Federated Insurance Series August 29, 2002

N-30D 1 fisform.htm Federated Insurance Series August 29, 2002

Federated Investors
World-Class Investment Manager

Federated American Leaders Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated American Leaders Fund II, a portfolio of Federated Insurance Series.

This report covers the six-month reporting period from January 1, 2002, through June 30, 2002. It begins with a commentary by the fund's portfolio manager, which is followed by a complete listing of the fund's stock holdings and financial statements.

At the end of the reporting period, the selected high-quality stocks included 81 holdings that represent major industry groups and include leaders like Alcoa, Bank of America, BellSouth, H&R Block, Exxon, General Motors, Kimberly-Clark, and Philip Morris.

For the six-month reporting period, the Primary Shares produced a total return of (8.99)% and paid dividends totaling $0.188 per share, and a net asset value decrease of $1.90.¹ The Service Shares produced a total return of (5.09)% for the period from April 30, 2002 (date of initial public investment) to June 30, 2002. On June 30, 2002, the fund's net assets totaled $398.4 million.

The reporting period was an unusually difficult one for stocks. Please remember that the true measure of investment performance is in years rather than months, and you can anticipate relatively brief periods of negative, as well as positive, returns.

Thank you for participating in the long-term growth of American companies through Federated American Leaders Fund II. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

Investment Review

MARKET REVIEW

The bear market for U.S. equities present since March 2000 continued during the first half of 2002. Despite record low short-term interest rates and signs of economic strength, investors continued to shed stocks from their portfolios aided by wave after wave of high profile accounting and corporate governance scandals. The Standard and Poor's 500 Index ("S&P 500")² has declined 33% from its March 24, 2000 peak through the end of the second quarter. The Nasdaq Composite Index (Nasdaq)³ fell 20.6% during the quarter, its second-worst performance in history, and is down 71% from its peak set in March 2000. Through June 30, 2002, the S&P 500 declined 13.16%, while the Nasdaq fell 24.8%. Within the S&P 500, the Telecommunication Services and Information Technology sectors performed the worst during the reporting period and declined 35% and 31%, respectively. The best-performing sectors within the S&P 500 were Materials up 9%, Consumer Staples up 5%, and Energy up 4%. Small- and mid-cap value strategies continued their outperformance over large-cap strategies during the reporting period, with large-cap growth strategies performing the worst.

2 S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is unmanaged and investments cannot be made in an index.

3 Nasdaq Composite Index is an unmanaged index that measures all Nasdaq domestic and non U.S.-based common stocks listed on the Nasdaq Stock Market. The index is unmanaged and investments cannot be made in an index.

PERFORMANCE

The fund's Primary Shares returned (8.99%) during the first six months of 2002, and outperformed the S&P 500 Index, which returned (13.16)%. The fund's Service Shares returned (5.09)% from inception on April 30, 2002 to the end of the reporting period. The fund also outperformed the S&P/Barra Value Index⁴ which returned (9.46)% during the reporting period. Positive influences on relative performance included an overweight position in Energy and an underweight position in Information Technology. Other positive influences on relative performance were an overweight position and favorable security selection in Financials (Principal Financial up 29%, Wachovia Corp. up 22%, Washington Mutual up 13%) and favorable security selection in Utilities (Cinergy up 8%, Entergy up 9%, FPL up 6%). Negative influences on relative performance included an overweight position in Telecommunication Services (Verizon Communications down 15%, BellSouth down 17%, SBC Communications down 22%) and an overweight position and unfavorable security selection in Industrials (Tyco Intl. down 77%, Cendant down 19%, Waste Management down 18%). An underweight position and unfavorable security selection in Consumer Staples (Sara Lee down 7%, Philip Morris down 5%) also negatively influenced relative performance.

POSITIONING AND STRATEGY

A fundamental tenet of equity investing is that over long periods of time, equity prices follow the trend in corporate profits. We believe the divergence between the strength in the U.S. economy and weakness in the equity markets will dissipate over the next year. Despite the bear market that Information Technology and Telecommunication Services stocks have experienced during the past two years, valuations still remain unappealing due to weakness in corporate capital spending and speculative business models. The S&P Information Technology sector still trades at a price-to-sales (P/S) ratio almost 50% above its historical average, while Telecommunication Services companies other than the Regional Bell Operating Companies (RBOCs) have been shut out of the capital markets. We maintain an underweight position in the Information Technology sector emphasizing beaten-down leading companies that have historical support for valuation levels. Our valuation disciplines continue to emphasize Healthcare and Consumer Discretionary companies, and we maintain an overweight position in Healthcare relative to our peers as a result. Our strategy for the rest of the year is to utilize our investment process to seek out undervalued leading companies for addition to the portfolio and eliminate those with weakening fundamentals or overvaluation.

4 S&P 500/Barra Value Index is a market capitalization-weighted index of the stocks in the Standard and Poor's 500 Index having the lowest price to book ratios. The index consists of approximately half of the S&P 500 on a market capitalization basis.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value
			COMMON STOCKS--96.2%
			Consumer Discretionary--9.7%
	220,700	^1,4	Charter Communications, Inc., Class A	$	900,456
	94,400	¹	Federated Department Stores, Inc.		3,747,680
	240,970		Ford Motor Co.		3,855,520
	91,427		General Motors Corp.		4,886,773
	55,700		Johnson Controls, Inc.		4,545,677
	108,900		Koninklijke (Royal) Philips Electronics NV, ADR		3,005,640
	202,300	⁴	News Corp. Ltd., ADR		3,995,425
	79,200		TRW, Inc.		4,512,816
	263,500	¹	Toys 'R' Us, Inc.		4,603,345
	103,578	¹	Viacom, Inc., Class B		4,595,756

			TOTAL		38,649,088

			Consumer Staples--5.8%
	68,300		Kimberly-Clark Corp.		4,234,600
	186,900		Philip Morris Cos., Inc.		8,163,792
	220,700		Sara Lee Corp.		4,555,248
	184,000		UST, Inc.		6,256,000

			TOTAL		23,209,640

			Energy--12.4%
	117,600		BP PLC, ADR		5,937,624
	78,500		Chevron Texaco Corp.		6,947,250
	190,800		Diamond Offshore Drilling, Inc.		5,437,800
	145,000		ENSCO International, Inc.		3,952,700
	164,000		Exxon Mobil Corp.		6,710,880
	189,600		Marathon Oil Corp.		5,141,952
	93,000		Phillips Petroleum Co.		5,475,840
	119,100		Sunoco Inc.		4,243,533
	148,000		Unocal Corp.		5,467,120

			TOTAL		49,314,699

			Financials--21.8%
	108,900		Allmerica Financial Corp.		5,031,180
	169,500		Allstate Corp.		6,268,110
	124,900		Bank of America Corp.		8,787,964
	112,000	⁴	Bear Stearns Cos., Inc.		6,854,400
	136,800		Citigroup, Inc.		5,301,000
	60,000		Fannie Mae		4,425,000
	112,800		Lincoln National Corp.		4,737,600
	130,400		Loews Corp.		6,909,896
	96,700		MBIA, Inc.		5,466,451
	47,400		Marsh & McLennan Cos., Inc.		4,578,840
	121,100		Morgan Stanley Dean Witter & Co.		5,216,988
	78,100		PNC Financial Services Group		4,083,068
	153,600	¹	Principal Financial Group, Inc.		4,761,600
	166,600		Wachovia Corp.		6,360,788
	218,600		Washington Mutual, Inc.		8,112,246

			TOTAL		86,895,131

Shares				Value
			COMMON STOCKS--continued
			Healthcare--11.5%
	72,400		Abbott Laboratories	$	2,725,860
	85,200		Baxter International, Inc.		3,787,140
	183,000	¹	Boston Scientific Corp.		5,365,560
	112,600		Bristol-Myers Squibb Co.		2,893,820
	64,000		CIGNA Corp.		6,234,880
	525,600	¹	Healthsouth Corp.		6,722,424
	155,500		Pfizer, Inc.		5,442,500
	120,097		Pharmacia Corp.		4,497,633
	89,800		Schering Plough Corp.		2,209,080
	65,100		United Health Group, Inc.		5,959,905

			TOTAL		45,838,802

			Industrials--13.3%
	190,884	^1,4	ABB Ltd., ADR		1,717,956
	170,300		Block (H&R), Inc.		7,859,345
	600,464	^1,4	Cendant Corp.		9,535,368
	224,800		First Data Corp.		8,362,560
	44,900		General Dynamics Corp.		4,775,115
	98,200		Ingersoll-Rand Co.		4,483,812
	23,800		Northrop Grumman, Corp.		2,975,000
	87,700		Textron, Inc.		4,113,130
	362,400		Tyco International Ltd.		4,896,024
	162,900		Waste Management, Inc.		4,243,545

			TOTAL		52,961,855

			Information Technology--7.4%
	88,800		Computer Associates International, Inc.		1,411,032
	81,300	¹	Computer Sciences Corp.		3,886,140
	103,100		Electronic Data Systems Corp.		3,830,165
	348,443		Hewlett-Packard Co.		5,324,209
	55,700		International Business Machines Corp.		4,010,400
	73,700	¹	Lexmark International Group, Class A		4,009,280
	235,300		Motorola, Inc.		3,393,026
	232,800	¹	Storage Technology Corp.		3,717,816

			TOTAL		29,582,068

			Materials--5.0%
	88,400		Air Products & Chemicals, Inc.		4,461,548
	121,600		Alcoa, Inc.		4,031,040
	114,700		Du Pont (E.I.) de Nemours & Co.		5,092,680
	100,600		PPG Industries, Inc.		6,227,140

			TOTAL		19,812,408

			Telecommunication Services--4.4%
	112,800		BellSouth Corp.		3,553,200
	140,300		SBC Communications, Inc.		4,279,150
	213,900		Sprint Corp. - FON Group		2,269,479
	181,306		Verizon Communications, Inc.		7,279,436

			TOTAL		17,381,265

Shares or Principal Amount				Value
			COMMON STOCKS--continued
			Utilities--4.9%
	124,600		Cinergy Corp.	$	4,484,354
	144,400		Entergy Corp.		6,128,336
	97,600		FPL Group, Inc.		5,855,024
	190,100		Reliant Energy, Inc.		3,212,690

			TOTAL		19,680,404

			TOTAL COMMON STOCKS (IDENTIFIED COST $356,901,688)		383,325,360

			CORPORATE BONDS--0.3%
			Information Technology--0.3%
$	1,200,000		Computer Associates International, Inc., Conv. Bond, 5.00%, 3/15/2007 (Identified Cost $1,200,000)		1,190,604

			PREFERRED STOCKS--2.2%
			Industrials--2.2%
	31,100		Northrop Grumman, Corp., Conv. Pfd.		4,121,061
	94,400		Union Pacific Capital Trust, Conv. Pfd.		4,873,874

			TOTAL PREFERRED STOCKS (IDENTIFIED COST $7,172,823)		8,994,935

			REPURCHASE AGREEMENT--0.4%²
$	1,494,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		1,494,000

			TOTAL INVESTMENTS (IDENTIFIED COST $366,768,511)³	$	395,004,899

1 Non-income producing security.

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

3 The cost of investments for federal tax purposes amounts to $366,768,511. The net unrealized appreciation of investments on a federal tax basis amounts to $28,236,388 which is comprised of $69,330,981 appreciation and $41,094,593 depreciation at June 30, 2002.

4 All or a portion of these shares are temporarily on loan to unaffiliated broker/dealers.

Note: The categories of investments are shown as a percentage of net assets ($398,445,508) at June 30, 2002.

