along with previous press releases and related communications on those matters, is available in the "About Us" section of Federated's website at FederatedInvestors.com ..

</R>
<R>

Federated and various Funds have also been named as defendants in several additional lawsuits, the majority of which are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees .

</R>
<R>

The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees, and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

</R>

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Fund's financial performance for its past five fiscal years. 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 the Fund, assuming reinvestment of any dividends and capital gains.

<R>

This information for the fiscal year ended February 28, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the Fund's audited financial statements, is included in the Annual Report. As discussed in the Annual Report, the information for prior years was audited by Deloitte & Touche LLP, another independent registered public accounting firm.

</R>

Financial Highlights

(For a Share Outstanding Throughout Each Period)

Year Ended February 28 or 29	2006 1			2005			2004			2003			2002
Net Asset Value, Beginning of Period:	$9.54			$9.75			$9.77			$9.60			$9.52
Income From Investment Operations:
Net investment income	0.35			0.21			0.18			0.30			0.49
Net realized and unrealized gain (loss) on investments	(0.21	)		(0.21	)		(0.02	)		0.17			0.08
TOTAL FROM INVESTMENT OPERATIONS	0.14			0.00			0.16			0.47			0.57
Less Distributions:
Distributions from net investment income	(0.35	)		(0.21	)		(0.18	)		(0.30	)		(0.49	)
Net Asset Value, End of Period	$9.33			$9.54			$9.75			$9.77			$9.60
Total Return 2	1.49	%		(0.04	)%		1.67	%		4.95	%		6.06	%
Ratios to Average Net Assets:
Net expenses	0.55	%		0.55	%		0.55	%		0.55	%		0.55	%
Net investment income	3.61	%		2.13	%		1.87	%		3.05	%		5.07	%
Expense waiver/reimbursement 3	1.15	%		0.89	%		0.71	%		0.76	%		0.82	%
Supplemental Data:
Net assets, end of period (000 omitted)	$41,425		$60,422			$76,813			$84,067			$82,462
Portfolio turnover	140	%		164	%		116	%		110	%		71	%

1 Beginning with the year ended February 28, 2006, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

2 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

3 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

Further information about the Fund's performance is contained in the Fund's Annual Report, dated February 28, 2006, which can be obtained free of charge.

<R>

Appendix A: Hypothetical Investment and Expense Information

</R>
<R>

The following chart provides additional hypothetical information about the effect of the Fund's expenses, including investment advisory fees and other Fund costs, on the Fund's assumed returns over a 10-year period. The chart shows the estimated expenses that would be incurred in respect of a hypothetical investment of $10,000, assuming a 5% return each year, and no redemption of Shares. The chart also assumes that the Fund's annual expense ratio stays the same throughout the 10-year period and that all dividends and distributions are reinvested. The annual expense ratio used in the chart is the same as stated in the "Fees and Expenses" table of this prospectus (and thus may not reflect any fee waiver or expense reimbursement currently in effect). The maximum amount of any sales charge that might be imposed on the purchase of Shares (and deducted from the hypothetical initial investment of $10,000; the "Front-End Sales Charge") is reflected in the "Hypothetical Expenses" column. The hypothetical investment information does not reflect the effect of charges (if any) normally applicable to redemptions of Shares (e.g., deferred sales charges, redemption fees). Mutual fund returns, as well as fees and expenses, may fluctuate over time, and your actual investment returns and total expenses may be higher or lower than those shown below.

</R>
<R>

FEDERATED INTERMEDIATE GOVERNMENT FUND, INC. - INSTITUTIONAL SERVICE SHARES
ANNUAL EXPENSE RATIO: 1.70%
MAXIMUM FRONT-END SALES CHARGE: 0.00%

</R>

<R>Year</R>	<R>Hypothetical Beginning Investment</R>	<R>Hypothetical Performance Earnings</R>	<R>Investment After Returns</R>	<R>Hypothetical Expenses </R>	<R>Hypothetical Ending Investment</R>
<R>1</R>	<R>$10,000.00</R>	<R>$ 500.00</R>	<R>$10,500.00</R>	<R>$ 172.81</R>	<R>$10,330.00</R>
<R>2</R>	<R>$10,330.00</R>	<R>$ 516.50</R>	<R>$10,846.50</R>	<R>$ 178.51</R>	<R>$10,670.89</R>
<R>3</R>	<R>$10,670.89</R>	<R>$ 533.54</R>	<R>$11,204.43</R>	<R>$ 184.40</R>	<R>$11,023.03</R>
<R>4</R>	<R>$11,023.03</R>	<R>$ 551.15</R>	<R>$11,574.18</R>	<R>$ 190.48</R>	<R>$11,386.79</R>
<R>5</R>	<R>$11,386.79</R>	<R>$ 569.34</R>	<R>$11,956.13</R>	<R>$ 196.77</R>	<R>$11,762.55</R>
<R>6</R>	<R>$11,762.55</R>	<R>$ 588.13</R>	<R>$12,350.68</R>	<R>$ 203.26</R>	<R>$12,150.71</R>
<R>7</R>	<R>$12,150.71</R>	<R>$ 607.54</R>	<R>$12,758.25</R>	<R>$ 209.97</R>	<R>$12,551.68</R>
<R>8</R>	<R>$12,551.68</R>	<R>$ 627.58</R>	<R>$13,179.26</R>	<R>$ 2 16.90</R>	<R>$12,965.89</R>
<R>9</R>	<R>$12,965.89</R>	<R>$ 648.29</R>	<R>$13,614.18</R>	<R>$ 224.06</R>	<R>$13,393.76</R>
<R>10</R>	<R>$13,393.76</R>	<R>$ 669.69</R>	<R>$14,063.45</R>	<R>$ 231.45</R>	<R>$13,835.75</R>
<R>Cumulative</R>		<R>$5,811.76</R>		<R>$2,008.61</R>

<R>

A Statement of Additional Information (SAI) dated April 30, 2006, is incorporated by reference into this prospectus. Additional information about the Fund and its investments is contained in the Fund's SAI and Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report's Management's Discussion of Fund Performance discusses market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The SAI contains a description of the Fund's policies and procedures with respect to the disclosure of its portfolio securities. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and to make inquiries, call your financial intermediary or the Fund at 1-800-341-7400.

</R>

These documents, as well as additional information about the Fund (including portfolio holdings, performance and distributions), are also available on Federated's website at FederatedInvestors.com.

You can obtain information about the Fund (including the SAI) by writing to or visiting the SEC's Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's website at www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.

Investment Company Act File No. 811-6307

Federated
World-Class Investment Manager

Federated Intermediate Government Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31420H208

<R>

25746 ( 4/ 06)

</R>

Federated is a registered mark of Federated Investors, Inc. 2006 (c)Federated Investors, Inc.

FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.


STATEMENT OF ADDITIONAL INFORMATION
<R>

APRIL 30, 2006

</R>
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES


<R>
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for Federated Intermediate Government
Fund, Inc. (Fund), dated April 30, 2006.

</R>
This SAI incorporates by reference the Fund's Annual Report. Obtain the
prospectuses or the Annual Report without charge by calling 1-800-341-7400.







                                            CONTENTS                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

<R>
                                  How is the Fund Organized?.......................1
                                  Description of the Fund and its
                                  Investments and Risks............................1
                                  Securities in Which the Fund Invests.............2
                                  What Do Shares Cost?.............................7
                                  How is the Fund Sold?............................9
                                  Subaccounting Services..........................11
                                  Redemption in Kind..............................11
                                  Account and Share Information...................12
                                  Tax Information.................................13
                                  Who Manages and Provides Services to the
                                  Fund?...........................................13
                                  How Does the Fund Measure Performance?..........30
                                  Who is Federated Investors, Inc.?...............32
                                  Financial Information...........................33
                                  Addresses.........................................
                                  Appendix..........................................
</R>
          [GRAPHIC OMITTED][GRAPHIC OMITTED]







HOW IS THE FUND ORGANIZED?

The Fund is a diversified open-end, management investment company that was
established under the laws of the State of Maryland on March 20, 1991. The
Fund changed its name from Federated Limited Duration Government Fund, Inc.
to Federated Intermediate Government Fund, Inc. on April 30, 2005.

The Board of Directors (the "Board") has established two classes of shares of
the Fund, known as Institutional Shares and Institutional Service Shares
(Shares). This SAI relates to both classes of Shares. The Fund's investment
adviser is Federated Investment Management Company (Adviser).

<R>

DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS


INVESTMENT OBJECTIVE
The Fund's investment objective is to provide total return. The investment
objective may not be changed by the Fund's Board of Trustees without shareholder
approval. The Fund's total return will consist of two components: (1) changes in
the market value of its portfolio securities (both realized and unrealized
appreciation), and (2) income received from its portfolio securities. The Fund
expects that, under normal market conditions, income will comprise the largest
component of its total return. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
strategies and policies described in this SAI.


INVESTMENT STRATEGIES
The Fund is intended to provide returns consistent with investments in United
States government and government agency securities. The Fund's overall strategy
is therefore to invest in a portfolio consisting primarily of United States
Treasury securities, United States government agency securities (including
mortgage-backed securities issued by United States government agencies or
instrumentalities) and related derivative contracts. A description of the
various types of securities and derivative contracts in which the Fund invests,
other investment techniques used by the Fund, and their risks, immediately
follows this strategy section.

The Adviser evaluates the Fund's investment strategy by comparing the
performance of the Fund's portfolio to an index composed of notes and bonds
issued by the United States government and its agencies or instrumentalities
with maturities of not less than one year and not more than ten years (the
"Index"). The Adviser's basic strategy seeks to construct a portfolio that will
perform favorably when compared to the Index over the long-term. The Adviser
tries to vary the portfolio's performance from the Index by, among other things:

|X|   Varying the portfolio's effective duration as compared to the Index;

|X| Creating a portfolio of securities with a different mixture of effective
   durations as compared to the composition of the Index;

Investing a larger percentage of the portfolio in certain types of securities(1)
as compared to the composition of the Index, or investing in types of securities
that are not included in the Index; and

Investing a large percentage of the portfolio in a specific security as compared
to the Index, or investing the portfolio in securities that are not included in
the Index.

Under normal market conditions, the Adviser limits the extent to which it may
vary the portfolio's effective duration to within 20% of the effective duration
of the Index. The Fund currently uses the Lehman Brothers Intermediate
Government Index as the Index.

Effective duration provides a measure of the price sensitivity of a fixed-income
security or portfolio of fixed-income securities to changes in interest rates.
The Adviser calculates the effective duration of the portfolio using standard
analytical models that quantify the expected changes in the value of the
portfolio resulting from changes in the applicable yield curve.(2) The Index may
calculate its effective duration using different assumptions and models. The
Adviser will rely on its calculations for purposes of complying with any
limitations established with respect to the portfolio's effective duration.
Uncertainty as to the amount and timing of prepayments may make calculating the
effective durations of mortgaged-backed and some asset-backed securities more
difficult than some other types of fixed income securities.

|X| The Adviser bases the investment strategy principally on its market outlook,
   which analyzes historical and expected changes in:

|X|   the overall level and volatility of interest rates,

|X|   the slope and shape of yield curves, and

|X|   the relative interest rates of different sectors.

The investment strategy will also reflect other factors (political developments
or demographic trends, for example).

Teams of investment professionals formulate the Adviser's market outlook and
otherwise attempt to anticipate changes in market conditions. They base their
analysis on a multiple factors, which may include:

|X|   current and expected U.S. economic growth,

|X|   current and expected changes in the rate of inflation,

|X|   the level of interest rates in other countries as compared to U.S.
   interest rates,

|X|   the Federal Reserve Board's monetary policy, and

|X| technical factors affecting the supply or demand for specific securities or
   types of securities.

There is no assurance that the Adviser's efforts to forecast market conditions
and interest rates, or to assess the impact of changes in interest rates and the
yield curve, will be successful.

These teams also recommend how to structure the portfolio in response to the
market outlook. In order to manage the risks taken by the Fund, these
recommendations may set additional limits on the extent to which the portfolio's
duration and composition may vary from the Index. The Fund's portfolio manager
follows these recommendations in selecting securities for the portfolio.
Decisions to purchase or sell particular securities or derivative contracts are
based on a fundamental analysis of their sensitivity to changes in interest
rates, interest rate volatility, the yield curve and inflation, among other
factors. Characteristics that the Adviser may consider in analyzing
mortgage-backed securities include the average interest rates of the underlying
loans, the prior prepayment history and any guarantee of the security or
underlying loans by a GSE or company. This analysis relies on information from a
variety of sources (such as government securities dealers, electronic data
services and financial publications), and employs quantitative models and
analytic tools provided by third parties or developed by the Adviser. The
analysis also draws on the experience of the Adviser's staff of investment
analysts, portfolio managers and traders.