The following acronym is used throughout this portfolio:

ADR	--American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified and cost $366,768,511)			$	395,004,899
Cash				882
Income receivable				454,653
Receivable for investments sold				3,293,016
Cash held as collateral for securities lending				3,550,146
Prepaid expenses				67,996

TOTAL ASSETS				402,371,592

Liabilities:
Payable for investments purchased	$	308,985
Payable on collateral due to broker		3,550,146
Accrued expenses		66,953

TOTAL LIABILITIES				3,926,084

Net assets for 22,960,138 shares outstanding			$	398,445,508

Net Assets Consist of:
Paid in capital			$	384,281,055
Net unrealized appreciation of investments				28,236,388
Accumulated net realized loss on investments				(16,486,066	)
Undistributed net investment income				2,414,131

TOTAL NET ASSETS			$	398,445,508

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Primary Shares:
$398,443,061 ÷ 22,959,997 shares outstanding				$17.35

Service Shares:
$2,447 ÷ 141 shares outstanding				$17.35

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $12,413)				$	4,238,110
Interest (including income on securities loaned of $8,504)					64,375

TOTAL INCOME					4,302,485

Expenses:
Investment adviser fee	$	1,629,366
Administrative personnel and services fee		163,371
Custodian fees		11,162
Transfer and dividend disbursing agent fees and expenses		13,799
Directors'/Trustees' fees		1,742
Auditing fees		6,005
Legal fees		2,030
Portfolio accounting fees		44,771
Distribution services fee--Service Shares		1
Share registration costs		873
Printing and postage		21,223
Insurance premiums		656
Miscellaneous		2,236

TOTAL EXPENSES		1,897,235

Fees paid indirectly from directed broker arrangements		(11,170	)

Net expenses					1,886,065

Net investment income					2,416,420

Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments					71,764
Net change in unrealized appreciation of investments					(42,493,847	)

Net realized and unrealized gain (loss) on investments					(42,422,083	)

Change in net assets resulting from operations				$	(40,005,663	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,416,420		$	4,403,345
Net realized gain (loss) on investments		71,764			(15,850,549	)
Net change in unrealized appreciation on investments		(42,493,847	)		(9,388,118	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(40,005,663	)		(20,835,322	)

Distributions to Shareholders:
Distributions from net investment income--Primary Shares		(4,404,745	)		(6,475,052	)
Distributions from net realized gains on investments--Primary Shares		--			(2,820,939	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(4,404,745	)		(9,295,991	)

Share Transactions:
Proceeds from sale of shares		22,930,770			73,866,893
Net asset value of shares issued to shareholders in payment of distributions declared		4,404,745			9,295,989
Cost of shares redeemed		(40,447,567	)		(82,675,669	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(13,112,052	)		487,213

Change in net assets		(57,522,460	)		(29,644,100	)

Net Assets:
Beginning of period		455,967,968			485,612,068

End of period (including undistributed net investment income of $2,414,131 and $4,402,456, respectively)	$	398,445,508		$	455,967,968

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Primary Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999		1998		1997
Net Asset Value, Beginning of Period	$19.25		$20.52		$20.82		$21.68		$19.63		$15.26
Income From Investment Operations:
Net investment income	0.11		0.19		0.27		0.19		0.20		0.19
Net realized and unrealized gain (loss) on investments	(1.82	)	(1.07	)	0.19		1.19		3.20		4.64

TOTAL FROM INVESTMENT OPERATIONS	(1.71	)	(0.88	)	0.46		1.38		3.40		4.83

Less Distributions:
Distributions from net investment income	(0.19	)	(0.27	)	(0.19	)	(0.20	)	(0.10	)	(0.10	)
Distributions from net realized gain on investments	--		(0.12	)	(0.57	)	(2.04	)	(1.25	)	(0.36	)

TOTAL DISTRIBUTIONS	(0.19	)	(0.39	)	(0.76	)	(2.24	)	(1.35	)	(0.46	)

Net Asset Value, End of Period	$17.35		$19.25		$20.52		$20.82		$21.68		$19.63

Total Return¹	(8.99	)%	(4.21	)%	2.38	%	6.67	%	17.62	%	32.34	%


Ratios to Average Net Assets:

Expenses	0.87	%^2,3	0.87	%³	0.87	%	0.88	%	0.88	%	0.85	%

Net investment income	1.11	%²	0.94	%	1.38	%	0.95	%	1.06	%	1.18	%

Expense waiver/reimbursement⁴	--		--		--		--		0.01	%	0.09	%

Supplemental Data:

Net assets, end of period (000 omitted)	$398,443		$455,968		$485,612		$477,426		$418,212		$305,796

Portfolio turnover	14	%	27	%	38	%	29	%	58	%	56	%

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

2 Computed on an annualized basis.

3 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratios for the six months ended June 30, 2002 and the year ended December 31, 2001 are 0.86% and 0.86%, respectively, after taking into account these expense reductions.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Service Shares

(For a Share Outstanding Throughout the Period)

	Period Ended (unaudited) 6/30/2002	¹
Net Asset Value, Beginning of Period	$18.49
Income From Investment Operations:
Net investment income	0.01
Net realized and unrealized loss on investments	(1.15	)

TOTAL FROM INVESTMENT OPERATIONS	(1.14	)

Net Asset Value, End of Period	$17.35

Total Return²	(5.09	)%


Ratios to Average Net Assets:

Expenses	1.12	%^3,4

Net investment income	0.86	%³

Supplemental Data:

Net assets, end of period (000 omitted)	$2

Portfolio turnover	14	%

1 Reflects operations for the period from April 30, 2002 (date of initial public investment) to June 30, 2002.

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

3 Computed on an annualized basis.

4 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratio is 1.11% after taking into account these expense reductions.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated American Leaders Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The primary objective of the Fund is to achieve long-term growth of capital. The Fund's secondary objective is to provide income. Effective April 30, 2002 the Fund added Service Shares.

The Fund offers two classes of shares: Primary Shares and Service Shares.

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

Listed corporate bonds and fixed income securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

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

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Trustees. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.

Investment Income, Expenses and Distributions

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended, (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $16,261,955 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2009.

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. Collateral for securities loaned must be in cash or government securities. Collateral is maintained at a minimum level of 100% of the market value on investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the custodian, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of June 30, 2002, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$3,462,457		$3,550,146

Use of Estimates

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

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002					Year Ended 12/31/2001
Primary Shares:	Shares			Amount		Shares			Amount
Shares sold	1,228,250		$	22,927,896		3,754,498		$	73,866,893
Shares issued to shareholders in payment of distributions declared	229,056			4,404,745		497,111			9,295,989
Shares redeemed	(2,181,702	)		(40,447,290	)	(4,231,647	)		(82,675,669	)

NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS	(724,396	)	$	(13,114,649	)	19,962		$	487,213


	Period Ended 6/30/2002¹
Service Shares:	Shares			Amount
Shares sold	156		$	2,874
Shares redeemed	(15	)		(277	)

NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS	141			2,597

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(724,255	)	$	(13,112,052	)

1 Reflects operations for the period from April 30, 2002 (date of initial public investment) to June 30, 2002.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER FEE

Administrative Fee

Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on a scale that ranges from 0.150% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.

Distribution Services Fee

Shareholder Services Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. For the six months ended June 30, 2002, the Fund did not incur a shareholder service fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

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

Portfolio Accounting Fees

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

Expense Reduction

The Fund directs certain portfolio trades to a broker, that in turn, pays a portion of the Fund's operating expenses. For the six months ended June 30, 2002, the Fund's expenses were reduced by $11,170 under these arrangements.

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002 were as follows:

Purchases	$	56,268,240

Sales	$	74,161,330

Purchases and sales of long-term U.S. government securities for the six months ended June 30, 2002 were as follows:

Purchases	$	4,744,645

Sales	$	0

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the householding program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of householding. Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of householding at any time by calling 1-800-341-7400.

Federated
World-Class Investment Manager
Federated American Leaders Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916405
Cusip 313916793

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G00433-04 (8/02)

Federated Investors
World-Class Investment Manager

Federated Capital Appreciation Fund II

(formerly, Federated Large Cap Growth Fund II)

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

Federated Capital Appreciation Fund II, a portfolio of Federated Insurance Series, is managed to provide you with capital appreciation opportunities by investing in a diversified portfolio of mid- and large-cap companies across many industrial sectors. Many of the stocks owned by the fund are household names, such as Target Corp., Microsoft Corp. and Coca-Cola Co.

This Semi-Annual Report covers the fund's reporting period from January 1, 2002 through June 30, 2002. It opens with the fund manager's review of market conditions and discussion of fund performance, which is followed by a complete listing of the fund's holdings and financial statements.

During the six-month reporting period, the fund's Primary Shares produced a total return of (13.22)%, as net asset value decreased by $0.76. The fund's Service Shares, which were created April 30, 2002, produced a total return of (5.85)% during the two-month reporting period, and net asset value decreased by $0.31.¹ The fund's total net assets as of June 30, 2002 were $7.68 million.

As you know, the past several quarters have been especially difficult for equity investments. Markets clearly are experiencing a down cycle due to a series of corporate scandals as well as continuing concerns about terrorism and Mid-East violence. But many economic indicators have become more positive in recent months, suggesting that U.S. and global recoveries are indeed under way--although they have been clouded by discouraging headlines and may be occurring more gradually than we would like. Please remember that the true measure of the performance of a long-term investment like Federated Capital Appreciation Fund II is in years rather than months.

During times of market uncertainty, keep in mind the value of dollar-cost averaging, an investment method through which you can take advantage of price fluctuations by adding to your account on a regular basis. By investing the same amount on a regular schedule, you buy more fund shares when prices are low and fewer when prices are high.²

Thank you for choosing Federated Capital Appreciation Fund II as a diversified, professionally managed way to participate in the capital appreciation potential of American companies. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

2 Systematic investing does not assure a profit or protect against loss in declining markets. Because dollar-cost averaging involves continuous investment regardless of fluctuating price levels, investors should consider their financial ability to continue purchases during periods of low price levels.

Investment Review

After two straight quarters of positive returns pulled us out of the bear market, equities resumed their downtrend in an ugly way. Increased investor concerns regarding corporate fraud, alleged accounting shenanigans, overleveraged balance sheets, potential terrorist attacks and other geopolitical events, combined with high valuations, made it easy to overlook consistently positive economic data. The result was the third worst quarterly performance in market history. While all sectors were down, the best relative performers were Materials, Consumer Staples and Energy.

FUND PERFORMANCE

Despite negative returns, Federated Capital Appreciation Fund II outperformed its benchmark, the Standard & Poor's 500 Index (S&P 500), and its Lipper peer group.¹ During the reporting period, the Fund's Primary Shares returned (13.22)%, the S&P 500 returned (13.40)%, and the Lipper VA Multi Cap Growth Fund Average returned (17.43)%. Our underweight of Information Technology combined with stock selection within Healthcare, Industrials and Information Technology were the primary drivers of performance. This was offset in a minor way by selection within Consumer Discretionary and Consumer Staples and our underweight of Financials.

Top performing holdings were Wellpoint Health Networks, Intuit, Inc., Anthem, Inc., Simon Property Group, Inc. and AmerisourceBergen Corp. Positions which most negatively impacted the Fund were Omnicom Group, Inc., Novellus Systems, Inc., International Business Machines, Corp., Abbott Laboratories and Citigroup, Inc.

MAJOR TRANSACTIONS

Recent purchases included:

Fifth Third Bancorp--A leading Midwest regional bank with strong revenue and earnings growth, high ROA and ROE and good credit risk control.

Wal-Mart Stores, Inc.--The largest U.S. retailer continues to find ways to grow, taking share from food stores, lowering costs and improving returns.

Brocade Communications Systems, Inc.--A leader in the fiber channel SAN space with strong fundamentals at a reasonable valuation.

Recent sales included:

Philip Morris Cos., Inc.--Risk/reward not as attractive given higher share price, strength of generic competition and more visible legal calendar.

FirstEnergy Corp.--We are concerned issues related to its nuclear power plant will impact the business longer than expected.

Wellpoint Health Networks--We believe the valuation reflects strong fundamentals for this HMO, while legal and political risk is rising.

CURRENT STRATEGY

We believe the recent sell-off in the market has provided some attractive risk/reward opportunities not seen for quite some time. As a result we have trimmed our exposure in Healthcare, Utilities and Energy using the proceeds to add to Financials, Technology and Telecommunication Services, where we believe the near-term opportunities are greatest.

At the end of the reporting period, the Fund held 56% of its assets in value stocks with the remaining 44% in growth stocks.