The portfolio manager uses this fundamental analysis to compare the potential
returns from available securities with comparable durations, risks and other
characteristics. For mortgage-backed securities, the decision to buy or sell
also involves assessment of available securities relative to specific interest
rate and prepayment risks, such as average life variability, price sensitivity
to changes in market spread levels and price sensitivity to changes in the level
of interest rate volatility. The Adviser assesses these risks by analyzing how
the timing, amount and division of cash flows from the mortgages underlying a
security might change in response to changing economic and market conditions.
However, there is no assurance that a security or derivative contract will
perform as expected or that the fundamental analysis will incorporate all
relevant information.

In appropriate market conditions, the Fund may invest in derivative contracts to
implement its investment strategy. For example, the Fund may buy a future or
call option on United States Treasury securities in order to lengthen the
effective duration of the portfolio as compared to the Index; alternatively, the
Fund may sell a future or call option on United States Treasury securities in
order to shorten the effective duration of the portfolio as compared to the
Index. The Fund also may use futures or options on United States Treasury
securities to increase or decrease the exposure to different points on the yield
curve without affecting the effective duration of the portfolio or to obtain
premiums. As other examples, the Fund may use swaptions or Euro-dollar futures
to shorten or lengthen the effective duration of the Fund, increase or decrease
the exposure of the Fund to different points on the yield curve or to obtain
premiums. There is no assurance that the use of derivatives contracts will work
as intended.

The Fund may also seek to increase its income by engaging in dollar-roll
transactions and by lending its portfolio securities.

The Fund may invest in overnight repurchase agreements or money market funds in
order to maintain sufficient cash to pay for daily net redemptions and portfolio
transactions. In the event that the Fund does not have sufficient cash for these
purposes, it could incur overdrafts, enter into reverse repurchase agreements or
otherwise borrow money in accordance with its investment limitations. The Fund
also reserves the right to redeem Shares in kind with portfolio securities. See
PAYMENT METHOD FOR REDEMPTIONS--Redemptions In Kind. The Fund may also enter
into repurchase agreements with longer terms (up to twelve months) if they offer
higher returns than those expected from U.S. Treasury or agency securities
having the same maturity.

Mortgage-backed pass-through certificates are typically offered or traded on a
"to-be-announced" or other delayed delivery basis. Other U.S. government
securities may also be offered on a delayed delivery basis. The Fund will enter
into trades on this basis in order to participate in these offerings or trade
these securities.

Because the Fund refers to United States government securities in its name, it
will notify shareholders at least 60 days in advance of any change in its
investment policies that would enable the Fund to invest, under normal
circumstances, less than 80% of its assets in United States government
investments.

</R>

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective:


SECURITIES DESCRIPTIONS AND TECHNIQUES

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 Fund
invests:

<R>

TREASURY SECURITIES
Treasury securities are direct obligations of the 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 (GSE) acting under federal authority. Some agency
securities are supported by the full faith and credit of the United States.
These include the Government National Mortgage Association, Small Business
Administration, Farm Credit System Financial Assistance Corporation, Farmer's
Home Administration, Federal Financing Bank, General Services Administration,
Department of Housing and Urban Development, Export-Import Bank, Overseas
Private Investment Corporation, and Washington Metropolitan Area Transit
Authority Bonds.

Other agency securities receive support through federal subsidies, loans or
other benefits. For example, the U.S. Treasury is authorized to purchase
specified amounts of securities issued by (or otherwise make funds available to)
the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association, and Tennessee Valley Authority in support
of such obligations.

A few agency securities have no explicit financial support, but are regarded as
having implied support because the federal government sponsors their activities.
These include the Farm Credit System, Financing Corporation, and Resolution
Funding Corporation.

Investors regard agency securities as having low credit risks, but not as low as
U.S. Treasury securities. A Fund treats mortgage -backed securities guaranteed
by a GSE as agency securities. Although such a guarantee protects against credit
risks, it does not reduce market and prepayment risks.

</R>

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. Interest
in pools of adjustable rate mortgages are know as ARMs.
<R>
  Mortgage-backed securities come in a variety of forms. The simplest form of
mortgage-backed securities is pass-through certificates. Holders of pass-through
certificates receive a pro rata share of all net interest and principal payments
and pepayments from the underlying mortgages. As a result, the holders assume
all the interest rate and prepayment risks of the underlying mortgages. Other
mortgage-backed securities may have more complicated financial structures.
</R>

Adjustable Rate Mortgages (ARMs)
The Fund may invest in interests in pools of adjustable rate mortgages, which
are known as ARMs. While fixed rate mortgage securities have a stated interest
rate, ARMs have periodic adjustments in the interest rate on the underlying
mortgages. The adjustable rate feature of the mortgages underlying the ARMs will
help to limit sharp movements in the Fund's net asset value in response to
normal fluctuations in interest rates. As interest rates on the mortgages
underlying ARMs reset periodically (for example, semi-annually or annually), the
yields of the ARMs held in the portfolio will gradually adjust to reflect the
overall changes in interest rates.


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 AND 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
                                   <R>
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. 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). In contrast, POs decrease in value when interest rates
rise (and prepayments decrease).
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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.

The degree of increased or decreased prepayment risks depends upon the structure
of the CMOs. However, the actual returns on any type of mortgage backed security
depend upon the performance of the underlying pool of mortgages, which no one
can predict and will vary among pools.


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.
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DERIVATIVE CONTRACTS
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Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, 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.
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 with respect to exchange-traded contracts. Trading contracts on an
exchange also allows investors to close out their contracts by entering into
offsetting contracts.
For example, the 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, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
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 the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract. The Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and another party commonly
referred to as a 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 Fund uses derivative contracts
and the relationships between the market value of a derivative contract and the
underlying asset, derivative contracts may increase or decrease the Fund's
exposure to interest rate and credit risks, and may also expose the Fund to
liquidity and leverage risks. OTC contracts also expose the Fund to credit risks
in the event that a counterparty defaults on the contract. The Fund may trade in
the following types of derivative contracts:
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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:
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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.

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. The Fund has claimed an exclusion from
the definition of the term "commodity pool operator" under the Commodity
Exchange Act and, therefore, is not subject to registration or regulation as a
commodity pool operator under that Act. Futures contracts traded OTC are
frequently referred to as forward contracts. The Fund can buy or sell financial
futures.

OPTIONS
Options are rights to buy or sell an underlying asset or instrument for a
specified price (the exercise price) during, or at the end of, a specified
period. The seller (or 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. Options can trade on exchanges or in the OTC market and
may be bought or sold on a wide variety of underlying assets or instruments,
including financial indices, individual securities, and other derivative
instruments, such as futures contracts. Options that are written on futures
contracts will be subject to margin requirements similar to those applied to
futures contracts.

Call Options

A call option gives the holder (buyer) the right to buy the underlying asset
from the seller (writer) of the option. The Fund may use call options in the
following ways:

|X| Buy call options on financial futures in anticipation of an increase in the
   value of the underlying asset or instrument; and

|X| Write call options on financial futures to generate income from premiums,
   and in anticipation of a decrease or only limited increase in the value of
   the underlying asset. If a call written by the Fund is exercised, the Fund
   foregoes any possible profit from an increase in the market price of the
   underlying asset over the exercise price plus the premium received.

Put Options

A put option gives the holder the right to sell the underlying asset to the
writer of the option. The Fund may use put options in the following ways:

|X| Buy put options on financial futures in anticipation of a decrease in the
   value of the underlying asset; and

|X| Write put options on financial futures to generate income from premiums, and
   in anticipation of an increase or only limited decrease in the value of the
   underlying asset. In writing puts, there is a risk that the Fund may be
   required to take delivery of the underlying asset when its current market
   price is lower than the exercise price.

The Fund may also buy or write options, as needed, to close out existing option
positions.

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Special Transactions

                             REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys 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
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser.

The Fund's 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.


REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are repurchase agreements in which the Fund is the
seller (rather than the buyer) 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 Fund. Reverse repurchase agreements are subject to
credit risks. In addition, reverse repurchase agreements create leverage risks
because the Fund 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 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.


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 Fund sells 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 and
credit risks.


ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
special transactions, the Fund 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 Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause the Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.


SECURITIES LENDING
The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives 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
Fund the equivalent of any dividends or interest received on the loaned
securities.

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

Loans are subject to termination at the option of the Fund or the borrower. The
Fund will not have the right to vote on securities while they are on loan, but
it will terminate a loan in anticipation of any important vote. The Fund 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 and credit risks.


Inter-Fund Borrowing and Lending Arrangements
The Securities and Exchange Commission (SEC) has granted an exemption that
permits the Fund and all other funds advised by subsidiaries of Federated
Investors, Inc. (Federated funds) to lend and borrow money for certain temporary
purposes directly to and from other Federated funds. Participation in this
inter-fund lending program is voluntary for both borrowing and lending funds,
and an inter-fund loan is only made if it benefits each participating fund.
Federated Investors, Inc. (Federated) administers the program according to
procedures approved by the Fund's Board, and the Board monitors the operation of
the program. Any inter- fund loan must comply with certain conditions set out in
the exemption, which are designed to assure fairness and protect all
participating funds.

For example, inter-fund lending is permitted only: (a) to meet shareholder
redemption requests; and (b) to meet commitments arising from "failed" trades.
All inter-fund loans must be repaid in seven days or less. The Fund's
participation in this program must be consistent with its investment policies
and limitations, and must meet certain percentage tests. Inter-fund loans may be
made only when the rate of interest to be charged is more attractive to the
lending fund than market-competitive rates on overnight repurchase agreements
(Repo Rate) and more attractive to the borrowing fund than the rate of interest
that would be charged by an unaffiliated bank for short-term borrowings (Bank
Loan Rate), as determined by the Board. The interest rate imposed on inter-fund
loans is the average of the Repo Rate and the Bank Loan Rate.


INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The Fund's
principal risks are described in its prospectus. Additional risk factors are
outlined below.

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Credit Risks
o    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
     Fund will lose money.

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</R>

Call Risks
                                   <R>
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 Fund may have to reinvest the proceeds
   in other fixed income securities with lower interest rates, higher credit
   risks, or other less favorable characteristics.

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Leverage Risks
o    Leverage risk is created when an investment exposes the Fund to a level of
     risk that exceeds the amount invested. Changes in the value of such an
     investment magnify the Fund's risk of loss and potential for gain.


Liquidity Risks
o    Trading opportunities are more limited for fixed income securities that
     have not received any credit ratings, have received ratings below
     investment grade or are not widely held.

o     Trading opportunities are more limited for CMOs that have complex
     terms or that are not widely held. These features may make it more
     difficult to sell or buy a security at a favorable price or time.
     Consequently, the Fund 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 Fund's
     performance. Infrequent trading of securities may also lead to an
     increase in their price volatility.

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

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INVESTMENT LIMITATIONS

Diversification
With respect to securities comprising 75% of the value of its total assets, the
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 the Fund would own more than 10% of the
outstanding voting securities of that issuer.

Borrowing Money and Issuing Senior Securities
The Fund may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the Investment Company Act of 1940 (1940
Act).

Investing in Real Estate
The Fund may not purchase or sell real estate, provided that this restriction
does not prevent the 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.
The 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 Fund may not purchase or sell physical commodities, provided that the Fund
may purchase securities of companies that deal in commodities. For purposes of
this restriction, 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.

Underwriting
The Fund may not underwrite the securities of other issuers, except that the
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
The Fund may not make loans, provided that this restriction does not prevent the
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
The 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 unless authorized by the Board and by
the "vote of a majority of its outstanding voting securities," as defined by the
1940 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.

Securities Lending
The Fund may lend portfolio securities up to one-third of the value of its total
assets to broker/dealers, banks or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks or
other institutions which the Adviser has determined are creditworthy under
guidelines established by the Fund's Board. The Fund will receive collateral in
the form of cash or U.S. government securities equal to at least 100% of the
value of the securities loaned.
  The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund.

Illiquid Securities
The Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits that the
fund cannot dispose of within seven days, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the Fund's
net assets.

Investing in Other Investment Companies
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investments in other investment companies will be limited to shares of
money market funds, including funds affiliated with the Fund's Adviser.

Buying Securities on Margin
The Fund will not purchase securities on margin, provided that the Fund may
obtain short-term credits necessary for the clearance of purchases and sales of
securities, and further provided that the 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
The 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
permissible borrowing or to collateral arrangements in connection with
permissible activities.

INVESTMENT POLICY
  <R>
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For purposes of the above limitations, the Fund considers 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" and "bank
instruments." Except with respect to borrowing money, if a percentage
limitations 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 limitation.

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DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:

o     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;

o    for mortgage-backed securities, based on the aggregate investment value of
     the projected cash flows to be generated by the security, as furnished by
     an independent pricing service;

o    for fixed income securities, according to the price furnished by an
     independent pricing service as indicative of the bid price currently
     offered to institutional investors for the securities, except that fixed
     income securities with remaining maturities of less than 60 days at the
     time of purchase may be valued at amortized cost; and

o    for all other securities at fair value as determined in accordance with
     procedures established by and under the general supervision of the Board..