1 The S&P 500 is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Indexes are unmanaged and investments cannot be made in an index. Lipper figures represent the average of the total returns reports by all of mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares					Value
			COMMON STOCKS--90.0%
			Consumer Discretionary--8.6%
	3,300	¹	AOL Time Warner, Inc.	$	48,543
	1,500	¹	BJ's Wholesale Club, Inc.		57,750
	600	¹	Clear Channel Communications, Inc.		19,212
	900		Interpublic Group Cos., Inc.		22,284
	1,100		Johnson Controls, Inc.		89,771
	1,000		Knight-Ridder, Inc.		62,950
	700		Nike, Inc., Class B		37,555
	600		Omnicom Group, Inc.		27,480
	1,900		Target Corp.		72,390
	4,100	¹	Toys `R' Us, Inc.		71,627
	1,600	¹	Viacom, Inc., Class B		70,992
	1,400		Wal-Mart Stores, Inc.		77,014

			TOTAL		657,568

			Consumer Staples--9.7%
	2,200		Anheuser-Busch Cos., Inc.		110,000
	2,200		Coca-Cola Co.		123,200
	1,100		Gillette Co.		37,257
	600		Hershey Foods Corp.		37,500
	3,700		Kroger Co.		73,630
	3,200		McCormick & Co., Inc.		82,400
	1,600		PepsiCo, Inc.		77,120
	800		Procter & Gamble Co.		71,440
	1,000		R.J. Reynolds Tobacco Holdings, Inc.		53,750
	2,100		Walgreen Co.		81,123

			TOTAL		747,420

			Energy--6.8%
	1,000		ChevronTexaco Corp.		88,500
	2,000		Diamond Offshore Drilling, Inc.		57,000
	3,100		Exxon Mobil Corp.		126,852
	1,800		GlobalSantaFe Corp.		49,230
	700		Murphy Oil Corp.		57,750
	500		Phillips Petroleum Co.		29,440
	1,600		Royal Dutch Petroleum Co., ADR		88,432
	600		Valero Energy Corp.		22,452

			TOTAL		519,656

Shares					Value
			COMMON STOCKS--continued
			Financials--13.9%
	1,200		Bank of America Corp.	$	84,432
	2,200		Bank of New York Co., Inc.		74,250
	1,900		Bear Stearns Cos., Inc.		116,280
	2,700		Citigroup, Inc.		104,625
	1,900		Edwards(AG), Inc.		73,853
	1,200		Fifth Third Bancorp		79,980
	3,600		Gallagher (Arthur J.) & Co.		124,740
	1,300		Lehman Brothers Holdings, Inc.		81,276
	2,000		Morgan Stanley, Dean Witter & Co.		86,160
	2,600		Simon Property Group, Inc.		95,784
	2,400	¹	Travelers Property Casualty Corp., Class A		42,480
	2,100		Wells Fargo & Co.		105,126

			TOTAL		1,068,986

			Health Care--18.5%
	2,400		Abbott Laboratories		90,360
	1,300		AmerisourceBergen Corp.		98,800
	2,200	¹	Anthem, Inc.		148,456
	1,900		Baxter International, Inc.		84,455
	1,400	¹	Biogen, Inc.		58,002
	1,600		Bristol-Myers Squibb Co.		41,120
	5,300	¹	HealthSouth Corp.		67,787
	1,300		Lilly (Eli) & Co.		73,320
	1,700		Merck & Co., Inc.		86,088
	2,100		Mylan Laboratories, Inc.		65,835
	3,900		Pfizer, Inc.		136,500
	2,800		Pharmacia Corp.		104,860
	3,300		Schering Plough Corp.		81,180
	1,000	¹	St. Jude Medical, Inc.		73,850
	800	¹	Tenet Healthcare Corp.		57,240
	1,500		Wyeth		76,800
	2,100	¹	Zimmer Holdings, Inc.		74,886

			TOTAL		1,419,539

			Industrials--10.6%
	300	¹	American Standard Cos.		22,530
	2,600		Block (H&R), Inc.		119,990
	1,000		Danaher Corp.		66,350
	1,400		Deere & Co.		67,060
	1,800		Dover Corp.		63,000
	900		Eaton Corp.		65,475
	1,700	¹	FIserv, Inc.		62,407
	2,900		General Electric Co.		84,245
	1,300		Ingersoll-Rand Co., Class A		59,358
	1,100		Lockheed Martin Corp.		76,450
	1,300		Textron, Inc.		60,970
	2,500		Waste Management, Inc.		65,125

			TOTAL		812,960

Shares					Value
			COMMON STOCKS--continued
			Information Technology--11.7%
	4,700	¹	Advanced Micro Devices, Inc.	$	45,684
	4,400	¹	BEA Systems, Inc.		41,844
	2,000	¹	Brocade Communications Systems, Inc.		34,960
	6,100	¹	EMC Corp.		46,055
	1,000		International Business Machines Corp.		72,000
	1,600	¹	Intuit, Inc.		79,552
	1,800	¹	Lexmark International, Inc., Class A		97,920
	2,400		Micron Technology, Inc.		48,528
	2,900	¹	Microsoft Corp.		158,630
	1,600	¹	Novellus Systems, Inc.		54,400
	4,400	¹	Oracle Corp.		41,668
	2,700		Scientific-Atlanta, Inc.		44,415
	2,500	¹	SunGuard Data Systems, Inc.		66,200
	700	¹	Symantec Corp.		22,995
	1,800	¹	Teradyne, Inc.		42,300

			TOTAL		897,151

			Materials--3.3%
	2,000		Alcoa, Inc.		66,300
	1,700		Bowater, Inc.		92,429
	2,900		MeadWestvaco Corp.		97,324

			TOTAL		256,053

			Telecommunication Services--3.6%
	1,000		BellSouth Corp.		31,500
	2,700		SBC Communications, Inc.		82,350
	3,800	¹	Sprint Corp. (PCS Group)		40,318
	700		Telephone and Data System, Inc.		42,385
	2,100		Verizon Communications, Inc.		84,315

			TOTAL		280,868

			Utilities--3.3%
	2,100		Cinergy Corp.		75,579
	2,500		NiSource, Inc.		54,575
	2,300		SCANA Corp.		71,001
	2,300		Sempra Energy		50,899

			TOTAL		252,054

			TOTAL COMMON STOCKS (IDENTIFIED COST $7,277,574)		6,912,255

Shares or Principal Amount					Value
			CONVERTIBLE PREFERRED STOCKS--6.1%
			Consumer Discretionary--1.0%
	1,300		Ford Motor Co. Capital Trust I, Conv. Pfd., $3.25	$	73,125

			Financials--3.0%
	1,400		Capital One Financial Corp., DECS, $3.13		67,690
	900		Metlife Capital Trust I, Conv. Pfd., $4.00		79,947
	1,600		Washington Mutual, Inc., Conv. Pfd., $2.69		84,200

			TOTAL		231,837

			Industrials--2.1%
	1,200		Raytheon Co., Conv. Pfd., $4.13		79,500
	1,600		Union Pacific Capital Trust, Conv. Pfd., $3.13		82,608

			TOTAL		162,108

			TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $484,848)		467,070

			CONVERTIBLE PREFERRED BONDS--1.6%
			Consumer Discretionary--1.6%
$	160,000	¹	Lowe's Cos., Inc., 2/16/2021 (identified cost $126,188)		130,155

			REPURCHASE AGREEMENT--2.9%²
	222,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		222,000

			TOTAL INVESTMENTS (IDENTIFIED COST $8,110,610)³	$	7,731,480

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $8,110,610. The net unrealized depreciation of investments on a federal tax basis amounts to $379,130 which is comprised of $190,382 appreciation and $569,512 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($7,683,205) at June 30, 2002.

The following acronyms are used throughout this portfolio:

ADR	--American Depositary Receipt
DECS	--Dividend Enhanced Convertible Stock

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $8,110,610)			$	7,731,480
Cash				460
Income receivable				10,836
Receivable for investments sold				760,280
Prepaid expenses				26,972

TOTAL ASSETS				8,530,028

Liabilities:
Payable for investments purchased	$	841,611
Accrued expenses		5,212

TOTAL LIABILITIES				846,823

Net assets for 1,538,784 shares outstanding			$	7,683,205

Net Assets Consist of:
Paid in capital			$	12,665,514
Net unrealized depreciation of investments				(379,130	)
Accumulated net realized loss on investments				(4,619,542	)
Undistributed net investment income				16,363

TOTAL NET ASSETS			$	7,683,205

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Primary Shares:
$7,677,351 ÷ 1,537,611 shares outstanding				$4.99

Service Shares:
$5,854 ÷ 1,173 shares outstanding				$4.99

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $242)							$	45,133
Interest								3,907

TOTAL INCOME								49,040

Expenses:
Investment adviser fee				$	30,695
Administrative personnel and services fee					65,329
Custodian fees					5,250
Transfer and dividend disbursing agent fees and expenses					7,853
Directors'/Trustees' fees					316
Auditing fees					6,000
Legal fees					1,319
Portfolio accounting fees					17,613
Distribution services fee--Service Shares					1
Share registration costs					105
Printing and postage					6,621
Insurance premiums					382
Miscellaneous					56

TOTAL EXPENSES					141,540

Waiver, Reimbursement and Expense Reduction:
Waiver of investment adviser fee	$	(30,695	)
Reimbursement of other operating expenses		(77,954	)
Fees paid indirectly from directed brokerage arrangements		(214	)

TOTAL WAIVER, REIMBURSEMENT AND EXPENSE REDUCTION					(108,863	)

Net expenses								32,677

Net investment income								16,363

Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								84,043
Net change in unrealized appreciation of investments								(1,141,659	)

Net realized and unrealized loss on investments								(1,057,616	)

Change in net assets resulting from operations							$	(1,041,253	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income (operating loss)	$	16,363		$	(4,832	)
Net realized gain (loss) on investments		84,043			(3,574,243	)
Net change in unrealized appreciation of investments		(1,141,659	)		1,266,208

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,041,253	)		(2,312,867	)

Share Transactions:
Proceeds from sale of shares		2,016,642			4,591,232
Cost of shares redeemed		(355,177	)		(2,432,119	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		1,661,465			2,159,113

Change in net assets		620,212			(153,754	)

Net Assets:
Beginning of period		7,062,993			7,216,747

End of period	$	7,683,205		$	7,062,993

See Notes which are an integral part of the Financial Statements

Financial Highlights--Primary Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 6/30/2002		Year Ended 12/31/2001		Period Ended 12/31/2000	¹
Net Asset Value, Beginning of Period	$5.75		$7.67		$10.00
Income From Investment Operations:
Net investment income (operating loss)	0.01		(0.00	)²	(0.01	)
Net realized and unrealized loss on investments	(0.77	)	(1.92	)	(2.32	)

TOTAL FROM INVESTMENT OPERATIONS	(0.76	)	(1.92	)	(2.33	)

Net Asset Value, End of Period	$4.99		$5.75		$ 7.67

Total Return³	(13.22	)%	(25.03	)%	(23.30	)%


Ratios to Average Net Assets:

Expenses	0.91	%^4,5	0.91	%⁵	0.90	%⁴

Net investment income (operating loss)	0.45	%⁴	(0.06	)%	(0.18	)%⁴

Expense waiver/reimbursement⁶	3.01	%⁴	2.75	%	4.31	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$7,677		$7,060		$7,217

Portfolio turnover	135	%	353	%	109	%

1 For the period from June 19, 2000 (date of initial public investment) to December 31, 2000.

2 Per share amount less than $0.01.

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

4 Computed on an annualized basis.

5 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratio is 0.90% after taking into account these expense reductions for the six months ended June 30, 2002 and the year ended December 31, 2001.

6 This voluntary expense decrease is reflected in both the expense and the net investment income (operating loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights--Service Shares

(For a Share Outstanding Throughout the Period)

	Period Ended (unaudited) 6/30/2002	¹
Net Asset Value, Beginning of Period	$5.30
Income From Investment Operations:
Net investment income	0.00	²
Net realized and unrealized loss on investments	(0.31	)

TOTAL FROM INVESTMENT OPERATIONS	(0.31	)

Net Asset Value, End of Period	$4.99

Total Return³	(5.85	)%


Ratios to Average Net Assets:

Expenses	1.16	%^4,5

Net investment income	1.00	%⁴

Expense waiver/reimbursement⁶	2.39	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$6

Portfolio turnover	135	%

1 For the period from April 30, 2002 (date of initial public investment) to June 30, 2002.

2 Per share amount is less than $0.01.

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

4 Computed on an annualized basis.

5 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratio is 1.15% after taking into account these expense reductions for the period ended June 30, 2002.