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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.


WHAT DO SHARES COST?

The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the 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.


HOW IS THE FUND SOLD?

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


RULE 12b-1 PLAN (INSTITUTIONAL SERVICE SHARES)
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As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor for activities principally intended to result in the sale of Shares
such as advertising and marketing of Shares (including printing and distributing
prospectuses and sales literature to prospective shareholders and financial
intermediaries) and providing incentives to financial intermediaries to sell
Shares. The Plan is also designed to cover the cost of administrative services
performed in conjunction with the sale of Shares, including, but not limited to,
shareholder services, recordkeeping services and educational services, as well
as the costs of implementing and operating the Plan. The Rule 12b-1 Plan allows
the Distributor to contract with financial intermediaries to perform activities
covered by the Plan. The Rule 12b-1 Plan is expected to benefit the Fund in a
number of ways. For example, it is anticipated that the Plan will help the Fund
attract and retain assets, thus providing cash for orderly portfolio management
and Share redemptions and possibly helping to stabilize or reduce other
operating expenses. In addition, the Plan is integral to the multiple class
structure of the Fund, which promotes the sale of Shares by providing a range of
options to investors. The Fund's service providers that receive asset-based fees
also benefit from stable or increasing Fund assets. The Fund may compensate the
Distributor more or less than its actual marketing expenses. In no event will
the 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.


ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES
The Distributor may pay out of its own resources amounts (including items of
material value) to certain financial intermediaries. In some cases, such
payments may be made by, or funded from the resources of, companies affiliated
with the Distributor (including the Adviser). While NASD regulations limit the
sales charges that you may bear, there are no limits with regard to the amounts
that the Distributor may pay out of its own resources. In addition to the
payments which are generally described herein and in the prospectus, the
financial intermediary also may receive payments under the Rule 12b-1 Plan
and/or Service Fees. In connection with these payments, the financial
intermediary may elevate the prominence or profile of the Fund and/or other
Federated funds within the financial intermediary's organization by, for
example, placement on a list of preferred or recommended funds, and/or granting
the Distributor preferential or enhanced opportunities to promote the funds in
various ways within the financial intermediary's organization. You can ask your
financial intermediary for information about any payments it receives from the
Distributor or the Federated funds and any services provided.

The following examples illustrate the types of instances in which the
Distributor may make additional payments to financial intermediaries.


Supplemental Payments
The Distributor may make supplemental payments to certain financial
intermediaries that are holders or dealers of record for accounts in one or more
of the Federated funds. These payments may be based on such factors as the
number or value of Shares the financial intermediary sells or may sell; the
value of client assets invested; or the type and nature of services or support
furnished by the financial intermediary.

Processing Support Payments
The Distributor may make payments to financial intermediaries that sell
Federated fund shares to help offset their costs associated with client account
maintenance support, statement processing and transaction processing. The types
of payments that the Distributor may make under this category include payment of
ticket charges on a per transaction basis; payment of networking fees; and
payment for ancillary services such as setting up funds on the financial
intermediary's mutual fund trading system.


Retirement Plan Program Servicing Payments
The Distributor may make payments to certain financial intermediaries who sell
Federated fund shares through retirement plan programs. A financial intermediary
may perform retirement plan program services itself or may arrange with a third
party to perform retirement plan program services. In addition to participant
recordkeeping, reporting, or transaction processing, retirement plan program
services may include services rendered to a plan in connection with
fund/investment selection and monitoring; employee enrollment and education;
plan balance rollover or separation, or other similar services.


Other Benefits to Financial Intermediaries
From time to time, the Distributor, at its expense, may provide additional
compensation to financial intermediaries that sell or arrange for the sale of
Shares. Such compensation may include financial assistance to financial
intermediaries that enable the Distributor to participate in or present at
conferences or seminars, sales or training programs for invited employees,
client and investor events and other financial intermediary-sponsored events.

The Distributor also may hold or sponsor, at its expense, sales events,
conferences and programs for employees or associated persons of financial
intermediaries and may pay the travel and lodging expenses of attendees. The
Distributor also may provide, at its expense, meals and entertainment in
conjunction with meetings with financial intermediaries. Other compensation may
be offered to the extent not prohibited by applicable laws, regulations or the
rules of any self-regulatory agency, such as the NASD.


SUBACCOUNTING SERVICES

Certain financial intermediaries 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. Financial intermediaries 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 financial intermediary about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

</R>

REDEMPTION IN KIND

Although the 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 the Fund's portfolio securities.

Because the Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
the Fund is 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 Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's 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.


ACCOUNT AND SHARE INFORMATION

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

Directors 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 Fund's outstanding Shares.

As of April 3, 2006, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Shares: Fifth Third Bank TTEE,
Cincinnati, OH, owned approximately 471,887 Shares (69.01%).

As of April 3, 2006, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Service Shares: MLPF&S,
Jacksonville, FL, owned approximately 824,335 Shares (19.09%).

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

Fifth Third Bank is organized in the state of Ohio and is a subsidiary of Fifth
Third Bancorp, organized in the state of Texas.



</R>

TAX INFORMATION


FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code (Code) applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will be subject to
federal corporate income tax.


WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

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BOARD OF DIRECTORS
The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders. The
following tables give information about each Board member and the senior
officers of the Fund. Where required, the tables separately list Board members
who are "interested persons" of the Fund (i.e., "Interested" Board members) and
those who are not (i.e., "Independent" Board members). Unless otherwise noted,
the address of each person listed is Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA. As of December 31, 2005, the Federated Fund Complex
consisted of 43 investment companies (comprising 136 portfolios). Unless
otherwise noted, each Officer is elected annually. Unless otherwise noted, each
Board member oversees all portfolios in the Federated Fund Complex and serves
for an indefinite term.

As of April 3, 2006, the Fund's Board and Officers as a group owned less than 1%
of the Fund's outstanding Shares.


INTERESTED DIRECTORS BACKGROUND AND COMPENSATION
Name                        Principal Occupation(s) for Past       Aggregate         Total
Birth Date                  Five Years,                           Compensation    Compensation
Address                     Other Directorships Held and           From Fund     From Fund and
Positions Held with Fund    Previous Position(s)                  (past fiscal   Federated Fund
Date Service Began                                                   year)          Complex
                                                                                 (past calendar
                                                                                     year)
John F. Donahue*            Principal Occupations: Director or         $0              $0
Birth Date: July 28, 1924   Trustee of the Federated Fund
DIRECTOR                    Complex; Chairman and Director,
Began serving: March 1991   Federated Investors, Inc.

                            Previous Positions: Chairman of the
                            Federated Fund Complex; Trustee, Federated
                            Investment Management Company and Chairman and
                            Director, Federated Investment Counseling.

J. Christopher Donahue*     Principal Occupations: Principal           $0              $0
Birth Date: April 11,       Executive Officer and President of
1949                        the Federated Fund Complex;
PRESIDENT AND DIRECTOR      Director or Trustee of some of the
Began serving: October      Funds in the Federated Fund
1999                        Complex; President, Chief Executive
                            Officer and Director, Federated
                            Investors, Inc.; Chairman and
                            Trustee, Federated Investment
                            Management Company; Trustee,
                            Federated Investment Counseling;
                            Chairman and Director, Federated
                            Global Investment Management Corp.;
                            Chairman, Federated Equity
                            Management Company of Pennsylvania,
                            Passport Research, Ltd. (Investment
                            advisory subsidiary of Federated)
                            and Passport Research II, Ltd.
                            (Investment advisory subsidiary of
                            Federated); Trustee, Federated
                            Shareholder Services Company;
                            Director, Federated Services
                            Company.

                            Previous Positions: President,
                            Federated Investment Counseling;
                            President and Chief Executive
                            Officer, Federated Investment
                            Management Company, Federated
                            Global Investment Management Corp.
                            and Passport Research, Ltd.

Lawrence D. Ellis, M.D.*    Principal Occupations: Director or     $1,027.27        $148,500
Birth Date: October 11,     Trustee of the Federated Fund
1932                        Complex; Professor of Medicine,
3471 Fifth Avenue           University of Pittsburgh; Medical
Suite 1111                  Director, University of Pittsburgh
Pittsburgh, PA              Medical Center Downtown;
DIRECTOR                    Hematologist, Oncologist and
Began serving: March 1991   Internist, University of Pittsburgh
                                 Medical Center.

                            Other Directorships Held: Member,
                            National Board of Trustees,
                            Leukemia Society of America.

                            Previous Positions: Trustee,
                            University of Pittsburgh; Director,
                            University of Pittsburgh Medical
                            Center.

* Family relationships and reasons for "interested" status: John F. Donahue is
the father of J. Christopher Donahue; both are "interested" due to the positions
they hold with Federated and its subsidiaries. Lawrence D. Ellis, M.D. is
"interested" because his son-in-law is employed by the Fund's principal
underwriter, Federated Securities Corp.

INDEPENDENT DIRECTORS BACKGROUND AND COMPENSATION


Name                         Principal Occupation(s) for        Aggregate   Total Compensation
Birth Date                   Past Five Years,                 Compensation     From Fund and
Address                      Other Directorships Held and       From Fund     Federated Fund
Positions Held with Fund     Previous Position(s)             (past fiscal        Complex
Date Service Began                                                year)       (past calendar
                                                                                   year)
Thomas G. Bigley             Principal Occupation: Director     $1,130.00        $163,350
Birth Date: February 3,      or Trustee of the Federated
1934                         Fund Complex.
15 Old Timber Trail
Pittsburgh, PA               Other Directorships Held:
DIRECTOR                     Director, Member of Executive
Began serving: November      Committee, Children's Hospital
1994                         of Pittsburgh; Director,
                             University of Pittsburgh.

                             Previous Position: Senior
                             Partner, Ernst & Young LLP.

John T. Conroy, Jr.          Principal Occupations: Director    $1,130.00        $163,350
Birth Date: June 23, 1937    or Trustee of the Federated
Investment Properties        Fund Complex; Chairman of the
Corporation                  Board, Investment Properties
3838 North Tamiami Trail     Corporation; Partner or Trustee
Suite 402                    in private real estate ventures
Naples, FL                   in Southwest Florida.
DIRECTOR
Began serving: August        Previous Positions: President,
1991                         Investment Properties
                             Corporation; Senior Vice
                             President, John R. Wood and
                             Associates, Inc., Realtors;
                             President, Naples Property
                             Management, Inc. and Northgate
                             Village Development Corporation.

Nicholas P. Constantakis     Principal Occupation: Director     $1,130.00        $163,350
Birth Date: September 3,     or Trustee of the Federated
1939                         Fund Complex.
175 Woodshire Drive
Pittsburgh, PA               Other Directorships Held:
DIRECTOR                     Director and Member of the
Began serving: February      Audit Committee, Michael Baker
1998                         Corporation (engineering and
                             energy services worldwide).

                             Previous Position: Partner,
                             Andersen Worldwide SC.

John F. Cunningham           Principal Occupation: Director     $1,027.27        $148,500
Birth Date: March 5, 1943    or Trustee of the Federated
353 El Brillo Way            Fund Complex.
Palm Beach, FL
DIRECTOR                     Other Directorships Held:
Began serving: January       Chairman, President and Chief
1999                         Executive Officer, Cunningham
                             & Co., Inc. (strategic
                             business consulting); Trustee
                             Associate, Boston College.

                             Previous Positions: Director,
                             Redgate Communications and EMC
                             Corporation (computer storage
                             systems); 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.

Peter E. Madden              Principal Occupation: Director     $1,027.27        $148,500
Birth Date: March 16,        or Trustee of the Federated
1942                         Fund Complex.
One Royal Palm Way
100 Royal Palm Way           Other Directorships Held: Board
Palm Beach, FL               of Overseers, Babson College.
DIRECTOR
Began serving: August        Previous Positions:
1991                         Representative, Commonwealth of Massachusetts
                             General Court; President, State Street Bank and
                             Trust Company and State Street Corporation
                             (retired); Director, VISA USA and VISA
                             International; Chairman and Director, Massachusetts
                             Bankers Association; Director, Depository Trust
                             Corporation; Director, The Boston Stock Exchange.

Charles F. Mansfield, Jr.    Principal Occupations: Director    $1,130.00        $163,350
Birth Date: April 10,        or Trustee of the Federated
1945                         Fund Complex; Management
80 South Road                Consultant.
Westhampton Beach, NY
DIRECTOR                     Previous Positions: Chief
Began serving: October       Executive Officer, PBTC
1999                         International Bank; Partner,
                             Arthur Young & Company (now Ernst & Young
                             LLP); Chief Financial Officer of Retail Banking
                             Sector, Chase Manhattan Bank; Senior Vice
                             President, HSBC Bank USA (formerly, Marine Midland
                             Bank); Vice President, Citibank; Assistant
                             Professor of Banking and Finance, Frank G. Zarb
                             School of Business, Hofstra University; Executive
                             Vice President DVC Group, Inc.

John E. Murray, Jr.,         Principal Occupations: Director    $1,232.73        $178,200
J.D., S.J.D.                 or Trustee, and Chairman of the
Birth Date: December 20,     Board of Directors or Trustees,
1932                         of the Federated Fund Complex;
Chancellor, Duquesne         Chancellor and Law Professor,
University                   Duquesne University; Partner,
Pittsburgh, PA               Murray, Hogue & Lannis.
CHAIRMAN AND DIRECTOR
Began serving: February      Other Directorships Held:
1995                         Director, Michael Baker Corp.
                             (engineering, construction,
                             operations and technical
                             services).

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

Marjorie P. Smuts            Principal Occupations:             $1,027.27        $148,500
Birth Date: June 21, 1935    Director or Trustee of the
4905 Bayard Street           Federated Fund Complex; Public
Pittsburgh, PA               Relations/Marketing
DIRECTOR                     Consultant/Conference
Began serving: March 1991    Coordinator.

                             Previous Positions: National
                             Spokesperson, Aluminum Company
                             of America; television
                             producer; President, Marj
                             Palmer Assoc.; Owner, Scandia
                             Bord.

John S. Walsh                Principal Occupations:             $1,027.27        $148,500
Birth Date: November 28,     Director or Trustee of the
1957                         Federated Fund Complex;
2604 William Drive           President and Director, Heat
Valparaiso, IN               Wagon, Inc. (manufacturer of
DIRECTOR                     construction temporary
Began serving: October       heaters); President and
1999                         Director, Manufacturers
                             Products, Inc. (distributor of
                             portable construction heaters);
                             President, Portable Heater
                              Parts, a division of
                             Manufacturers Products, Inc.

                             Previous Position: Vice
                             President, Walsh & Kelly,
                             Inc.

James F. Will                Principal Occupations:  Vice         None              $0
Birth Date:  October 12,     Chancellor and President, Saint
1938                         Vincent College.
Saint Vincent College
Latrobe, PA                  Other Directorships Held:
DIRECTOR                     Alleghany Corporation.
Began serving: April 2006
                             Previous Positions: Chairman,
                             President and Chief Executive
                             Officer, Armco, Inc.; President
                             and Chief Executive Officer,
                             Cyclops Industries; President
                             and Chief Operating Officer,
                             Kaiser Steel Corporation.


OFFICERS**
Name                                    Principal Occupation(s) and Previous Position(s)
Birth Date
Address
Positions Held with Fund
Date Service Began
John W. McGonigle                       Principal Occupations: Executive Vice President and
Birth Date: October 26, 1938            Secretary of the Federated Fund Complex; Vice
EXECUTIVE VICE PRESIDENT AND            Chairman, Executive Vice President, Secretary and
SECRETARY                               Director, Federated Investors, Inc.
Began serving: June 1995
                                        Previous Positions: Trustee, Federated Investment
                                        Management Company and Federated Investment
                                        Counseling; Director, Federated Global Investment
                                        Management Corp., Federated Services Company and
                                        Federated Securities Corp.

Richard A. Novak                        Principal Occupations: Principal Financial Officer and
Birth Date: December 25, 1963           Treasurer of the Federated Fund Complex; Senior Vice
TREASURER                               President, Federated Administrative Services. ;
Began serving: January 2006             Financial and Operations Principal for Federated
                                        Securities Corp., Edgewood Services, Inc. and
                                        Southpointe Distribution Services, Inc.; Senior Vice
                                        President and Controller of Federated Investors, Inc.

                                        Previous Positions: Vice President, Finance of
                                        Federated Services Company; held various financial
                                        management positions within The Mercy Hospital of
                                        Pittsburgh; Auditor, Arthur Andersen & Co.

Richard B. Fisher                       Principal Occupations: Vice Chairman or Vice President
Birth Date: May 17, 1923                of some of the Funds in the Federated Fund Complex;
VICE CHAIRMAN                           Vice Chairman, Federated Investors, Inc.; Chairman,
Began serving: August 2002              Federated Securities Corp.

                                        Previous Positions: President and Director or Trustee
                                        of some of the Funds in the Federated Fund Complex;
                                        Executive Vice President, Federated Investors, Inc.
                                        and Director and Chief Executive Officer, Federated
                                        Securities Corp.

Robert J. Ostrowski                     Principal Occupations:  Robert Ostrowski joined
Birth Date: April 26, 1963              Federated in 1987 as an Investment Analyst and became
CHIEF INVESTMENT OFFICER                a Portfolio Manager in 1990. He was named Chief
Began serving: May 2004                 Investment Officer of taxable fixed income products in
                                        2004 and also serves as a Senior Portfolio Manager. He
                                        has been a Senior Vice President of the Fund's Adviser
                                        since 1997. Mr. Ostrowski is a Chartered Financial
                                        Analyst. He received his M.S. in Industrial
                                        Administration from Carnegie Mellon University.

Todd A. Abraham                         Todd A. Abraham has been the Fund's Portfolio Manager
Birth Date: February 10, 1966           since October 1995. He is Vice President of the Fund.
VICE PRESIDENT                          Mr. Abraham has been a Portfolio Manager since 1995
Began serving: June 1995                and a Vice President of the Fund's Adviser since 1997.
                                        Mr. Abraham joined Federated in 1993 as
                                        an Investment Analyst and served as
                                        Assistant Vice President from 1995 to
                                        1997. Mr. Abraham served as a Portfolio
                                        Analyst at Ryland Mortgage Co. from
                                        1992-1993. Mr. Abraham is a Chartered
                                        Financial Analyst and received his
                                        M.B.A. in Finance from Loyola College.

** Officers do not receive any compensation from the Fund(s).

COMMITTEES OF THE BOARD
Board      Committee                  Committee Functions                      Meetings Held
Committee  Members                                                              During Last
                                                                                Fiscal Year
Executive  John F. Donahue            In between meetings of the full Board,        Five
           John E. Murray, Jr.,       the Executive Committee generally may
           J.D., S.J.D.               exercise all the powers of the full
           John S. Walsh              Board in the management and direction of
                                      the business and conduct of the affairs of
                                      the Corporation in such manner as the
                                      Executive Committee shall deem to be in
                                      the best interests of the Corporation.
                                      However, the Executive Committee cannot
                                      elect or remove Board members, increase or
                                      decrease the number of Directors, elect or
                                      remove any Officer, declare dividends,
                                      issue shares or recommend to shareholders
                                      any action requiring shareholder approval.

Audit      Thomas G. Bigley           The purposes of the Audit Committee are       Six
           John T. Conroy, Jr.        to oversee the accounting and financial
           Nicholas P.                reporting process of the Fund, the
           Constantakis               Fund`s internal control over financial
           Charles F. Mansfield,      reporting, and the quality, integrity
           Jr.                        and independent audit of the Fund`s
                                      financial statements. The Committee also
                                      oversees or assists the Board with the
                                      oversight of compliance with legal
                                      requirements relating to those matters,
                                      approves the engagement and reviews the
                                      qualifications, independence and
                                      performance of the Fund`s independent
                                      registered public accounting firm, acts as
                                      a liaison between the independent
                                      registered public accounting firm and the
                                      Board and reviews the Fund`s internal
                                      audit function.

Nominating Thomas G. Bigley           The Nominating Committee, whose members       One
           John T. Conroy, Jr.        consist of all Independent Directors,
           Nicholas P.                selects and nominates persons for
           Constantakis               election to the Fund`s Board when
           John F. Cunningham         vacancies occur. The Committee will
           Peter E. Madden            consider candidates recommended by
           Charles F. Mansfield,      shareholders, Independent Directors,
           Jr.                        officers or employees of any of the
           John E. Murray, Jr.        Fund`s agents or service providers and
           Marjorie P. Smuts          counsel to the Fund. Any shareholder who
           John S. Walsh              desires to have an individual considered
           James F. Will              for nomination by the Committee must
                                      submit a recommendation in writing to the
                                      Secretary of the Fund, at the Fund 's
                                      address appearing on the back cover of
                                      this Statement of Additional Information.
                                      The recommendation should include the name
                                      and address of both the shareholder and
                                      the candidate and detailed information
                                      concerning the candidate's qualifications
                                      and experience. In identifying and
                                      evaluating candidates for consideration,
                                      the Committee shall consider such factors
                                      as it deems appropriate. Those factors
                                      will ordinarily include: integrity,
                                      intelligence, collegiality, judgment,
                                      diversity, skill, business and other
                                      experience, qualification as an
                                      "Independent Director," the existence of
                                      material relationships which may create
                                      the appearance of a lack of independence,
                                      financial or accounting knowledge and
                                      experience, and dedication and willingness
                                      to devote the time and attention necessary
                                      to fulfill Board responsibilities.


BOARD OWNERSHIP OF SHARES IN THE FUND AND IN THE FEDERATED FAMILY OF
INVESTMENT COMPANIES AS OF DECEMBER 31, 2005
Interested                     Dollar Range of            Aggregate
Board Member Name                Shares Owned          Dollar Range of
                                 in Federated          Shares Owned in
                                 Intermediate        Federated Family of
                            Government Fund, Inc.   Investment Companies
John F. Donahue                      None               Over $100,000
J. Christopher Donahue               None               Over $100,000
Lawrence D. Ellis, M.D.              None               Over $100,000

Independent
Board Member Name
Thomas G. Bigley                     None               Over $100,000
John T. Conroy, Jr.                  None               Over $100,000
Nicholas P. Constantakis             None               Over $100,000
John F. Cunningham                   None               Over $100,000
Peter E. Madden                      None               Over $100,000
Charles F. Mansfield, Jr.            None               Over $100,000
John E. Murray, Jr., J.D.,           None               Over $100,000
S.J.D.
Marjorie P. Smuts                    None               Over $100,000
John S. Walsh                        None               Over $100,000
</R>
- -----------------------------------------------------------------------------
<R>

INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.

The Adviser is a wholly owned subsidiary of Federated.

The Adviser shall not be liable to the Fund 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 Fund.

</R>
<R>

Portfolio Manager Information

The following information about the Fund's portfolio manager is provided as of
the end of the fund's most recently completed fiscal year.
                               ----------------------------------------------

Other Accounts Managed           Total Number of Other Accounts Managed /
                                               Total Assets*
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

Registered Investment                     1 fund / $77.88 million
Companies
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

Other Pooled Investment                              0
Vehicles
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

Other Accounts                                       0
- -----------------------------------------------------------------------------

* None of the Accounts has an advisory fee that is based on the performance of
the account.

Dollar value range of shares owned in the Fund:  none.


Liam O'Connell is paid a fixed base salary and a variable annual incentive. Base
salary is determined within a market competitive position-specific salary range,
based on the portfolio manager's experience and performance. The annual
incentive amount is determined based on multiple performance criteria using a
Balanced Scorecard methodology, and may be paid entirely in cash, or in a
combination of cash and stock of Federated Investors, Inc. (Federated). There
are Five weighted performance categories in the Balanced Scorecard. Investment
Product Performance is the predominant factor. Of lesser importance are:
Research Performance, Leadership/Teamwork/Communication, Client Satisfaction and
Service, and Financial Success. The total Balanced Scorecard "score" is applied
against an annual incentive opportunity that is competitive in the market for
this portfolio manager role to determine the annual incentive payment.


Investment Product Performance is measured on a rolling 1, 3, and 5 calendar
year pre-tax total return basis vs. the Fund's benchmark (i.e. Lehman Brothers
Intermediate Government Index), and on a rolling 3 and 5 calendar year pre-tax
total return basis vs. the Fund's designated peer group of comparable accounts.
Performance periods are adjusted if a portfolio manager has been managing an
account for less than five years; accounts with less than one-year of
performance history under a portfolio manager may be excluded. As noted above,
Mr. O'Connell is also the portfolio manager for other accounts in addition to
the Fund. Such other accounts may have different benchmarks. IPP is calculated
with an equal weighting of each account managed by the portfolio manager.
Additionally, a portion of Mr. O'Connell's IPP score is based on the
equally-weighted performance of portfolios for which he provides research and
analytical support. In addition, Liam O'Connell serves on one or more Investment
Teams that establish guidelines on various performance drivers (e.g., currency,
duration, sector, volatility, and/or yield curve) for taxable fixed income
funds. A portion of the IPP score is based on Federated's senior management's
assessment of team contributions.


Research performance focuses on the quality of security recommendations,
timeliness and other qualitative factors and is assessed by the Chief Investment
Officer and other managers in portfolio manager's group.


Leadership/Teamwork/Communication is assessed by the Chief Investment Officer in
charge of the portfolio manager's group, with input from the portfolio manager's
co-workers.