6 This voluntary expense decrease is reflected in both the expense and the net operating loss ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Capital Appreciation Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is capital appreciation.

The Fund offers two classes of shares: Primary Shares and Service Shares.

The Board of Trustees (the "Trustees") approved a change in the name of the Fund as follows:

Effective Date		Old Name		New Name
April 30, 2002		Federated Large Cap Growth Fund II		Federated Capital Appreciation Fund II

Effective April 30, 2002, Service Shares class was added.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuations

Repurchase Agreements

Investment Income, Expenses and Distributions

The Fund offers multiple classes of shares, which may differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Effective January 1, 2002, the Fund has adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. The cumulative effect of this accounting change had no material reclassification effects to the components of net assets of the Fund.

Federal Taxes

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's tax rules and rates.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $4,259,473, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2008		$ 498,563

2009		$3,760,910

Additionally, net capital losses of $112,416 attributable to security transactions incurred after October 31, 2001 are treated as arising on the first day of the Fund's next taxable year.

When-Issued and Delayed Delivery Transactions

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002					Year Ended 12/31/2001
Primary Shares:	Shares		Amount			Shares		Amount
Shares sold	374,402		$	2,010,281		712,137		$	4,591,232
Shares redeemed	(65,317	)		(354,900	)	(424,486	)		(2,432,119	)

NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS	309,085		$	1,655,381		287,651		$	2,159,113


	Period Ended 6/30/2002
Service Shares:	Shares		Amount
Shares sold	1,226		$	6,361
Shares redeemed	(53	)		(277	)

NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS	1,173		$	6,084

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	310,258		$	1,661,465

1 Reflects operations for the period from April 30, 2002 (date of initial public investment) to June 30, 2002.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.85% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion.

Administrative Fee

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Primary Shares and Service Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Primary Shares and Service Shares, annually, to compensate FSC. FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended June 30, 2002 the Primary Shares did not incur a distribution services fee.

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

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

Portfolio Accounting Fees

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

Expense Reduction

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	11,005,062

Sales	$	9,296,959

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Capital Appreciation Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916835
Cusip 313916819

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

25669 (8/02)

Federated Investors
World-Class Investment Manager

Federated Equity Income Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Equity Income Fund II, a portfolio of Federated Insurance Series.

This report covers the fund's six-month reporting period from January 1, 2002 through June 30, 2002. It opens with the fund manager's review of market conditions and discussion of fund performance, which is followed by a complete listing of the fund's holdings and financial statements.

The fund is managed to help your money earn income and grow in value by investing in a diversified portfolio of dividend-paying stocks. The fund's common stock holdings are typically diversified across key businesses and industrial sectors. Many of the stocks owned by the fund are household names, such as Colgate-Palmolive Co., Home Depot, Inc. and Pfizer, Inc.

For the six-month reporting period ended June 30, 2002, the fund produced a total return of (12.35)% and paid dividends totaling $0.217 per share, and net asset value decreased by $1.73.¹ At the end of the reporting period, the fund's net assets were $76.3 million.

As you know, the past several quarters have been especially difficult for equity investments. Markets clearly are experiencing a down cycle due to a series of corporate scandals as well as continuing concern about terrorism and Mid-East violence. But many economic indicators have become more positive in recent months, suggesting that U.S. and global recoveries are indeed under way--although they have been clouded by discouraging headlines and may be occurring more gradually than we would like. Please remember that the true measure of the performance of a long-term investment like Federated Equity Income Fund II is in years rather than months.

Thank you for choosing Federated Equity Income Fund II as a diversified, professionally managed way to participate in the income and growth potential of American companies. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

Investment Review

The Standard & Poor's 500 Index (S&P 500)¹ has just suffered its worst first half loss since its (19.48)% return in 1970. The Technology-heavy Nasdaq Composite Index (Nasdaq)² experienced its worst first half ever, returning (24.98)%. The reasons for the state of affairs are numerous and well known: the Enron debacle, overall accounting concerns, a weakening U.S. dollar, terrorism fears, concerns about the strength of the economic recovery as it comes out of recession, and finally, questions about the valuation of the market. Meanwhile, leading economic indicators show a recovering global economy. Recent news in the Manufacturing sector is encouraging, as is continued strong consumer behavior, the housing boom, and low inflation. Many once-bearish strategists now suggest that the market may be making an important bottom from which a new bull market can emerge. The key will be a recovery in corporate earnings.

All sectors of the S&P 500 were down in the quarter, but the strongest relative sectors were those which would benefit from an improved economy including Basic Materials, (2.1)% and Energy, (4.6)%, as well as the sector considered to be less risky, Consumer Staples, (3.1)%.

The worst-performing groups were the beleaguered Technology, (26.0)%, Telecommunications, (23.6)% and Utilities, (16.9)% sectors.

FUND PERFORMANCE

The fund had a reasonable quarter on a relative basis, returning (13.02)%, slightly outperforming the (13.40)% return of its benchmark index,² the S&P 500. The Lipper VA Equity Income Fund Average (Lipper)³ return was (9.44)% for the quarter. On a year-to-date basis, the fund returned (12.35)%, outperforming the (13.16)% return of its benchmark index, the S&P 500. The Lipper return was (6.61)%. The Fund's best-performing securities were in the Healthcare Services and economically sensitive groups. These holdings included Anthem, Union Pacific, Universal Health Services, and International Paper. Worst-performing securities were in Technology, Pharmaceuticals and Advertising. These included Omnicom, Intel, Citigroup, Wyeth and IBM.

COMMENTS ON MAJOR TRANSACTIONS OVER THE QUARTER

Trades during the quarter were made to upgrade the quality of holdings within the portfolio by eliminating highly leveraged companies. We also purchased numerous attractive yielding convertible bonds and preferreds, which should cushion the downside in a weak market but also participate when the market recovers. In the Consumer Discretionary sector we sold Cablevision and bought Toys `R' Us convertible preferreds yielding 6.5%. We also bought Liberty Media bonds convertible into Viacom, yielding 3.4%. In Telecommunications we sold Vodafone, as wireless fundamentals continue to deteriorate, and bought investment-grade-rated Alltel convertible preferreds, yielding 8.2%. In Financials we sold Travelers Property Casualty convertibles to buy several high-yielding convertibles. These included Washington Mutual (5.2% yield), credit card leader Capital One Financial (6.8% yield), and Host Marriott (8.3% yield). Finally, in Utilities we sold companies with deteriorating fundamentals, including Dynegy, Mirant and Sierra Pacific. We purchased convertible securities of traditional electric and natural gas utilities. These include Ameren (9.2% yield), Keyspan (8.5% yield), Sempra Energy (9.8% yield) and TXU Corporation (8.2% yield).

FUND POSITIONING AND STRATEGY

The fund remains fully invested with blend exposure to both value and growth stocks in a sector-neutral portfolio. Convertible securities represent 33% of the fund's net assets, offering income while the market completes its bottoming process, but also offering the ability to appreciate in price when the market recovers.

1 S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks to measure performance of broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is unmanaged and investments cannot be made in an index.

2 Nasdaq Composite Index is an unmanaged index that measures all Nasdaq domestic and non-U.S.-based common stocks listed on the Nadsaq Stock Market.

3 Lipper figures represent the average of total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value
			COMMON STOCKS--63.3%
			Consumer Discretionary-5.3%
	23,300	¹	AOL Time Warner, Inc.	$	342,743
	28,585		Home Depot, Inc.		1,049,927
	7,400		Omnicom Group, Inc.		338,920
	23,100		Target Corp.		880,110
	25,300		Wal-Mart Stores, Inc.		1,391,753

			TOTAL		4,003,453

			Consumer Staples--10.4%
	32,600		Anheuser-Busch Cos., Inc.		1,630,000
	8,500		Colgate-Palmolive Co.		425,425
	25,600		Gillette Co.		867,072
	24,900		Kraft Foods, Inc., Class A		1,019,655
	39,060		PepsiCo, Inc.		1,882,692
	7,000		Procter & Gamble Co.		625,100
	78,400		Walt Disney Co.		1,481,760

			TOTAL		7,931,704

			Energy--6.4%
	21,700		Apache Corp.		1,247,316
	39,162		Exxon Mobil Corp.		1,602,509
	21,500	¹	Nabors Industries Ltd.		758,950
	22,000	¹	Noble Corp.		849,200
	14,000		Transocean Sedco Forex, Inc.		436,100

			TOTAL		4,894,075

			Financials--12.5%
	11,200		American International Group, Inc.		764,176
	13,200		Bank of America Corp.		928,752
	46,533		Citigroup, Inc.		1,803,154
	15,900		Goldman Sachs Group, Inc.		1,166,265
	28,600		Lehman Brothers Holdings, Inc.		1,788,072
	14,500		Marsh & McLennan Cos., Inc.		1,400,700
	20,000		Morgan Stanley Dean Witter & Co.		861,600
	16,200		Wells Fargo & Co.		810,972

			TOTAL		9,523,691

			Health Care--11.1%
	21,700		Abbott Laboratories		817,005
	15,900		Baxter International, Inc.		706,755
	21,000	¹	Guidant Corp.		634,830
	15,000		Johnson & Johnson		783,900
	19,100		Lilly (Eli) & Co.		1,077,240
	44,875		Pfizer, Inc.		1,570,625
	38,196		Pharmacia Corp.		1,430,440
	28,600		Wyeth		1,464,320

			TOTAL		8,485,115

Shares				Value
			COMMON STOCKS--continued
			Industrials--4.2%
	14,600		Deere & Co.	$	699,340
	41,400		General Electric Co.		1,202,670
	11,400		Grainger (W.W.), Inc.		571,140
	15,448		Ingersoll-Rand Co.		705,356

			TOTAL		3,178,506

			Information Technology--8.6%
	26,600	¹	Applied Materials, Inc.		505,932
	15,500	¹	Cisco Systems, Inc.		216,225
	34,600	¹	Dell Computer Corp.		904,444
	44,200		Intel Corp.		807,534
	10,600		International Business Machines Corp.		763,200
	36,100	¹	Microsoft Corp.		1,974,670
	36,900		Nokia Oyj, ADR		534,312
	37,400		Texas Instruments, Inc.		886,380

			TOTAL		6,592,697

			Materials--1.4%
	31,400		Alcoa, Inc.		1,040,910

			Telecommunication Services--3.4%
	35,300		SBC Communications, Inc.		1,076,650
	38,600		Verizon Communications, Inc.		1,549,790

			TOTAL		2,626,440

			TOTAL COMMON STOCKS (IDENTIFIED COST $48,507,190)		48,276,591

			CONVERTIBLE PREFERRED STOCKS--21.5%
			Consumer Discretionary--2.9%
	13,000		Ford Motor Co., Conv. Pfd., $3.25		731,250
	38,600		General Motors Corp., Conv. Deb., Series B, $1.00		1,014,022
	8,500		Toys `R' Us, Inc., DECS, $3.13		436,050

			TOTAL		2,181,322

			Financials--7.1%
	15,300		Ace, Ltd., PRIDES, $4.13		985,473
	28,300		Capital One Financial Corp., DECS, $3.13		1,372,550
	11,000		Host Marriott Corp., Conv. Pfd., $3.38		468,875
	8,100		Metlife Trust I Capital Conv. Pfd., $4.00		725,962
	19,300		Prudential Financial, Inc., Conv. Pfd., $3.38		1,111,680
	15,200	²	Washington Mutual, Inc., Conv. Pfd., Series 144A $2.69		791,920

			TOTAL		5,456,460

			Health Care--1.1%
	10,000		Anthem, Inc., Conv. Pfd., $3.00		832,500

			Industrials--4.0%
	23,000		Raytheon Co., DECS, $4.13		1,532,375
	29,900		Union Pacific Cap Trust, Conv. Pfd., $3.13		1,543,737