Client Satisfaction and Service is assessed by Federated's senior management
based on the quality, amount and effectiveness of client support, with input
from sales management.


Financial success is assessed to tie the portfolio manager's bonus, in part, to
Federated's overall financial health. In making this assessment, Federated's
senior management considers the following factors: growth of the portfolio
manager's accounts (assets under management and revenues), net flows relative to
industry trends for the product category, supporting the appropriate number of
accounts to improve efficiency and enhance strong account performance, growth in
assets under management and revenues attributable to the portfolio manager's
Department, and Departmental expense management. Although a number of these
factors are quantitative in nature, the overall assessment for this category is
based on management's judgment. The financial success score is lowered if
Federated's overall financial targets are not achieved.


As a general matter, certain conflicts of interest may arise in connection with
a portfolio manager's management of a fund's investments, on the one hand, and
the investments of other accounts for which the portfolio manager is
responsible, on the other. For example, it is possible that the various accounts
managed could have different investment strategies that, at times, might
conflict with one another to the possible detriment of the Fund. Alternatively,
to the extent that the same investment opportunities might be desirable for more
than one account, possible conflicts could arise in determining how to allocate
them. Other potential conflicts might include conflicts created by specific
portfolio manager compensation arrangements, and conflicts relating to selection
of brokers or dealers to execute fund portfolio trades and/or specific uses of
commissions from Fund portfolio trades (for example, research, or "soft
dollars"). The Adviser has structured the portfolio managers' compensation in a
manner, and the Fund has adopted policies and procedures, reasonably designed to
safeguard the Fund from being negatively affected as a result of any such
potential conflicts.

</R>

Services Agreement
Federated Advisory Services Company, an affiliate of the Adviser, provides
certain support services to the Adviser. The fee for these services is paid by
the Adviser and not by the Fund.


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.


CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING

As required by SEC rules, the Fund, its Adviser, and its Distributor have
adopted codes of ethics. These codes govern securities trading activities of
investment personnel, Fund Directors, and certain other employees. Although they
do permit these people to trade in securities, including those that the Fund
could buy, as well as Shares of the Fund, they also contain significant
safeguards designed to protect the Fund and its shareholders from abuses in this
area, such as requirements to obtain prior approval for, and to report,
particular transactions.


VOTING PROXIES ON FUND PORTFOLIO SECURITIES
The Board has delegated to the Adviser authority to vote proxies on the
securities held in the Fund's portfolio. The Board has also approved the
Adviser's policies and procedures for voting the proxies, which are described
below.


Proxy Voting Policies
The Adviser's general policy is to cast proxy votes in favor of proposals that
the Adviser anticipates will enhance the long-term value of the securities being
voted. Generally, this will mean voting for proposals that the Adviser believes
will: improve the management of a company; increase the rights or preferences of
the voted securities; and/or increase the chance that a premium offer would be
made for the company or for the voted securities.

The following examples illustrate how these general policies may apply to
proposals submitted by a company's board of directors. However, whether the
Adviser supports or opposes a proposal will always depend on the specific
circumstances described in the proxy statement and other available information.

On matters of corporate governance, generally the Adviser will vote for
proposals to: require independent tabulation of proxies and/or confidential
voting by shareholders; reorganize in another jurisdiction (unless it would
reduce the rights or preferences of the securities being voted); and repeal a
shareholder rights plan (also known as a "poison pill"). The Adviser will
generally vote against the adoption of such a plan (unless the plan is designed
to facilitate, rather than prevent, unsolicited offers for the company).

On matters of capital structure, generally the Adviser will vote: against
proposals to authorize or issue shares that are senior in priority or voting
rights to the securities being voted; for proposals to grant preemptive rights
to the securities being voted; and against proposals to eliminate such
preemptive rights.

On matters relating to management compensation, generally the Adviser will vote:
for stock incentive plans that align the recipients' interests with the
interests of shareholders without creating undue dilution; and against proposals
that would permit the amendment or replacement of outstanding stock incentives
with new stock incentives having more favorable terms.

On matters relating to corporate transactions, the Adviser will vote proxies
relating to proposed mergers, capital reorganizations, and similar transactions
in accordance with the general policy, based upon its analysis of the proposed
transaction. The Adviser will vote proxies in contested elections of directors
in accordance with the general policy, based upon its analysis of the opposing
slates and their respective proposed business strategies. Some transactions may
also involve proposed changes to the company's corporate governance, capital
structure or management compensation. The Adviser will vote on such changes
based on its evaluation of the proposed transaction or contested election. In
these circumstances, the Adviser may vote in a manner contrary to the general
practice for similar proposals made outside the context of such a proposed
transaction or change in the board. For example, if the Adviser decides to vote
against a proposed transaction, it may vote for anti-takeover measures
reasonably designed to prevent the transaction, even though the Adviser
typically votes against such measures in other contexts.

The Adviser generally votes against proposals submitted by shareholders without
the favorable recommendation of a company's board. The Adviser believes that a
company's board should manage its business and policies, and that shareholders
who seek specific changes should strive to convince the board of their merits or
seek direct representation on the board.

In addition, the Adviser will not vote if it determines that the consequences or
costs outweigh the potential benefit of voting. For example, if a foreign market
requires shareholders casting proxies to retain the voted shares until the
meeting date (thereby rendering the shares "illiquid" for some period of time),
the Adviser will not vote proxies for such shares.


Proxy Voting Procedures
<R>

The Adviser has established a Proxy Voting Committee (Proxy Committee), to
exercise all voting discretion granted to the Adviser by the Board in accordance
with the proxy voting policies. The Adviser has hired Institutional Shareholder
Services (ISS) to obtain, vote, and record proxies in accordance with the Proxy
Committee's directions. The Proxy Committee directs ISS by means of Proxy Voting
Guidelines, and ISS may vote any proxy as directed in the Proxy Voting
Guidelines without further direction from the Proxy Committee (and may make any
determinations required to implement the Proxy Voting Guidelines). However, if
the Proxy Voting Guidelines require case-by-case direction for a proposal, ISS
will provide the Proxy Committee with all information that it has obtained
regarding the proposal and the Proxy Committee will provide specific direction
to ISS. The Adviser's proxy voting procedures generally permit the Proxy
Committee to amend the Proxy Voting Guidelines, or override the directions
provided in such Guidelines, whenever necessary to comply with the proxy voting
policies.
</R>

 Conflicts of Interest
The Adviser has adopted procedures to address situations where a matter on which
a proxy is sought may present a potential conflict between the interests of the
Fund (and its shareholders) and those of the Adviser or Distributor. This may
occur where a significant business relationship exists between the Adviser (or
its affiliates) and a company involved with a proxy vote. A company that is a
proponent, opponent, or the subject of a proxy vote, and which to the knowledge
of the Proxy Committee has this type of significant business relationship, is
referred to as an "Interested Company."

The Adviser has implemented the following procedures in order to avoid concerns
that the conflicting interests of the Adviser have influenced proxy votes. Any
employee of the Adviser who is contacted by an Interested Company regarding
proxies to be voted by the Adviser must refer the Interested Company to a member
of the Proxy Committee, and must inform the Interested Company that the Proxy
Committee has exclusive authority to determine how the Adviser will vote. Any
Proxy Committee member contacted by an Interested Company must report it to the
full Proxy Committee and provide a written summary of the communication. Under
no circumstances will the Proxy Committee or any member of the Proxy Committee
make a commitment to an Interested Company regarding the voting of proxies or
disclose to an Interested Company how the Proxy Committee has directed such
proxies to be voted. If the Proxy Voting Guidelines already provide specific
direction on the proposal in question, the Proxy Committee shall not alter or
amend such directions. If the Proxy Voting Guidelines require the Proxy
Committee to provide further direction, the Proxy Committee shall do so in
accordance with the proxy voting policies, without regard for the interests of
the Adviser with respect to the Interested Company. If the Proxy Committee
provides any direction as to the voting of proxies relating to a proposal
affecting an Interested Company, it must disclose to the Fund's Board
information regarding: the significant business relationship; any material
communication with the Interested Company; the matter(s) voted on; and how, and
why, the Adviser voted as it did.

If the Fund holds shares of another investment company for which the Adviser (or
an affiliate) acts as an investment adviser, the Proxy Committee will vote the
Fund's proxies in the same proportion as the votes cast by shareholders who are
not clients of the Adviser at any shareholders' meeting called by such
investment company, unless otherwise directed by the Board.

Proxy Voting Report
<R>
A report on "Form N-PX" of how the Fund voted any proxies during the most recent
12-month period ended June 30 is available through Federated's website. Go to
FederatedInvestors.com; select "Products;" select the Fund; then use the link to
"Prospectuses and Regulatory Reports" to access the link to Form N-PX. Form N-PX
filings are also available at the SEC's website at www.sec.gov.


PORTFOLIO HOLDINGS INFORMATION
Information concerning the Fund's portfolio holdings is available in the
"Products" section of Federated's website at FederatedInvestors.com. A complete
listing of the Fund's portfolio holdings as of the end of each calendar quarter
is posted on the website 30 days (or the next business day) after the end of the
quarter and remains posted until replaced by the information for the succeeding
quarter. Summary portfolio composition information as of the close of each month
(except for recent purchase and sale transaction information, which is updated
quarterly) is posted on the website 15 days (or the next business day) after
month-end and remains until replaced by the information for the succeeding
month. The summary portfolio composition information may include percentage
breakdowns of portfolio by type of security.

To access this information from the "Products" section of the website, click on
"Portfolio Holdings" and select the appropriate link opposite the name of the
Fund, or select the name of the Fund from the menus on the "Products" section,
and from the Fund's page click on the "Portfolio Holdings" or "Composition"
link. A user is required to register on the website the first time the user
accesses this information.

You may also access from the "Products" section of the website portfolio
information as of the end of the Fund's fiscal quarters. The Fund's annual and
semiannual reports, which contain complete listings of the Fund's portfolio
holdings as of the end of the Fund's second and fourth fiscal quarters, may be
accessed by selecting the name of the Fund, clicking on "Prospectuses and
Regulatory Reports" and selecting the link to the appropriate PDF. Complete
listings of the Fund's portfolio holdings as of the end of the Fund's first and
third fiscal quarters may be accessed by selecting "Portfolio Holdings" from the
"Products" section and then selecting the appropriate link opposite the name of
the Fund. Fiscal quarter information is made available on the website within 70
days after the end of the fiscal quarter. This information is also available in
reports filed with the SEC at the SEC's website at www.sec.gov.

The disclosure policy of the Fund and the Adviser prohibits the disclosure of
portfolio holdings information to any investor or intermediary before the same
information is made available to other investors. Employees of the Adviser or
its affiliates who have access to nonpublic information concerning the Fund's
portfolio holdings are prohibited from trading securities on the basis of this
information. Such persons must report all personal securities trades and obtain
pre-clearance for all personal securities trades other than mutual fund shares.

Firms that provide administrative, custody, financial, accounting, legal or
other services to the Fund may receive nonpublic information about Fund
portfolio holdings for purposes relating to their services. The Fund may also
provide portfolio holdings information to publications that rate, rank or
otherwise categorize investment companies. Traders or portfolio managers may
provide "interest" lists to facilitate portfolio trading if the list reflects
only that subset of the portfolio for which the trader or portfolio manager is
seeking market interest. A list of service providers, publications and other
third parties who may receive nonpublic portfolio holdings information appears
in the Appendix to this SAI.

The furnishing of nonpublic portfolio holdings information to any third party
(other than authorized governmental or regulatory personnel) requires the prior
approval of the President of the Adviser and of the Chief Compliance Officer of
the Fund. The President of the Adviser and the Chief Compliance Officer will
approve the furnishing of nonpublic portfolio holdings information to a third
party only if they consider the furnishing of such information to be in the best
interests of the Fund and its shareholders. In that regard, and to address
possible conflicts between the interests of Fund shareholders and those of the
Adviser and its affiliates, the following procedures apply. No consideration may
be received by the Fund, the Adviser, any affiliate of the Adviser or any of
their employees in connection with the disclosure of portfolio holdings
information. Before information is furnished, the third party must sign a
written agreement that it will safeguard the confidentiality of the information,
will use it only for the purposes for which it is furnished and will not use it
in connection with the trading of any security. Persons approved to receive
nonpublic portfolio holdings information will receive it as often as necessary
for the purpose for which it is provided. Such information may be furnished as
frequently as daily and often with no time lag between the date of the
information and the date it is furnished. The Board receives and reviews
annually a list of the persons who receive nonpublic portfolio holdings
information and the purposes for which it is furnished.

</R>
<R>

BROKERAGE TRANSACTIONS AND INVESTMENT ALLOCATION
</R>
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 makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the Fund's
Board.

Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund 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 Fund 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 Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.