			TOTAL		3,076,112

			Materials--2.3%
	15,000		Boise Cascade Conv. Pfd., $3.75		803,250
	19,900		International Paper Co., Cumulative Conv. Pfd., $2.63		958,862

			TOTAL		1,762,112

Shares or Principal Amount				Value
			CONVERTIBLE PREFERRED STOCKS--continued
			Telecommunication Services--0.6%
	9,500		Alltel Corp., DECS, $3.88	$	461,130

			Utilities--3.5%
	16,500		Ameren Corp., ACES, $2.44		444,675
	14,000		FPL Group, Inc., DECS, $4.25		775,740
	9,300		KeySpan Corp., DECS, $4.38		485,460
	14,000		Sempra Energy, DECS, $2.13		327,250
	12,500		TXU Corp., PRIDES, $4.06		630,625

			TOTAL		2,663,750

			TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $15,243,530)		16,433,386

			CONVERTIBLE CORPORATE BONDS--11.7%
			Consumer Discretionary--1.0%
$	775,000	²	Liberty Media Group Series Viacom, Conv. Bond, 3.25%, 3/15/2031		754,873

			Energy--1.2%
	840,000		Kerr-McGee Corp., Conv. Bond, 5.25%, 2/15/2010		930,460

			Health Care--1.3%
	1,620,000		Universal Health Services, Inc., Conv. Bond,.426%, 6/23/2020		1,007,235

			Industrials--2.8%
	1,470,000		L-3 Communications Holdings, Inc., Conv. Bond, 4.00%, 9/15/2011		1,786,050
	430,000	²	Navistar Financial Corp. Owner Trust 1995-A, Conv. Bond, 4.75%, 4/1/2009		384,347

			TOTAL		2,170,397

			Information Technology--5.4%
	500,000	²	Adaptec, Inc., Conv. Bond, 3.00%, 3/5/2007		430,275
	830,000	²	Advanced Micro Devices, Inc., 4.75%, 2/1/2022		652,587
	1,420,000	²	LSI Logic Corp., Sub. Note, 4.00%, 11/1/2006		1,159,075
	575,000		NVIDIA Corp., Conv. Bond, 4.75%, 10/15/2007		477,693
	300,000	²	Photronics, Inc., Conv. Bond, 4.75%, 12/15/2006		262,986
	100,000		Photronics, Inc., Conv. Bond, 4.75%, 12/15/2006		88,258
	440,000		Siebel Systems, Inc., Conv. Bond, 5.50%, 9/15/2006		441,051
	500,000		Teradyne, Inc., Conv. Bond, 3.75%, 10/15/2006		588,420

			TOTAL		4,100,345

			TOTAL CONVERTIBLE CORPORATE BONDS (IDENTIFIED COST $10,177,815)		8,963,310

			REPURCHASE AGREEMENT--1.1%³
	805,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		805,000

			TOTAL INVESTMENTS (IDENTIFIED COST $74,733,535)⁴	$	74,478,287

1 Non-income producing security.

2 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. These securities have been deemed liquid based upon criteria approved by the fund's Board of Trustees. At June 30, 2002, these securities amounted to $4,436,063 which represents 5.8% of net assets.

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

4 The cost of investments for federal tax purposes amounts to $74,733,535. The net unrealized depreciation of investments on a federal tax basis amounts to $255,248 which is comprised of $6,689,179 appreciation and $6,944,427 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($76,314,308) at June 30, 2002.

The following acronyms are used throughout this portfolio:

ACES	--Adjustable Convertible Extendable Securities
ADR	--American Depositary Receipt
DECS	--Dividend Enhanced Convertible Stock
PRIDES	--Preferred Redeemable Increased Dividend Equity Securities

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $74,733,535)			$	74,478,287
Cash				408
Receivable for investments sold				1,912,566
Income receivable				152,188

TOTAL ASSETS				76,543,449

Liabilities:
Payable for investments purchased	$	223,981
Accrued expenses		5,160

TOTAL LIABILITIES				229,141

Net assets for 7,090,676 shares outstanding			$	76,314,308

Net Assets Consist of:
Paid in capital			$	98,325,913
Net unrealized depreciation of investments				(255,248	)
Accumulated net realized loss on investments				(22,414,657	)
Undistributed net investment income				658,300

TOTAL NET ASSETS			$	76,314,308

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$76,314,308 ÷ 7,090,676 shares outstanding				$10.76

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $990)			$	903,247
Interest				201,129

TOTAL INCOME				1,104,376

Expenses:
Investment adviser fee	$	324,529
Administrative personnel and services fee		61,974
Custodian fees		4,106
Transfer and dividend disbursing agent fees and expenses		16,688
Directors'/Trustees' fees		457
Auditing fees		3,955
Legal fees		2,007
Portfolio accounting fees		23,044
Printing and postage		8,287
Insurance premiums		958
Miscellaneous		87

TOTAL EXPENSES				446,092

Net investment income				658,284

Realized and Unrealized Loss on Investments:
Net realized loss on investments and options transactions				(2,200,600	)
Net change in unrealized appreciation of investments				(9,431,008	)

Net realized and unrealized loss on investments and options transactions				(11,631,608	)

Change in net assets resulting from operations			$	(10,973,324	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	658,284		$	1,722,424
Net realized loss on investments and options transactions		(2,200,600	)		(10,609,979	)
Net change in unrealized appreciation investments		(9,431,008	)		(3,093,457	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(10,973,324	)		(11,981,012	)

Distributions to Shareholders:
Distributions from net investment income		(1,569,093	)		(1,902,807	)

Share Transactions:
Proceeds from sale of shares		1,991,084			12,045,761
Net asset value of shares issued to shareholders in payment of distributions declared		1,569,093			1,902,806
Cost of shares redeemed		(6,691,294	)		(13,011,015	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(3,131,117	)		937,552

Change in net assets		(15,673,534	)		(12,946,267	)

Net Assets:
Beginning of period		91,987,842			104,934,109

End of period (including undistributed net investment income of $658,300 and $1,569,109, respectively)	$	76,314,308		$	91,987,842

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,								Period Ended
	6/30/2002		2001		2000		1999		1998		12/31/1997	¹
Net Asset Value, Beginning of Period	$12.49		$14.32		$16.28		$14.15		$12.31		$10.47
Income From Investment Operations:
Net investment income	0.10		0.23		0.22		0.22	²	0.22		0.23
Net realized and unrealized gain (loss) on investments	(1.61	)	(1.81	)	(2.01	)	2.32		1.69		1.76

TOTAL FROM INVESTMENT OPERATIONS	(1.51	)	(1.58	)	(1.79	)	2.54		1.91		1.99

Less Distributions:
Distributions from net investment income	(0.22	)	(0.25	)	(0.17	)	(0.23	)	(0.07	)	(0.15	)
Distributions from net realized gain on investments	--		--		--		(0.18	)	--		--

TOTAL DISTRIBUTIONS	(0.22	)	(0.25	)	(0.17	)	(0.41	)	(0.07	)	(0.15	)

Net Asset Value, End of Period	$10.76		$12.49		$14.32		$16.28		$14.15		$12.31

Total Return³	(12.35	)%	(10.98	)%	(11.19	)%	18.39	%	15.57	%	19.19	%


Ratios to Average Net Assets:

Expenses	1.03	%⁴	0.97	%	0.95	%	0.94	%	0.93	%	0.85	%⁴

Net investment income	1.52	%⁴	1.77	%	1.67	%	1.48	%	2.04	%	2.41	%⁴

Expense waiver/reimbursement⁵	--		0.02	%	0.04	%	0.20	%	0.43	%	1.44	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$76,314		$91,988		$104,934		$87,619		$57,499		$32,875

Portfolio turnover	54	%	101	%	74	%	49	%	59	%	68	%

1 Reflects operations for the period from January 30, 1997 (date of initial public investment) to December 31, 1997.

2 Calculated using the average shares method.

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Equity Income Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide above average income and capital appreciation.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

U.S. government securities, listed corporate bonds, other fixed income and asset backed securities, and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. All discounts/premiums are accreted/amortized for financial reporting purpose as required. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value.

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended (the "Code"), applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $20,200,847 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows.

Expiration Year		Expiration Amount
2007		$ 1,719,590

2008		$ 7,949,028

2009		$ 10,532,229

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's rules and rates.

When-Issued and Delayed Delivery Transactions

Written Options Contracts

The Fund may write option contracts. A written option obligates the Fund to deliver a call, or to receive and put the contracted amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. For the six months ended June 30, 2002, the Fund had a realized gain of $22,689 on written options.

Contracts	Number of Contracts	Premium
Outstanding 12/31/2001	--	$ --

Options written	375	40,872

Options expired	(180)	(17,110	)

Options closed	(195)	(23,762	)

Outstanding at 6/30/2002	--	$ --

Restricted Securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in good faith using methods approved by the Trustees.

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	167,537		904,763
Shares issued to shareholders in payment of distributions declared	126,032		154,323
Shares redeemed	(566,790	)	(1,025,198	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(273,221	)	33,888

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund annually, to compensate FSC. For the six months ended June 30, 2002, the Fund did not incur a distribution services fee.

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases		$44,629,871

Sales		$47,336,885

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Equity Income Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916801

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G01305-01 (8/02)

Federated Investors
World-Class Investment Manager

Federated Growth Strategies Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Growth Strategies Fund II, a portfolio of Federated Insurance Series.

This report covers the six-month reporting period from January 1, 2002, through June 30, 2002. It begins with a commentary by the fund's portfolio managers, which is followed by a complete listing of the fund's growth stock holdings and the financial statements.

The fund is managed to help your investment grow over the long term through a highly diversified portfolio of common stocks issued by large, quality companies. At the end of the reporting period, the fund's extensive list of stock holdings included many well-known names like Allstate Corp., Barnes & Noble, BellSouth, Dell Computer, Kellogg, Kraft Foods, Microsoft, PetSmart, and Starbucks.

This diversified portfolio produced a six-month total return of (14.56)% through a net asset value decrease of $2.57.¹ On June 30, 2002, net assets were $74.9 million.

The six-month reporting period was an unusually difficult one for stocks. Please remember that the true measure of investment performance is in years rather than months, and you can anticipate relatively brief periods of negative, as well as positive, returns.

Thank you for putting your money to work in quality American companies through the diversification and professional management of Federated Growth Strategies Fund II. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

Investment Review

The second quarter of 2002 saw signs of economic stability and relative tranquility on the domestic terrorism front. This was not enough to overcome the escalation of Indian/Pakistani tensions, the continuation of the Israeli/Palestinian conflict, and the increase in accounting concerns, punctuated by the news that WorldCom, Xerox and others may have committed massive fraud. The latter issues were substantial enough to weigh heavily on the equity markets, pushing all broader indexes down big for the quarter. Positive fallout of the trouble in the markets, however, was that the Federal Reserve (the "Fed") appears less likely to raise interest rates any time soon. This, along with continued benign inflation trends, helped the 30-year Treasury bond to rally, pushing yields down modestly from 5.80% to 5.51%.

The major news was that despite recent economic strength, especially off of last September lows, the increased uncertainty generated by the issues mentioned above were enough to dampen the outlook and forecasts issued by most companies, especially those related to technology spending. As a result, the market materially increased its first quarter preference for stocks with higher dividend yields, lower valuations and generally higher certainty of near-term sales.

Specifically, through the second quarter, the market maintained its predilection for smaller capitalized value stocks. Across industries, Technology, Telecom and Healthcare (here, hurt by a rash of company-specific issues) stayed under meaningful pressure, while Consumer Staples, Consumer Discretionary and Financials were down only modestly. The tale of the tape for the first half of 2002 had the Nasdaq Composite Index² down 24.8%, while the Standard & Poor's Barra Growth Index³ (a more diversified index of large-cap growth stocks) lost 16.9%. The Standard & Poor's 500 (S&P 500) posted a loss of 13.2%.⁴

2 NASDAQ Composite Index is an unmanaged index that measures all NASDAQ domestic and non U.S.-based common stocks listed on the NASDAQ Stock Market. The index is unmanaged and investments cannot be made in an index.

3 S&P 500/Barra Growth Indexis an unmanaged capitalization-weighted index of stocks in the Standard & Poor's 500 Index having the highest price to book ratios. The index consists of approximately half of the S&P 500 on the market capitalization basis. The index is unmanaged and investments cannot be made in an index.

4 S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is unmanaged and investments cannot be made in an index.

The fund was down 14.6% through the first half of this year. The average fund in the Lipper Multi-Cap Growth Universe⁵ lost 20.1% in the quarter. We believe that the fund had a modestly defensive position, relative to its peers, going into the beginning of the quarter. This means that the fund probably owned, on average, less Technology, relative to its peers, and modestly more of the stable growth sectors, such as Consumer Staples and Financials (mainly banks). We believe the fund also benefited from better performance within Healthcare (fewer biotechs & larger pharmas and more device & service related companies).

Our stand continues to be that the economy will likely improve throughout the balance of 2002. The market, however, appears to be preoccupied with the growing geopolitical tensions, terrorism and accounting irregularities. These three overhangs may mute the market's appreciation for and reaction to economic strength. Consequently, we believe that maintaining a near-term, modestly defensive posture is warranted. This implies that, relative to our peers, we will favor, for example, an underweight in the Information Technology sector, an overweight in Consumer Staples, an underweight in Biotech stocks, etc.

Should resolutions appear on any of the troubled fronts (due to positive events or just the passage of peaceful time), the markets will likely become more optimistic and move back into the faster growth or cyclically leveraged areas. We are skeptical, however, and will maintain our current biases until such improvement becomes more obvious and a more aggressive stance becomes justified. Should that type of environment develop, and we hope it does, the biases of the fund will probably adjust accordingly.

5 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the categories indicated. These figures do not reflect sales charges. This index is unmanaged.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares					Value
			COMMON STOCKS--97.5%
			Consumer Discretionary--16.2%
	7,100	¹	AutoZone, Inc.	$	548,830
	21,800	^1,4	Barnes & Noble, Inc.		576,174
	19,000	¹	Bed Bath & Beyond, Inc.		717,060
	25,100	⁴	Blockbuster, Inc.		675,190
	14,400	^1,4	Brinker International, Inc.		457,200
	13,500	¹	Cheesecake Factory, Inc.		478,980
	20,400		Darden Restaurants, Inc.		503,880
	14,200	¹	Furniture Brands International, Inc.		429,550
	14,300	^1,4	GameStop Corp.		300,157
	9,600	¹	Harrah's Entertainment, Inc.		425,760
	6,200		Johnson Controls, Inc.		505,982
	13,600	¹	Lear Corp.		629,000
	5,900		Lennar Corp.		361,080
	16,400		Lowe's Cos., Inc.		744,560
	9,600		Maytag Corp.		409,440
	36,500	¹	Office Depot, Inc.		613,200
	46,800	¹	PetSmart, Inc.		750,672
	20,900	¹	Starbucks Corp.		519,365
	18,900		Tiffany & Co.		665,280
	10,400		Wal-Mart Stores, Inc.		572,104
	23,600	^1,4	Williams-Sonoma, Inc.		723,576
	17,200	¹	Yum! Brands, Inc.		503,100

			TOTAL		12,110,140

			Consumer Staples--8.5%
	13,800		Anheuser-Busch Cos., Inc.		690,000
	13,400		Avon Products, Inc.		700,016
	12,800		Clorox Co.		529,280
	19,300		Coca-Cola Enterprises, Inc.		426,144
	23,200		ConAgra, Inc.		641,480
	20,400	^1,4	Constellation Brands, Inc., Class A		652,800
	13,000		Diageo PLC, ADR		671,450
	16,900		Kellogg Co.		606,034
	13,500		Kraft Foods, Inc., Class A		552,825
	19,300		SUPERVALU, Inc.		473,429
	14,900		The Pepsi Bottling Group, Inc.		458,920

			TOTAL		6,402,378

			Energy--5.2%
	10,000		Apache Corp.		574,800
	11,900	¹	Cooper Cameron Corp.		576,198
	20,100		ENSCO International, Inc.		547,926
	18,500		GlobalSantaFe Corp.		505,975
	15,000	¹	Nabors Industries Ltd.		529,500
	10,900	¹	Newfield Exploration Co.		405,153
	22,000	¹	Rowan Companies, Inc.		471,900
	9,200	⁴	Sunoco Inc.		327,796

			TOTAL		3,939,248

Shares					Value
			COMMON STOCKS--continued
			Financials--11.2%
	19,000		Ace, Ltd.	$	600,400
	11,100		Allstate Corp.		410,478
	8,400	⁴	Bear Stearns Cos., Inc.		514,080
	14,800		Commerce Bancorp, Inc.		654,160
	10,800		Edwards(AG), Inc.		419,796
	5,700		Fidelity National Financial, Inc.		180,120
	11,700		Gallagher (Arthur J.) & Co.		405,405
	7,100		Goldman Sachs Group, Inc.		520,785
	14,800		Legg Mason, Inc.		730,232
	7,300		Lehman Brothers Holdings, Inc.		456,396
	8,100		M & T Bank Corp.		694,656
	11,000		Morgan Stanley Dean Witter & Co.		473,880
	17,000		New York Community Bancorp, Inc.		460,700
	14,000		North Fork Bancorp, Inc.		557,340
	45,700	⁴	Sovereign Bancorp, Inc.		683,215
	7,100		XL Capital Ltd., Class A		601,370

			TOTAL		8,363,013

			Healthcare--16.3%
	8,700	¹	Amgen, Inc.		364,356
	9,800	^1,4	Anthem, Inc.		661,304
	21,100	¹	Boston Scientific Corp.		618,652
	30,500	¹	Caremark Rx, Inc.		503,250
	4,600	^1,4	Cephalon, Inc.		207,920
	21,850		Dentsply International, Inc.		806,484
	23,400	^1,4	First Health Group Corp.		656,136
	11,300	¹	Forest Labratories, Inc., Class A		800,040
	7,200	^1,4	Gilead Sciences, Inc.		236,736
	20,000	¹	Guidant Corp.		604,600
	26,200	¹	Manor Care, Inc.		602,600
	8,400	¹	Medimmune, Inc.		221,760
	14,900		Medtronic, Inc.		638,465
	10,500		Merck & Co., Inc.		531,720
	16,100	¹	Patterson Dental Co.		810,313
	20,668		Pfizer, Inc.		723,380
	17,800		Pharmacia Corp.		666,610
	9,600	¹	St. Jude Medical, Inc.		708,960
	8,300	¹	Tenet Healthcare Corp.		593,865
	9,800	¹	Wellpoint Health Networks, Inc.		762,538
	9,000		Wyeth		460,800

			TOTAL		12,180,489

Shares					Value
			COMMON STOCKS--continued
			Industrials--8.5%
	12,000	¹	Alliant Techsystems, Inc.	$	765,600
	16,500	¹	Concord EFS, Inc.		497,310
	12,200	¹	Corporate Executive Board Co.		417,850
	6,900		Eaton Corp.		501,975
	5,800		General Dynamics Corp.		616,830
	11,900		Honeywell International, Inc.		419,237
	9,600		ITT Industries, Inc.		677,760
	10,700	^1,4	L-3 Communications Holdings, Inc.		577,800
	10,400		Lockheed Martin Corp.		722,800
	9,600		Pentair, Inc.		461,568
	6,100		SPX Corp.		716,750

			TOTAL		6,375,480

			Information Technology--25.1%
	19,300	^1,4	ASML Holding NV		291,816
	8,800		Adobe System, Inc.		250,800
	33,800	¹	Advanced Micro Devices, Inc.		328,536
	13,200	¹	Affiliated Computer Services, Inc., Class A		626,736
	23,000	¹	Applied Materials, Inc.		437,460
	32,700	¹	Brocade Communications Systems, Inc.		571,596
	63,900	¹	Cisco Systems, Inc.		891,405
	13,400	^1,4	Cymer, Inc.		469,536
	30,100	¹	Dell Computer Corp.		786,814
	11,400	¹	Electronic Arts, Inc.		752,970
	12,700	^1,4	Emulex Corp.		285,877
	53,600	^1,4	Extreme Networks, Inc.		540,824
	28,300	^1,4	Fairchild Semiconductor International, Inc., Class A		687,690
	12,600		Harris Corp.		456,624
	30,900	⁴	Ingram Micro, Inc., Class A		424,875
	10,100		Intuit, Inc.		502,172
	23,600	^1,4	JDA Software Group, Inc.		666,936
	27,700	¹	Jabil Circuit, Inc.		584,747
	12,200	¹	Lexmark International Group, Class A		663,680
	11,100	^1,4	Mercury Interactive Corp.		254,856
	14,100	¹	Microchip Technology, Inc.		386,763
	18,700	¹	Microsoft Corp.		1,022,890
	41,500		Motorola, Inc.		598,430
	43,100	¹	Oracle Corp.		408,157
	16,000	^1,4	Qlogic Corp.		609,600
	21,200	¹	Qualcomm, Inc.		582,788
	26,700	^1,4	SanDisk Corp.		331,080
	16,100	⁴	SAP AG (Systeme, Anwendungen, Produkte in der Datevnerarbeitung), ADR		391,069
	22,300	^1,4	Siebel Systems, Inc.		317,106
	14,100	¹	SunGuard Data Systems, Inc.		373,368
	14,600	^1,4	Symantec Corp.		479,610
Shares or Principal Amount					Value
			COMMON STOCKS--continued
			Information Technology--continued
	12,900	¹	THQ, Inc.	$	384,678
	47,696	^1,4	Taiwan Semiconductor Manufacturing Co., ADR		620,048
	95,100	^1,4	United Microelectronics Corp., ADR		698,985
	18,000	¹	Veritas Software Corp.		356,220
	22,000	^1,4	Vishay Intertechnology, Inc.		484,000
	12,600	¹	Xilinx, Inc.		282,618

			TOTAL		18,803,360

			Materials--2.6%
	12,200		Ball Corp.		506,056
	27,600		Barrick Gold Corp.		524,124
	21,900	¹	Pactiv Corp.		521,220
	9,600	^1,4	Sealed Air Corp.		386,592

			TOTAL		1,937,992

			Telecommunication Services--2.3%
	9,500		ALLTEL Corp.		446,500
	12,700		BellSouth Corp.		400,050
	12,200		Telefonos de Mexico, Class L, ADR		391,376
	11,300		Verizon Communications, Inc.		453,695

			TOTAL		1,691,621

			Utilities--1.6%
	14,200		Entergy Corp.		602,648
	12,000		TXU Corp.		618,600

			TOTAL		1,221,248

			TOTAL COMMON STOCKS (IDENTIFIED COST $72,402,661)		73,024,969

			REPURCHASE AGREEMENT--1.7%²
$	1,249,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		1,249,000

			TOTAL INVESTMENTS (IDENTIFIED COST $73,651,661)³	$	74,273,969

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $73,651,661. The net unrealized appreciation of investments on a federal tax basis amounts to $622,308 which is comprised of $6,316,706 appreciation and $5,694,398 depreciation at June 30, 2002.

4 All or a portion of these shares are temporarily on loan to unaffiliated broker/dealers.

Note: The categories of investments are shown as a percentage of net assets ($74,864,177) at June 30, 2002.