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

                                     Average Aggregate Daily
Maximum Net Assets of the Federated Funds Administrative Fee 0.150 of 1% on the
first $5 billion 0.125 of 1% on the next $5 billion 0.100 of 1% on the next $10
billion 0.075 of 1% on assets over $20 billion The administrative fee received
during any fiscal year shall be at least $150,000 per portfolio and $40,000 per
each additional class of Shares. FAS may voluntarily waive a portion of its fee
and may reimburse the Fund for expenses.
- -----------------------------------------------------------------------------

FAS also provides certain accounting and recordkeeping services with respect to
the Fund's 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 Fund.


TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company, the Fund's registered transfer agent,
maintains all necessary shareholder records.

<R>

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The independent registered public accounting firm for the Fund, Ernst &
Young LLP, conducts its audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States), which require it to plan and
perform its audits to provide reasonable assurance about whether the Fund's
financial statements and financial highlights are free of material misstatement.


FEES PAID BY THE FUND FOR SERVICES
                                         2006            2005            2004r
For the Year Ended February 28 or
29
Advisory Fee Earned                    $233,388        $335,571        $476,159
Advisory Fee Reduction                 $233,388        $335,571        $474,192
Advisory Fee Reimbursement                --              --            $1,967
Administrative Fee                     $155,584        $155,839        $155,365
12b-1 Fee:
 Institutional Service Shares            -0-              --              --
Shareholder Services Fee:
  Institutional Shares                   -0-              --              --
  Institutional Service Shares         $125,010        $172,524           --

- -----------------------------------------------------------------------------
</R>
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 DOES THE FUND MEASURE PERFORMANCE?

The Fund may advertise Share performance by using the SEC's standard methods 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 Fund's or any class of Shares'
expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
and/or the value of portfolio holdings 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
Total returns are given for the one-year, five-year and ten-year periods ended
February 28, 2006.

<R>
Yield is given for the 30-day period ended February 28, 2006.

                            30-Day Period    1 Year    5 Years      Start of
                                                                  Performance on
                                                                       9/11/2000
Institutional Shares:
Total Return
  Before Taxes                   N/A          1.73%     3.05%        3.80%
  After Taxes on                 N/A          0.34%     1.77%        2.39%
  Distributions
  After Taxes on                 N/A          1.12%     1.83%        2.39%
  Distributions and Sale
  of Shares
Yield                           4.56%          N/A       N/A          N/A
                            30-Day Period    1 Year    5 Years      10 Years
Institutional Service
Shares::
Total Return
  Before Taxes                   N/A          1.49%     2.80%        4.13%
  After Taxes on                 N/A          0.18%     1.61%        2.43%
  Distributions
  After Taxes on                 N/A          0.96      1.67%        2.46%
  Distributions and Sale
  of Shares
Yield                           4.31%          N/A       N/A          N/A
</R>
- -----------------------------------------------------------------------------

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 $10,000 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 $10,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions. Total returns after taxes are calculated in a
similar manner, but reflect additional standard assumptions required by the SEC.


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 financial intermediaries 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:

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

o charts, graphs and illustrations using the Fund's returns, or returns in
  general, that demonstrate investment concepts such as tax-deferred
  compounding, dollar-cost averaging and systematic investment;

o 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 Fund; and

o information about the mutual fund industry from sources such as the Investment
  Company Institute.

The 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 Fund 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 Fund uses in advertising may include:

Lipper, Inc.

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

<R>
Lehman Brothers 1-3 Year Government Index

The Lehman Brothers 1-3 Year Government Index is comprised of all publicly
issued, non-convertible domestic debt of the U.S. government, or any agency
thereof, or any quasi-federal corporation. The index also includes corporate
debt guaranteed by the U.S. government. Only notes and bonds with a minimum
maturity of one year and maximum maturity of 2.9 years are included.

Lehman Brothers Intermediate Government Index

The Lehman Brothers Intermediate Government Index is comprised of all publicly
issued, non-convertible domestic debt of the U.S. government or any agency
thereof, or any quasi-federal corporation and of corporate debt guaranteed by
the U.S. government. Only notes and bonds with minimum outstanding principal of
$1 million and minimum maturity of one year and maximum maturity of ten years
are included.

</R>
Morningstar, Inc.

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 and its subsidiaries are dedicated to providing you with world-class
investment management. With offices in Pittsburgh, New York City and Frankfurt,
Federated is a firm with independent research, product breadth and industry
standing.

Federated seeks to achieve superior and sustainable investment performance for a
broad array of global clients through a disciplined investment process and an
information advantage created by proprietary fundamental research. Federated is
distinctive in our disciplined process that integrates proprietary research with
trading and portfolio management.


FEDERATED FUNDS OVERVIEW
<R>

Equities
As of December 31, 2005, Federated managed 35 equity funds totaling
approximately $26.0 billion in assets across growth, value, equity income,
international, index and sector allocation styles.


Taxable Fixed Income
As of December 31, 2005, Federated managed 33 taxable bond funds including:
high-yield, multi-sector, mortgage-backed, U.S. government, U.S. corporate
and international, with assets approximating $16.0 billion.


Tax Free Fixed Income
As of December 31, 2005, Federated managed 15 municipal bond funds with
approximately $3.1 billion in assets and 22 municipal money market funds with
approximately $27.6 billion in total assets.


Money Market Funds
As of December 31, 2005, Federated managed $145.3 billion in assets across 53
money market funds, including 18 government, 12 prime, 22 municipal and 1
euro-denominated with assets approximating $54.9 billion, $62.6 billion, $27.6
billion and $113.8 million.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: Stephen F. Auth, CFA, for Global
Equity; Robert J. Ostrowski, CFA, for Taxable Fixed Income; Mary Jo Ochson, CFA,
for Tax Free Fixed Income; and Deborah A. Cunningham, CFA, for Money Market
Funds.


FINANCIAL INFORMATION

The Financial Statements for the Fund for the fiscal year ended February 28,
2006 are incorporated herein by reference to the Annual Report to Shareholders
of Federated Intermediate Government Fund, Inc. dated February 28, 2006.

</R>









ADDRESSES

FEDERATED INTERMEDIATE GOVERNMENT FUND

Institutional Shares

Institutional Service 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, Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600


Independent Registered Public Accounting Firm
<R>
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072

</R>







APPENDIX

                                   <R>
The following is a list of persons other than the Adviser and its affiliates
that may receive nonpublic portfolio holdings information concerning the Fund:

</R>

CUSTODIAN
State Street Bank and Trust Company


SECURITIES LENDING AGENT
HSBC; State Street Bank and Trust Company

<R>

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP

</R>

LEGAL COUNSEL
ReedSmith LLP; Dickstein, Shapiro Morin & Oshinsky LLP


SERVICE PROVIDERS
Bloomberg; Factset


SECURITY PRICING SERVICES
FT Interactive Data

<R>

RATINGS AGENCIES
Standard & Poor's

</R>

PERFORMANCE REPORTING/PUBLICATIONS
Fidelity-Strategic Advisors; Lipper; Morningstar; NASDAQ; Value Line;
Wiesenberger/Thomson Financial

<R>

OTHER
Investment Company Institute

</R>












(1) The Adviser may refer to types of securities (such as Treasury, agency,
mortgage-backed or corporate debt securities) as "sectors" of the fixed income
market.



(2) In shareholder reports and other descriptions of the Fund's investment
strategy and performance, the Adviser may refer to the relative interest rates
of securities with longer and shorter durations within a sector as a "yield
curve."



PART C.     OTHER INFORMATION.

Item 23.    EXHIBITS:
      (a)         (i) Conformed Copy of Articles of Incorporation of the
                  Registrant; (3)
            (ii)  Conformed Copy of Amendment No. 1 to Articles of Incorporation
                  of the Registrant; (3)
            (iii) Conformed Copy of Amendment No. 2 to Articles of Incorporation
                  of the Registrant; (6)
            (iv)  Conformed Copy of Amendment No. 3 to Articles of Incorporation
                  of the Registrant; (8)
            (v)   Conformed Copy of Amendment No. 4 to Articles of Incorporation
                  of the Registrant; (9)
             (vi) Conformed Copy of Amendment No. 5 to Articles of Incorporation
                  of the Registrant; (9)
            (vii) Conformed Copy of Amendment No. 6 to Articles of Incorporation
                  of the Registrant; (+)
      (b)   (i) Copy of By-Laws of the Registrant; (3) (ii) Copy of Amendment
            No. 1 to the By-Laws of the Registrant;
                  (3)
            (iii) Copy of Amendment No. 2 to the By-Laws of the Registrant; (7)
            (iv)  Copy of Amendment No. 3 to the By-Laws of the Registrant; (7)
            (v)   Copy of Amendment No. 4 to the By-Laws of the Registrant; (7)
(vi) Copy of Amendment No. 5 to the By-Laws of the Registrant; (11) (vii) Copy
of Amendment No. 6 to the By-Laws of the Registrant; (12) (viii) Copy of
Amendment No. 7 to the By-Laws of the Registrant; (13) (ix) Copy of Amendment
No. 8 to the By-Laws of the Registrant; (+) (x) Copy of Amendment No. 9 to the
By-Laws of the Registrant; (+)
      (c)         Copy of Specimen Certificate for Shares of Beneficial Interest
                  of the Registrant; (5)
      (d)         (i) Conformed copy of Investment Advisory Contract of the
                  Registrant; (3)
            (ii)  Conformed copy of Amendment No. 1 to the Investment Advisory
                  Contract of the Registrant; (9)
            (iii) Conformed copy of Amendment to the Investment Advisory
                  Contract of the Registrant; (10)
      (e)         (i) Conformed copy of Distributor's Contract of the
                  Registrant, including Exhibit A; (3)
            (ii)  Conformed copy of Exhibit B to the Distributor's Contract of
                  the Registrant; (9)
            (iii) Conformed copy of Amendment to the Distributor's Contract of
                  the Registrant; (10)
(iv)               The Registrant hereby incorporates the conformed copy of the
                   specimen Mutual Funds Sales and Service Agreement; Mutual
                   Funds Service Agreement; and Plan Trustee/Mutual Funds
                   Service Agreement from Item 24(b)(6) of the Cash Trust Series
                   II Registration Statement on Form N-1A, filed with the
                   Commission on July 24, 1995. (File Numbers 33-38550 and
                   811-6269)
(v)               Conformed copy of Amendment to Distributors Contract of the
                  Registrant, dated October 1, 2003. (12)
      (f) Not applicable;
      (g)         (i) Conformed Copy of Custodian Agreement of the Registrant;
                  (3)
            (ii) Conformed Copy of Custodian Fee Schedule; (6) (iii) Conformed
            Copy of Amendment to Custodian Agreement of the
                  Registrant; (11)
      (h)         (i) Conformed copy of Amended and Restated Agreement for Fund
                  Accounting Services, Administrative Services, Shareholder
                  Transfer Agency Services and Custody Services Procurement; (4)
            (ii)  Conformed copy of Amendment to the Amended and Restated
                  Agreement for Fund Accounting Services, Administrative
                  Services, Shareholder Transfer Agency Services and Custody
                  Services Procurement; (10)
            (iii) The Registrant hereby incorporates the conformed copy of the
                  Second Amended and Restated Services Agreement, with attached
                  Schedule 1 revised 6/30/04, from Item 23(h)(vii) of the Cash
                  Trust Series, Inc. Registration Statement on Form N-1A, filed
                  with the Commission on July 29, 2004. (File Nos. 33-29838 and
                  811-5843)
(iv)                 The responses described in Item 23(e)(iv) are hereby
                     incorporated by reference;
(v)                  The Registrant hereby incorporates the conformed copy of
                     the Financial Administration and Accounting Services
                     Agreement, with attached Exhibit A revised 3/1/06, from
                     Item (h)(viii) of the Federated Total Return Government
                     Bond Fund Registration Statement on Form N-1A, filed with
                     the Commission on April 26, 2006. (File Nos. 33-60411 and
                     811-07309)
(vi)                 The Registrant hereby incorporates by reference the
                     conformed copy of the Agreement for Administrative
                     Services, with Exhibit 1 and Amendments 1 and 2 attached,
                     between Federated Administrative Services and the
                     Registrant from Item 23(h)(iv)of the Federated Total Return
                     Series, Inc. Registration Statement on Form N-1A, filed
                     with the Commission on November 29, 2004. (File Nos.
                     33-50773 and 811-7115);
(vii)             The Registrant hereby incorporates the Conformed copy of
                     the Transfer Agency and Service Agreement
                     between the Federated Funds listed on Schedule A
                     revised 3/1/06, from Item (h)(ix) of the
                     Federated Total Return Government Bond Fund
                     Registration Statement on Form N-1A, filed with
                     the Commission on April 26, 2006.  (File Nos.
                     33-60411 and 811-07309)
(viii)            The Registrant hereby incorporates the Conformed copy of
                     the Mutual Fund Expense/ Commission Recapture
                     Services Agreement between State Street Global
                     Markets, LLC and Certain Federated Funds with
                     attached Exhibit 1 dated 3/1/06, from Item
                     (h)(x) of the Federated Total Return Government
                     Bond Fund Registration Statement on Form N-1A,
                     filed with the Commission on April 26, 2006.
                     (File Nos. 33-60411 and 811-07309)
       (i)        Conformed copy of Opinion and Consent of Counsel as to
                  legality of shares being registered; (3)
      (j) Conformed copy of Consent of Independent Auditors; + (k) Not
      applicable; (l) Conformed copy of Initial Capital Understanding;
                  (3)
      (m)         (i) Conformed copy of Distribution Plan of the Registrant,
                  including Exhibit A; (1)
            (ii)  The responses described in Item 23(e)(iv) are hereby
                  incorporated by reference.
(n)         (i) The Registrant hereby incorporates the Copy of the Multiple
            Class Plan and attached Exhibits from Item (n) of the Federated
            Total Return Government Bond Fund Registration Statement on Form
            N-1A, filed with the Commission on April 26, 2006. (File Nos.
            33-60411 and 811-07309)
      (o)         (i) Conformed copy of Power of Attorney of the Registrant; (9)
            (ii)  Conformed copy of Power of Attorney of the Chief Investment
                  Officer of the Registrant; (9)
            (iii) Conformed copy of Power of Attorney of President and Director,
                  and Vice Chairman of the Registrant; (11)
            (iv)  Conformed copy of Power of Attorney of Treasurer of the
                  Registrant; (+)
            (v)   Conformed copy of Power of Attorney of Director, of the
                  Registrant; (+)
            (vi)  Conformed copy of Power of Attorney of Director of the
                  Registrant (+)
      (p)   (i) The Registrant hereby incorporates the copy of the Code of
            Ethics for Access Persons from Item 23(p) of the Money Market
            Obligations Trust Registration Statement on Form N-1A filed with the
            Commission on February 26, 2004. (File Nos. 33-31602 and 811-5950).
            (ii) The Registrant hereby incorporates the conformed copy of the
            Federated Investors, Inc. Code of Ethics for Access Persons,
            effective 1/1/2005, from Item 23(p) of the Federated Total Return
            Series, Inc. Registration Statement on Form N-1A, filed with the
            Commission on November 29, 2004. (File Nos. 33-50773 and 811-7115)
            (iii) The Registrant hereby incorporates the conformed copy of
                  the Federated Investors, Inc. Code of Ethics for Access
                  Persons, effective 1/1/2005, from Item 23(p) of the Money
                  Market Obligations Trust Registration Statement on Form N-1A,
                  filed with the Commission on February 25, 2005.
                       (File Nos. 33-31602 and 811-5950);