The following acronym is used throughout this portfolio:

ADR	--American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $73,651,661)			$	74,273,969
Cash				834
Income receivable				38,548
Receivable for investments sold				2,012,236
Cash held as collateral for securities lending				12,408,296
Prepaid expenses				10,347

TOTAL ASSETS				88,744,230

Liabilities:
Payable for investments purchased	$	1,461,991
Payable on collateral due to broker		12,408,296
Accrued expenses		9,766

TOTAL LIABILITIES				13,880,053

Net assets for 4,965,308 shares outstanding			$	74,864,177

Net Assets Consist of:
Paid in capital			$	97,692,455
Net unrealized appreciation of investments				622,308
Accumulated net realized loss on investments				(23,344,485	)
Accumulated net operating loss				(106,101	)

TOTAL NET ASSETS			$	74,864,177

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$74,864,177 ÷ 4,965,308 shares outstanding				$15.08

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $1,800)							$	305,432
Interest (including income on securities loaned of $6,520)								34,619

TOTAL INCOME								340,051

Expenses:
Investment adviser fee				$	330,677
Administrative personnel and services fee					61,987
Custodian fees					7,648
Transfer and dividend disbursing agent fees and expenses					7,893
Directors'/Trustees' fees					459
Auditing fees					9,623
Legal fees					2,073
Portfolio accounting fees					23,149
Printing and postage					11,138
Insurance premiums					397
Miscellaneous					406

TOTAL EXPENSES					455,450

Waiver and Expense Reduction:
Waiver of investment adviser fee	$	(4,574	)
Fees paid indirectly from direct broker arrangements		(4,724	)

TOTAL WAIVER AND EXPENSE REDUCTION					(9,298	)

Net expenses								446,152

Net operating loss								(106,101	)

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(2,604,423	)
Net change in unrealized appreciation of investments								(10,629,100	)

Net realized and unrealized loss on investments								(13,233,523	)

Change in net assets resulting from operations							$	(13,339,624	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net operating loss	$	(106,101	)	$	(162,218	)
Net realized loss on investments		(2,604,423	)		(20,243,036	)
Net change in unrealized appreciation of investments		(10,629,100	)		(9,720,117	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(13,339,624	)		(30,125,371	)

Distributions to Shareholders:
Distributions from net realized gain on investments		--			(1,849,196	)

Share Transactions:
Proceeds from sale of shares		1,305,308			9,521,839
Net asset value of shares issued to shareholders in payment of distributions declared		--			1,849,194
Cost of shares redeemed		(9,227,909	)		(15,620,977	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(7,922,601	)		(4,249,944	)

Change in net assets		(21,262,225	)		(36,224,511	)

Net Assets:
Beginning of period		96,126,402			132,350,913

End of period	$	74,864,177		$	96,126,402

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)			Year Ended December 31,
	6/30/2002			2001			2000			1999			1998			1997
Net Asset Value, Beginning of Period	$17.65			$23.15			$30.88			$17.91			$16.14			$12.80
Income From Investment Operations:
Net investment income (net operating loss)	(0.02	)		(0.03	)¹		(0.10	)		(0.07	)		(0.04	)¹		0.02	¹
Net realized and unrealized gain (loss) on investments	(2.55	)		(5.15	)		(5.32	)		13.04			2.83			3.41

TOTAL FROM INVESTMENT OPERATIONS	(2.57	)		(5.18	)		(5.42	)		12.97			2.79			3.43

Less Distributions:
Distributions from net investment income	--			--			--			--			(0.02	)		(0.02	)
Distributions from net realized gain on investments	--			(0.32	)		(2.31	)		--			(1.00	)		(0.07	)

TOTAL DISTRIBUTIONS	--			(0.32	)		(2.31	)		--			(1.02	)		(0.09	)

Net Asset Value, End of Period	$15.08			$17.65			$23.15			$30.88			$17.91			$16.14

Total Return²	(14.56	)%		(22.38	)%		(19.91	)%		72.42	%		17.44	%		27.03	%


Ratios to Average Net Assets:

Expenses	1.02	%^3,4		0.90	%		0.86	%		0.85	%		0.86	%		0.85	%

Net investment income (net operating loss)	(0.24	)%³		(0.15	)%		(0.39	)%		(0.38	)%		(0.25	)%		0.14	%

Expense waiver/reimbursement⁵	0.01	%³		0.07	%		0.08	%		0.20	%		0.31	%		0.67	%

Supplemental Data:

Net assets, end of period (000 omitted)	$74,864		$96,126			$132,351			$132,563			$62,747			$47,280

Portfolio turnover	108	%		219	%		128	%		117	%		104	%		148	%

1 Per share information presented is based upon the monthly average number of shares outstanding.

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

3 Computed on an annualized basis.

4 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratio is 1.01% after taking into account these expense reductions.

5 This voluntary expense decrease is reflected in both the expense and the net investment income (net operating loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Growth Strategies Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is capital appreciation.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended, (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of their income. Accordingly, no provision for federal tax is necessary.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $18,827,237 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2009.

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's rules and rates.

When-Issued and Delayed Delivery Transactions

Securities Lending

As of June 30, 2002, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$12,038,028		$12,408,296

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	76,904		472,399
Shares issued to shareholders in payment of distributions declared	--		103,596
Shares redeemed	(556,542	)	(848,641	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(479,638	)	(272,646	)

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.75% of the Fund's average daily net assets. The Adviser may voluntarily choose to wave any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Administrative Fee

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund annually to compensate FSC. For the six months ended June 30, 2002, the Fund did not incur a distribution services fee.

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

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

Portfolio Accounting Fees

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

Expense Reduction

The Fund directs certain portfolio trades to a broker that, in turn, pays a portion of the Fund's operating expenses. For the six months ended June 30, 2002, the Fund's expenses were reduced by $4,724 under these arrangements.

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	89,987,408

Sales	$	97,815,987

Purchases and sales of long-term U.S. government securities for the six months ended June 30, 2002, were as follows:

Purchases	$	1,709,031

Sales	$	1,693,094

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Growth Strategies Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916702

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G00433-08 (8/02)

Federated Investors
World-Class Investment Manager

Federated High Income Bond Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present your Semi-Annual Report for Federated High Income Bond Fund II, a portfolio of Federated Insurance Series.

This report covers the six-month reporting period from January 1, 2002 through June 30, 2002 for Primary Shares and Service Shares. It begins with a commentary by the fund's portfolio manager, which is followed by a complete listing of the fund's high-yield bond holdings and the financial statements.

For the six-month reporting period, the fund's broadly diversified, carefully researched portfolio held 302 high-yield, lower-rated bonds.¹ Total return was negatively impacted by a decline in high-yield bond prices, with credit concerns being the primary driver of weaker performance. Individual share class total return for the reporting period, including income distribution, follows.²

	Total Return	Dividends	Net Asset Value Change
Primary Shares	(1.33)%	$0.759	$7.72 to $6.89 = (10.75)%
Service Shares	(1.36)%	$0.757	$7.72 to $6.89 = (10.75)%

On June 30, 2002, net assets for the two share classes totaled $219.9 million.

Thank you for participating in the income opportunities of high-yield corporate bonds through the diversification and professional management of Federated High Income Bond Fund II. As always, we welcome your comments and suggestions.

Very sincerely yours,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 Lower rated bonds involve a higher degree of risk than investment grade bonds in return for higher yield potential.

2 Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information does not reflect the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

Investment Review

MARKET OVERVIEW

The high-yield bond market substantially underperformed the high-quality bond market during the six months ended June 30, 2002. For example, the Lehman Brothers Aggregate Bond Index,³ a measure of high-quality bond performance, returned 3.79% versus (4.84)% for the Lehman Brothers High Yield Bond Index.⁴ The high-yield market, which had performed well through April, turned decidedly negative in the month of June. Declining equity prices, concerns over the strength of the U.S. economy and corporate integrity issues negatively impacted the high-yield market.

The high-yield market was heavily influenced during June primarily by four large sectors: Wireline Telecommunications, Wireless Telecommunications, Cable Television, and Utilities. The broader high-yield market performed relatively well, with only 8 of 48 industry sectors tracked within the Lehman Brothers High Yield Bond Index having negative returns year-to-date. Within the Wireline Telecommunications sector, the underperformance was exacerbated by the downgrade of WorldCom and Qwest Communications from investment grade to junk status. Combined, WorldCom and Qwest accounted for approximately 6.78% of the high-yield market when they entered the high-yield index on May 31, 2002. With the announcement of accounting irregularities at WorldCom, the price of the securities of both companies fell dramatically. Accounting irregularities, which ultimately led to the bankruptcy of Adelphia Communications, Inc., put pressure on the entire Cable Television sector. The underperformance in the Wireless Telecommunications sector, which currently represents approximately 3.3% of the high-yield market, was impacted by slower than expected subscriber growth reported by many companies within the sector. Finally, the Electric Utility sector, currently 7.26% of the high-yield market, was driven by a large sell-off within the Independent Power Producer (IPP) sector, which accounts for approximately 50% of the Electric Utility sector. The Utility Sector continues to be volatile as revelations of fictitious trading, possible market manipulation and accounting irregularities following the collapse of Enron continue to make investors reluctant to invest in this sector of the market. As of June 30, 2002, the fund had no exposure to Qwest, WorldCom, or Adelphia Communications.

3 Lehman Brothers Aggregate Bond Index is an unmanaged index composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. The index is unmanaged and investments cannot be made in an index.

4 Lehman Brothers High Yield Bond Index is an unmanaged index that includes all fixed income securities having a maximum quality rating of Ba1, a minimum amount outstanding of $100m and at least one year to maturity. The index is unmanaged and investments cannot be made in an index.

FUND PERFORMANCE

The fund's Primary Shares returned (1.33)% during the six-month reporting period substantially outperforming the Lehman Brothers High Yield Bond Index, which returned (4.84)% and the (3.77)% average return for high-yield funds tracked by the Lipper⁵ mutual fund universe. The fund's underweight to Wireline Telecommunication's issuers, specifically WorldCom and Qwest, substantially benefited relative performance. Security selection continued to help the fund's performance as holdings such as Eagle Picher, GFSI, Premier Parks, Accuride, Allied Holdings, and SITEL, dramatically outperformed the overall market. Also, overweights in the Consumer Products, Food Products, and Industrial Products and Equipment sectors benefited the fund. The fund's performance was negatively impacted by its overweight to Wireless Telecommunications issuers such as Airgate PCS, Inc., Alamosa PCS Holdings, Inc., Nextel Communications, Inc. and Triton PCS, Inc. The fund outperformed in the Cable Television sector relative to the benchmark. Absolute performance was negatively impacted due to its large holdings in the Cable Television Sector, including Charter Communications and Telewest Communications. The fund continues to benefit from a substantial underweight in the Utility Sector relative to the benchmark, however large holdings in Calpine and CMS Energy have had a negative impact on performance over the past six-month reporting period.

5 Lipper figures represent the average of total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges.

CURRENT STRATEGY

We believe the second half of 2002 will show better results than the first half. Falling default rates (with perhaps the exception of a large "fallen angel" skewing the data) and continued economic recovery should positively impact the high-yield market. From a portfolio perspective, we remain overweight in the Consumer Products, Health Care and Food Products sectors, given the stable fundamentals of these sectors. We continue to prudently seek opportunities to enhance yield in smaller, less well-known issuers, which appear to provide attractive risk return characteristics. We are better sellers of lower yielding, higher quality issuers that retain substantial interest rate risk. As stability returns, the reversal of the flight to quality should lead to underperformance of these types of issuers.