+ All exhibits are being filed electronically.
1. Response is incorporated by reference to Registrant's Post-Effective
Registration Statement on Form N-1A filed April 24, 1994. (File Nos. 33-41004
and 811-6307).
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 filed July 18, 1991. (File Nos. 33-41004 and 811-6307). 3.
Response is incorporated by reference to Registrant's Post-Effective Amendment
No. 8 on Form N-1A filed April 21, 1995. (File Nos. 33-41004 and 811-6307).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed April 25, 1996. (File Nos. 33-41004 and
811-6307).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed April 28, 1997. (File Nos. 33-41004 and
811-6307).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed April 28, 1998. (File Nos. 33-41004 and
811-6307).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed February 26, 1999. (File Nos. 33-41004 and
811-6307).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed April 25, 2000. (File Nos. 33-41004 and
811-6307).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed April 25, 2001. (File Nos. 33-41004 and
811-6307).
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed April 25, 2002. (File Nos. 33-41004 and
811-6307).
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed April 29, 2003. (File Nos. 33-41004 and
811-6307).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed April 28, 2004. (File Nos. 33-41004 and
811-6307).
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed April 29, 2005. (File Nos. 33-41004 and
811-6307).

Item 24. Persons Controlled By or Under Common Control with the Fund:

      None

Item 25.    Indemnification: (2)
            ---------------








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 two of the
            Trustees and two 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
            Trustees of the investment adviser and, in parentheses, their
            principal occupations are:  Thomas R. Donahue, (Chief Financial
            Officer, Federated Investors, Inc.), 1001 Liberty Avenue,
            Pittsburgh, PA, 15222-3779 and Mark D. Olson (a principal of
            the firm, Mark D. Olson & Company, L.L.C. and Partner, Wilson,
            Halbrook & Bayard, P.A.), 800 Delaware Avenue, P.O. Box 2305,
            Wilmington, DE  19899-2305.

The remaining Officers of the investment adviser are:

President/ Chief Executive Officer
and Trustee:                                   John B. Fisher

Vice Chairman:                                 William D. Dawson, III

Senior Vice Presidents:                        J. Scott Albrecht
                                               Joseph M. Balestrino
                                               Jonathan C. Conley
                                               Deborah A. Cunningham
                                               Mark E. Durbiano
                                               Donald T. Ellenberger
                                               Susan R. Hill
                                               Robert M. Kowit
                                               Jeffrey A. Kozemchak
                                               Mary Jo Ochson
                                               Robert J. Ostrowski
                                               Richard Tito
                                               Paige Wilhelm

Vice Presidents:                               Todd A. Abraham
                                               Randall S. Bauer
                                               Nancy J.Belz
                                               G. Andrew Bonnewell
                                               Karol Crummie
                                               Lee R. Cunningham, II
                                               B. Anthony Delserone,Jr.
                                               Eamonn G. Folan
                                               William Ehling
                                               Richard J. Gallo
                                               John T. Gentry
                                               Kathyrn P. Glass
                                               Patricia L. Heagy
                                               William R. Jamison
                                               Nathan H. Kehm
                                               John C. Kerber
                                               J. Andrew Kirschler
                                               Marian R. Marinack
                                               Kevin McCloskey
                                               John W. McGonigle
                                               Natalie F. Metz
                                               Thomas J. Mitchell
                                               Joseph M. Natoli
                                               Bob Nolte
                                               Mary Kay Pavuk
                                               Jeffrey A. Petro
                                               John Polinski
                                               Ihab L. Salib
                                               Roberto Sanchez-Dahl, Sr.
                                               John Sidawi
                                               Michael W. Sirianni, Jr.
                                               Christopher Smith
                                               Timothy G. Trebilcock
                                               Paolo H. Valle
                                               Stephen J. Wagner
                                               George B. Wright

Assistant Vice Presidents:                     Hanan Callas
                                               Jerome Conner
                                               James R. Crea, Jr.
                                               Richard Cumberledge
                                               Jason DeVito
                                               Timothy Gannon
                                               James Grant
                                               Tracey L. Lusk
                                               Ann Manley
                                               Karl Mocharko
                                               Joseph Mycka
                                               Nick Navari
                                               Gene Neavin
                                               Liam O'Connell
                                               Rae Ann Rice
                                               Brian Ruffner
                                               Kyle D. Stewart
                                               Mary Ellen Tesla
                                               Nichlas S. Tripodes
                                               Mark Weiss

Secretary:                                     G. Andrew Bonnewell

Treasurer:                                     Thomas R. Donahue


Assistant Treasurer:                           Denis 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,  Inc.;  Cash  Trust  Series  II;
                  Federated    Adjustable   Rate    Securities    Fund;
                  Federated  American  Leaders  Fund,  Inc.;  Federated
                  Core   Trust;   Federated   Core   Trust  II,   L.P.;
                  Federated  Equity  Funds;   Federated  Equity  Income
                  Fund,  Inc.;   Federated  Fixed  Income   Securities,
                  Inc.;  Federated  GNMA  Trust;  Federated  Government
                  Income Securities,  Inc.;  Federated High Income Bond
                  Fund,  Inc.;  Federated High Yield  Municipal  Income
                  Fund;  Federated High Yield Trust;  Federated  Income
                  Securities Trust;  Federated Income Trust;  Federated
                  Index   Trust;    Federated    Institutional   Trust;
                  Federated  Insurance Series;  Federated  Intermediate
                  Government   Fund,   Inc.   Federated   International
                  Series,  Inc.;  Federated  Investment  Series  Funds,
                  Inc.;   Federated  Managed   Allocation   Portfolios;
                  Federated   Municipal  High  Yield   Advantage  Fund,
                  Inc.;  Federated  Municipal  Securities  Fund,  Inc.;
                  Federated   Municipal    Securities   Income   Trust;
                  Federated  Premier   Intermediate   Municipal  Income
                  Fund;   Federated   Premier  Municipal  Income  Fund;
                  Federated  Short-Term   Municipal  Trust;   Federated
                  Stock and Bond Fund,  Inc.;  Federated  Stock  Trust;
                  Federated   Total   Return   Government   Bond  Fund;
                  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
                  World   Investment   Series,    Inc.;    Intermediate
                  Municipal  Trust;  Edward Jones Money Market Fund and
                  Money Market Obligations Trust.








      (b)

         (1) (2) (3) Positions and Offices Positions and Offices
  With Distributor                  Name                 With Registrant
- ---------------------         -----------------       ----------------------

Chairman:                     Richard B. Fisher       Vice Chairman

Executive Vice
Vice President, Assistant
Secretary and Director:       Thomas R. Donahue

President and Director:       Thomas E. Territ

Vice President and Director:  Peter J. Germain

Treasurer and Director:       Denis McAuley III

Senior Vice Presidents:       Mark W. Bloss
                              Richard W. Boyd
                              Laura M. Deger
                              Peter W. Eisenbrandt
                              Theodore Fadool, Jr.
                              Christopher Fives
                              James S. Hamilton
                              James M. Heaton
                              Harry J. Kennedy
                              Anne H. Kruczek
                              Amy Michaliszyn
                              Keith Nixon
                              Solon A. Person, IV
                              Colin B. Starks
                              Robert F. Tousignant
                              Paul Uhlman

Vice Presidents:              Irving Anderson
                              Dan Berry
                              John B. Bohnet
                              Edward R. Bozek
                              Jane E. Broeren-Lambesis
                              Bryan Burke
                              Craig Burness
                              David J. Callahan
                              Mark Carroll
                              Dan Casey
                              Scott Charlton
                              Steven R. Cohen
                              James Conely
                              Kevin J. Crenny
                              G. Michael Cullen
                              Beth C. Dell
                              Ron Dorman
                              Donald C. Edwards
                              Lee England
                              Timothy Franklin
                              Jamie Getz
                              Scott Gundersen
                              Dayna C. Haferkamp
                              Raymond J. Hanley
                              Vincent L. Harper, Jr.
                              Bruce E. Hastings
                              Christopher L. Johnston
                              Michael W. Koenig
                              Ed Koontz
                              Christopher A. Layton
                              Michael H. Liss
                              Michael R. Manning
                              Michael Marcin
                              Martin J. McCaffrey
                              Mary A. McCaffrey
                              Richard C. Mihm
                              Chris Milliken
                              Vincent T. Morrow
                              Doris T. Muller
                              Alec H. Neilly
                              Rebecca Nelson
                              James E. Ostrowski
                              Mark Patsy
                              Thomas A. Peter III
                              Robert F. Phillips
                              Chris Randal
                              Josh Rasmussen
                              Richard A. Recker
                              Christopher Renwick
                              Diane M. Robinson
                              Brian S. Ronayne
                              Timothy A. Rosewicz
                              Thomas S. Schinabeck
                              Edward J. Segura
                              Peter Siconolfi
                              Edward L. Smith
                              John A. Staley
                              Jeffrey A. Stewart
                              Mark Strubel
                              Kevin Stutz
                              William C. Tustin
                              Michael Vahl
                              G. Walter Whalen
                              Stephen White
                              Jeff Wick
                              Patrick M. Wiethorn
                              Lewis Williams
                              Edward J. Wojnarowski
                              Michael P. Wolff

Assistant Vice Presidents:    Lisa A. Toma
                              Robert W. Bauman
                              Charles L. Davis, Jr.
                              Brian F. Palusa
                              William Rose

Secretary:                    C. Todd Gibson

The business address of each of the Officers of Federated Securities
Corp. is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779.

         (c)     Not applicable








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                    Reed Smith LLP
                              Investment Management Group (IMG)
                              Federated Investors Tower
                              12th Floor
                              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

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

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 Directors and the calling of special
shareholder meetings by shareholders.






                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, FEDERATED INTERMEDIATE GOVERNMENT FUND,
INC., certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
27th day of April, 2006.

FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

      BY: /s/ Travis Williams
      Travis Williams, Assistant Secretary
      April 27, 2006

      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/ Travis Williams     Attorney In Fact    April 27, 2006
      Travis Williams         For the Persons
      ASSISTANT SECRETARY     Listed Below

John F. Donahue*                    Chairman and Director

J. Christopher Donahue*             President and Director
                                    (Principal Executive Officer)

Richard B. Fisher*                  Vice Chairman

Richard J. Thomas*                  Treasurer
                                    (Principal Financial Officer)

William D. Dawson, III*             Chief Investment Officer

Thomas G. Bigley*                   Director

John T. Conroy, Jr.*                Director

Nicholas P. Constantakis*           Director

John F. Cunningham*                 Director

Lawrence D. Ellis, M.D.*            Director

Peter E. Madden*                    Director

Charles F. Mansfield*               Director

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

Marjorie P. Smuts*                  Director

John S. Walsh*                      Director

*  By Power of Attorney

EX-99.FIGFAOI

                                             Exhibit (a) (vii) under Form N-1A
                                       Exhibit (3) (i) under Item 601/Reg. S-K


               FEDERATED LIMITED DURATION GOVERNMENT FUND, INC.

                              ARTICLES OF AMENDMENT


      FEDERATED   LIMITED   DURATION   GOVERNMENT   FUND,   INC.,  a  Maryland
corporation  (hereinafter called the  "Corporation"),  hereby certifies to the
State Department of Assessments and Taxation that:

      FIRST:      The Articles of  Incorporation of the Corporation are hereby
amended by striking Article FIRST and inserting the following in its place:

            "FIRST:   The  name  of  the   Corporation   is   "Federated
      Intermediate Government Fund, Inc."

      SECOND: The foregoing amendment to the charter of the Corporation was
approved by a majority of the entire Board of Directors of the Corporation; the
charter amendment is limited to a change expressly permitted by Section 2-605 of
the Maryland General Corporation Law to be made without action by stockholders;
and the Corporation is registered as an open-end company under the Investment
Company Act of 1940, as amended.

      THIRD: These Articles of Amendment shall become effective immediately upon
filing with the Maryland State Department of Assessments and Taxation.


      IN WITNESS WHEREOF, Federated Limited Duration Government Fund, Inc. has
caused these Articles of Amendment to be signed in its name and on its behalf as
of April 29, 2005, by its President and Assistant Secretary, who acknowledge
that these Articles of Amendment are the act of the Corporation, that to the
best of their knowledge, information and belief, all matters and facts set forth
therein relating to the authorization and approval of these Articles are true in
all material respects, and that this statement is made under the penalties of
perjury.


Witness:


/s/ Daniel M. Miller                     By:  /s/ J. Christopher Donahue
- ------------------------------------        ----------------------------
Name:  Daniel M. Miller                  Name:  J. Christopher Donahue
Title:  Assistant Secretary              Title:  President

EX-99.FIGFBYLAW8

                                               Exhibit (b) (x) under Form N-1A
                                        Exhibit (3(i)) under Item 601/Reg. S-K



                                  AMENDMENT #8
                                 TO THE BY-LAWS
                                       OF
                 FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

                            Effective August 18, 2005

Insert the following:

                                   ARTICLE IX
                                 INDEMNIFICATION

      Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify its officers to the same extent as its directors and to such
further extent as is consistent with law. The Corporation shall indemnify its
directors and officers who while serving as directors or officers also serve at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership joint venture,
trust, other enterprise or employee benefit plan to the fullest extent
consistent with law. The indemnification and other rights provided by this
Article shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such a person. This Article shall not protect any such person against any
liability to the Corporation or any Shareholder thereof to which such person
would otherwise be subject by reason of (i) willful misfeasance, (ii) bad faith,
(iii) gross negligence or (iv) reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").

      Section 2. ACTION BY DIRECTOR AGAINST THE CORPORATION. With respect to any
action, suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such indemnitee (i) was authorized by a
majority of the Directors or (ii) was instituted by the indemnitee to enforce
his rights to indemnification hereunder in a case in which the indemnitee is
found to be entitled to such indemnification.

      Section 3. SURVIVAL. The rights to indemnification set forth herein shall
continue as to a person who has ceased to be a Director or officer of the
Corporation and shall inure to the benefit of his heirs, executors and personal
and legal representatives.

      Section 4. AMENDMENTS. References in this Article are to the Maryland
General Corporation Law and to the Investment Company Act of 1940, as from time
to time amended. No amendment or restatement of these by-laws or repeal of any
of its provisions shall limit or eliminate any of the benefits provided to any
person who at any time is or was a Director or officer of the Corporation or
otherwise entitled to indemnification hereunder in respect of any act or
omission that occurred prior to such amendment, restatement or repeal.

      Section 5. PROCEDURE. Notwithstanding the foregoing, no indemnification
shall be made hereunder unless there has been a determination (i) by a final
decision on the merits by a court or other body of competent jurisdiction before
whom the issue of entitlement to indemnification hereunder was brought that such
indemnitee is entitled to indemnification hereunder or, (ii) in the absence of
such a decision, by (1) a majority vote of a quorum of those Directors who are
neither "interested persons" of the Corporation (as defined in Section 2(a)(19)
of the 1940 Act) nor parties to the proceeding ("Disinterested Non-Party
Directors"), that the indemnitee is entitled to indemnification hereunder, or
(2) if such quorum is not obtainable (or even if obtainable, if such majority so
directs) independent legal counsel in a written opinion concludes, based on a
review of readily available facts (as opposed to a full trial-type inquiry) that
the indemnitee should be entitled to indemnification hereunder. All
determinations to make advance payments in connection with the expense of
defending any proceeding shall be authorized and made in accordance with the
immediately succeeding paragraph (f) below.

      Section 6. ADVANCES. Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he is seeking
indemnification in the manner and to fullest extent permissible under the
Maryland General Corporation Law. The person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
the person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the Corporation is
insured against losses arising by reason of the advance, or (c) a majority of a
quorum of Disinterested Non-Party Directors, or independent legal counsel, in a
written opinion, shall be determined, based on a review of facts readily
available to the Corporation at the time the advance is proposed to be made,
that there is reason to believe that the person seeking indemnification will
ultimately be found to be entitled to indemnification.

      Section 7. OTHER RIGHTS. The rights accruing to any indemnitee under these
provisions shall not exclude any other right which any person may have or
hereafter acquire under the Articles of Incorporation or the by-laws of the
Corporation, by contract or otherwise under law, by a vote of stockholders or
Directors who are "disinterested persons" (as defined in Section 2(a)(19) of the
1940 Act) or any other right to which he may be lawfully entitled.

            Section 8. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Subject to any
limitations provided by the Investment Company Act of 1940 Act or otherwise
under the Articles of Incorporation or the by-laws of the Corporation, contract
or otherwise under law, the Corporation shall have the power and authority to
indemnify and provide for the advance payment of expenses to employees, agents
and other persons providing services to the Corporation or serving in any
capacity at the request of the Corporation to the full extent permitted by
applicable law, provided that such indemnification has been approved by a
majority of the Directors.



Renumber remaining Articles appropriately.

EX-99.FIGFBYLAW9

                                         Exhibit (b) (ix) under Form N-1A
                                   Exhibit (3(i)) under Item 601/Reg. S-K



                                  AMENDMENT #9
                                 TO THE BY-LAWS
                                       OF
              FEDERATED INTERMEDIATE GOVERNMENT FUND, INC.

                            Effective January 1, 2006

Strike Section 1, GENERAL PROVISIONS, and Section 2, ELECTION, TERM OF OFFICE
AND QUALIFICATIONS from Article IV - OFFICERS, in its entirety and replace with
the following:

      Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall be a
President, one or more Executive Vice Presidents, one or more Senior Vice
Presidents, one or more Vice Presidents, a Treasurer, and a Secretary. The Board
of Directors, in its discretion, may elect or appoint one or more Vice Chairmen
of the Board of Directors, and other Officers or agents, including one or more
Assistant Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. An Executive Vice President, Senior Vice President or Vice
President, the Secretary or the Treasurer may appoint an Assistant Vice
President, an Assistant Secretary or an Assistant Treasurer, respectively, to
serve until the next election of Officers. Two or more offices may be held by a
single person except the offices of President, Executive Vice President, Senior
Vice President or Vice President may not be held by the same person
concurrently. It shall not be necessary for any Director or any Officer to be a
holder of shares in any Series or Class of the Corporation. Any Officer, or
other such person as the Board may appoint, may preside at meetings of the
Shareholders.

      Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers shall
be elected annually by the Board of Directors at its Annual Meeting. Each
Officer shall hold office for one year and until the election and qualification
of his successor, or until earlier resignation or removal.

Strike Section 6, CHAIRMAN OF THE BOARD, Section 7, VICE CHAIRMAN OF THE BOARD
OF DIRECTORS, and Section 8, PRESIDENT, and Section 9, VICE PRESIDENT from
Article IV - OFFICERS, in their entirety and replace with the following:

      Section 6. CHAIRMAN OF THE BOARD. The Board may elect from among its
members a Chairman of the Board. The Chairman shall at all times be a Director
who meets all applicable regulatory and other relevant requirements for serving
in such capacity. The Chairman shall not be an Officer of the Corporation, but
shall preside over meetings of the Board and shall have such other
responsibilities in furthering the Board functions as may be assigned from time
to time by the Board of Directors or prescribed by these By-Laws. It shall be
understood that the election of any Director as Chairman shall not impose on
that person any duty, obligation, or liability that is greater than the duties,
obligations, and liabilities imposed on that person as a Director in the absence
of such election, and no Director who is so elected shall be held to a higher
standard of care by virtue thereof. In addition, election as Chairman shall not
affect in any way that Director's rights or entitlement to indemnification under
the By-Laws or otherwise by the Corporation. The Chairman shall be elected by
the Board annually to hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall have
resigned, or have been removed, as herein provided in these By-Laws. Each
Director, including the Chairman, shall have one vote.

Resignation. The Chairman may resign at any time by giving written notice of
resignation to the Board. Any such resignation shall take effect at the time
specified in such notice, or, if the time when it shall become effective shall
not be specified therein, immediately upon its receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

Removal. The Chairman may be removed by majority vote of the Board with or
without cause at any time.

Vacancy. Any vacancy in the office of Chairman, arising from any cause
whatsoever, may be filled for the unexpired portion of the term of the office
which shall be vacant by the vote of the Board.

Absence. If, for any reason, the Chairman is absent from a meeting of the board,
the Board may select from among its members who are present at such meeting a
Director to preside over such meeting.

      Section 7. VICE CHAIRMAN OF THE BOARD OF DIRECTORS. Any Vice Chairman
shall perform such duties as may be assigned to him from time to time by the
Board of Directors of the Corporation. The Vice Chairman need not be a Director.

            Section 8. PRESIDENT. The President of the Corporation shall be the
principal executive officer of the Corporation. Unless other provisions are made
therefor by the Board or Executive Committee, the President without limitation,
shall employ and define the duties of all employees of the Corporation, shall
have the power to discharge any such employees, shall exercise general
supervision over the affairs of the Corporation and shall have the power to
sign, in the name of and on behalf of the Corporation, powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities or other property owned by the Corporation, and may, in the name
of and on behalf of the Corporation, take all such action as the President may
deem advisable in entering into agreements to purchase securities and other
property in the ordinary course of business, and to sign representation letters
in the course of buying securities or other property and shall perform such
other duties as may be assigned to him from time to time by the Board of
Directors.

            Section 9. VICE PRESIDENT. The Executive Vice President, Senior Vice
President or Vice President, if any, in order of their rank as fixed by the
Board or if not ranked, a Vice President designated by the Board, in the absence
of the President shall perform all duties and may exercise any of the powers of
the President subject to the control of the Board. Each Executive Vice
President, Senior Vice President and Vice President shall have the power,
without limitation, to sign, in the name of and on behalf of the Corporation,
powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities or other property owned by the Corporation,
and may, in the name of and on behalf of the Corporation, take all such action
as the Executive Vice President, Senior Vice President or Vice President may
deem advisable in entering into agreements to purchase securities or other
property in the ordinary course of business, and to sign representation letters
in the course of buying securities or other property and shall perform such
other duties as may be assigned to him from time to time by the Board of
Directors, the Executive Committee, or the President.

EX-99.POANOVAK

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



                                POWER OF ATTORNEY


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


SIGNATURES                          TITLE                                 DATE
- ----------                          -----                                 ----





/s/ Richard A. Novak                Treasurer                         01/01/06
- ---------------------------------
Richard A. Novak

EX-99.POAWILL

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



                                POWER OF ATTORNEY


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


SIGNATURES                          TITLE                                 DATE
- ----------                          -----                                 ----





/s/ James F. Will                   Director                          01/01/06
- ---------------------------------
James F Will

EX-99.POAJFD

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


                                POWER OF ATTORNEY


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


SIGNATURES                          TITLE                                 DATE
- ----------                          -----                                 ----



/S/ John F. Donahue                 Director                   January 1, 2006
- ---------------------------------
John F. Donahue