Portfolio of Investments

June 30, 2002 (unaudited)

Principal Amount				Value
			CORPORATE BONDS--93.7%
			Aerospace & Defense--0.6%
$	650,000		Alliant Techsystems, Inc., Sr. Sub. Note, 8.50%, 5/15/2011	$	682,500
	562,000		Anteon Corp., Sr. Sub. Note, 12.00%, 5/15/2009		626,630
	325,000	^1,3	Condor Systems, Inc., Sr. Sub. Note, 11.875%, 5/1/2009		73,125

			TOTAL		1,382,255

			Automotive--4.0%
	375,000		Accuride Corp., Sr. Sub. Note, Series B, 9.25%, 2/1/2008		264,375
	1,000,000		American Axle & Manufacturing, Inc., Company Guarantee, 9.75%, 3/1/2009		1,065,000
	500,000		Arvin Industries, Inc., Note, 6.75%, 3/15/2008		491,835
	450,000		Arvin Industries, Inc., Note, 7.125%, 3/15/2009		445,239
	250,000		Arvinmeritor Inc., Note, 8.750%, 3/1/2012		266,625
	1,025,000	^1,2	Collins & Aikman Products Co., Sr. Note, 10.75%, 12/31/2011		1,030,125
	350,000		Collins & Aikman Products Co., Sr. Sub. Note, 11.50%, 4/15/2006		336,000
	600,000		Dana Corp., Sr. Note, 9.00%, 8/15/2011		591,000
	3,375,000		Lear Corp., Sr. Note, 8.11%, 5/15/2009		3,476,250
	875,000	^1,2	Stoneridge, Inc., Sr. Note, 11.50%, 5/1/2012		894,687

			TOTAL		8,861,136

			Beverage & Tobacco--0.8%
	800,000		Constellation Brands, Inc., Company Guarantee, Series B, 8.00%, 2/15/2008		824,000
	500,000		Cott Beverages, Inc., Company Guarantee, 8.00%, 12/15/2011		510,000
	100,000		Dimon, Inc., Sr. Note, 8.875%, 6/1/2006		101,500
	425,000		Dimon, Inc., Sr. Note, 9.625%, 10/15/2011		449,437

			TOTAL		1,884,937

			Broadcast Radio & Television--5.3%
	925,000	⁴	ACME Television, LLC, Sr. Disc. Note, 0/10.875%, 9/30/2004		938,875
	3,750,000		Chancellor Media Corp., Company Guarantee, 8.00%, 11/1/2008		3,740,625
	2,475,000	⁴	Fox/Liberty Networks, LLC, Sr. Disc. Note, 0/9.75%, 8/15/2007		2,533,781
	725,000		Fox/Liberty Networks, LLC, Sr. Note, 8.875%, 8/15/2007		760,344
	750,000		Liberty Media Corp., Sr. Note, 7.75%, 7/15/2009		763,072
	500,000		Lin Television Corp., Company Guarantee, 8.00%, 1/15/2008		502,500
	974,000		Loral Cyberstar, Inc., Company Guarantee, 10.00%, 7/15/2006		652,580
	950,000	^1,2	PanAmSat Corp., Sr. Note, 8.50%, 2/1/2012		886,093
	425,000		Sinclair Broadcast Group, Inc., Sr. Sub. Note, 9.00%, 7/15/2007		429,250
	700,000		XM Satellite Radio, Inc., Unit, 14.00%, 3/15/2010		402,500

			TOTAL		11,609,620

			Building & Development--2.1%
	700,000		American Builders & Contractors Supply Co. Inc., Sr. Sub. Note, 10.625%, 5/15/2007		728,000
	475,000	^1,2	Associated Materials, Inc., Sr. Sub. Note, 9.75%, 4/15/2012		491,625
	400,000	^1,2	Collins & Aikman Floorcoverings, Inc., Sr. Sub. Note, 9.75%, 2/15/2010		410,000
	925,000		NCI Building System, Inc., Sr. Sub. Note, (Series B), 9.25%, 5/1/2009		943,500
	575,000		Nortek, Inc., Sr. Note, 9.125%, 9/1/2007		586,500
	50,000		WCI Communities, Inc., Company Guarantee, 9.125%, 5/1/2012		49,750
	1,300,000		WCI Communities, Inc., Sr. Sub. Note, 10.625%, 2/15/2011		1,371,500

			TOTAL		4,580,875

Principal Amount				Value
			CORPORATE BONDS--continued
			Business Equipment & Services--1.6%
$	1,450,000		Buhrmann US, Inc., Sr. Sub. Note, 12.25%, 11/1/2009	$	1,529,750
	26,248	¹	Electronic Retailing Systems International, Inc., Sr. Disc. Note, 8.00%, 8/1/2004		5,656
	575,000		Global Imaging Systems, Inc., Sr. Sub. Note, 10.75%, 2/15/2007		580,750
	1,725,000	^1,2	Xerox Corp., Sr. Note, 9.75%, 1/15/2009		1,423,125

			TOTAL		3,539,281

			Cable Television--6.2%
	1,325,000		CSC Holdings, Inc., Sr. Note, 7.875%, 12/15/2007		1,079,875
	725,000		CSC Holdings, Inc., Sr. Note, 8.125%, 7/15/2009		590,875
	400,000		CSC Holdings, Inc., Sr. Sub. Deb., 9.875%, 2/15/2013		314,000
	7,050,000	⁴	Charter Communications Holdings Capital Corp., Sr. Disc. Note, 0/13.50%, 1/15/2011		2,679,000
	1,325,000	⁴	Charter Communications Holdings Capital Corp., Sr. Disc. Note, 0/9.92%, 4/1/2011		642,625
	50,000		Charter Communications Holdings Capital Corp., Sr. Note, 8.625%, 4/1/2009		33,250
	1,000,000		Charter Communications Holdings Capital Corp., Sr. Note, 10.00%, 5/15/2011		675,000
	1,500,000		Echostar Broadband Corp., Sr. Note, 10.375%, 10/1/2007		1,432,500
	775,000		Echostar DBS Corp., Sr. Note, 9.375%, 2/1/2009		724,625
	2,725,000	³	International Cabletel, Inc., Sr. Defd. Cpn. Note, 11.50%, 2/1/2006		803,875
	400,000		Lenfest Communications, Inc., Sr. Sub. Note, 8.25%, 2/15/2008		388,956
	4,075,000	^3,4	NTL, Inc., Sr. Note, 0/9.75%, 4/1/2008		1,120,625
	225,000	^3,4	NTL, Communications Corp., Sr. Disc. Note, (Series B), 0/12.375%, 10/1/2008		57,375
	600,000	⁴	Pegasus Satellite Communications Corp., Sr. Disc. Note, 0/13.50%, 3/1/2007		177,000
	675,000	⁴	Quebecor Media Inc., Sr. Disc. Note, 0/13.75%, 7/15/2011		394,875
	900,000		Quebecor Media Inc., Sr. Note, 11.125%, 7/15/2011		895,500
	400,000		Rogers Cablesystems Ltd., Sr. Sub. GTD Note, 11.00%, 12/1/2015		442,000
	2,050,000		TeleWest Communications PLC, Sr. Disc. Deb., 11.00%, 10/1/2007		809,750
	450,000		TeleWest PLC, Sr. Note, 11.25%, 11/1/2008		177,750
	900,000	^3,4	UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006		47,250
	1,300,000	⁴	United Pan-Europe Communications NV, Sr. Disc. Note, (Series B), 0/13.375%, 11/1/2009		146,250

			TOTAL		13,632,956

			Chemicals & Plastics--3.4%
	675,000		Compass Minerals Group, Inc., Sr. Sub. Note, 10.00%, 8/15/2011		712,125
	450,000		Equistar Chemicals LP, Sr. Note, 10.125%, 9/1/2008		432,000
	525,000		Foamex LP, Sr. Sub. Note, 9.875%, 6/15/2007		469,875
	750,000		Foamex LP, Sr. Sub. Note, 13.50%, 8/15/2005		761,250
	550,000	^1,2	Foamex LP, Sr. Secd. Note, 10.75%, 4/1/2009		563,750
	925,000		General Chemical Industrial Products, Inc., Sr. Sub. Note, 10.625%, 5/1/2009		772,375
	950,000		Huntsman ICI Chemicals LLC, Sr. Sub. Note, 10.125%, 7/1/2009		840,750
	250,000		Lyondell Chemical Co., Sr. Secd. Note, 9.50%, 12/15/2008		233,750
	825,000		Lyondell Chemical Co., Sr. Secd. Note, (Series A), 9.625%, 5/1/2007		792,000
	1,275,000		Lyondell Chemical Co., Sr. Sub. Note, (Series B), 10.875%, 5/1/2009		1,115,625
	925,000		Texas Petrochemicals Corp., Sr. Sub. Note, 11.125%, 7/1/2006		753,875

			TOTAL		7,447,375

Principal Amount				Value
			CORPORATE BONDS--continued
			Clothing & Textiles--1.1%
$	625,000	^1,3	Dyersburg Corp., Sr. Sub. Note, 9.75%, 9/1/2007	$	3,750
	1,050,000		GFSI, Inc., Sr. Sub. Note, 9.625%, 3/1/2007		918,750
	675,000	^1,3	Glenoit Corp., Sr. Sub. Note, 11.00%, 4/15/2007		7
	150,000	^1,3	Pillowtex Corp., Sr. Sub. Note, 9.00%, 12/15/2007		1,875
	1,350,000	^1,3	Pillowtex Corp., Sr. Sub. Note, 10.00%, 11/15/2006		16,875
	600,000	^1,2	Russell Corp., Sr. Note, 9.25%, 5/1/2010		619,500
	750,000		William Carter Co., Sr. Sub. Note, 10.875%, 8/15/2011		821,250

			TOTAL		2,382,007

			Conglomerates--0.6%
	1,650,000		Eagle Picher Industries, Inc., Sr. Sub. Note, 9.375%, 3/1/2008		1,394,250

			Consumer Products--6.5%
	1,400,000		Albecca, Inc., Company Guarantee, 10.75%, 8/15/2008		1,529,500
	550,000	^1,2	Alltrista Corp., Unsecd. Note, 9.75%, 5/1/2012		528,000
	850,000		American Achievement Corp., Sr. Note, Series W.I., 11.625%, 1/1/2007		879,750
	900,000		American Greetings Corp., Sr. Sub. Note, 11.75%, 7/15/2008		985,500
	975,000		Amscan Holdings, Inc., Sr. Sub. Note, 9.875%, 12/15/2007		882,375
	400,000		Armkel Finance, Inc., Sr. Sub. Note, 9.50%, 8/15/2009		414,000
	900,000		Chattem, Inc., Sr. Sub. Note, 8.875%, 4/1/2008		918,000
	250,000	^3,4	Diamond Brands, Inc., Sr. Disc. Deb., 0/12.875%, 4/15/2009		8,750
	200,000	³	Diamond Brands Operating Corp., Sr. Sub. Note, 10.125%, 4/15/2008		7,000
	550,000	^1,2	ICON Health & Fitness, Inc., Sr. Sub. Note, 11.25%, 4/1/2012		544,500
	875,000		Jostens, Inc., Sr. Sub. Note, 12.75%, 5/1/2010		949,375
	1,075,000		Levi Strauss & Co., Sr. Note, 11.625%, 1/15/2008		1,042,750
	400,000		NBTY, Inc., Sr. Sub. Note, 8.625%, 9/15/2007		400,000
	400,000	^1,2	PCA International, Inc., Sr. Note, 11.875%, 8/1/2009		398,000
	1,150,000		Playtex Products, Inc., Sr. Sub. Note, 9.375%, 6/1/2011		1,230,500
	1,750,000		Revlon Consumer Products Corp., Sr. Sub. Note, 8.625%, 2/1/2008		866,250
	200,000		Sealy Mattress Co., Sr. Sub. Note, 9.875%, 12/15/2007		203,000
	550,000	³	Sleepmaster L.L.C., Company Guarantee, Series B, 11.00%, 5/15/2009		118,250
	650,000		True Temper Sports, Inc., Sr. Sub. Note, Series B, 10.875%, 12/1/2008		685,750
	1,100,000		United Industries Corp., Sr. Sub. Note, (Series B), 9.875%, 4/1/2009		1,122,000
	725,000		Volume Services America, Inc., Sr. Sub. Note, 11.25%, 3/1/2009		699,625

			TOTAL		14,412,875

			Container & Glass Products--3.3%
	100,000		Graham Packaging Co., Sr. Sub. Note, 8.75%, 1/15/2008		95,500
	600,000		Graham Packaging Co., Sub. Note, 5.553%, 1/15/2008		531,000
	950,000		Huntsman Packaging Pliant Corp., Company Guarantee, 13.00%, 6/1/2010		997,500
	625,000	^1,2	Owens-Brockway Glass Container, Inc., Sr. Secd. Note, 8.875%, 2/15/2009		628,125
	1,150,000		Owens-Illinois, Inc., Sr. Note, 7.15%, 5/15/2005		1,052,250
	750,000		Owens-Illinois, Inc., Sr. Note, 7.35%, 5/15/2008		671,250
	150,000		Owens-Illinois, Inc., Sr. Note, 8.10%, 5/15/2007		140,250
	600,000		Plastipak Holdings, Company Guarantee, 10.75%, 9/1/2011		648,000
	650,000		Pliant Corp., Sr. Sub. Note, 13.00%, 6/1/2010		682,500
	108,411	^1,2	Russell Stanley Holdings, Inc., Sr. Sub. Note, 9.00%, 11/30/2008		81,579
	1,300,000		Tekni-Plex, Inc., Company Guarantee, Series B, 12.75%, 6/15/2010		1,352,000
	450,000	^1,2	Tekni-Plex, Inc., Sr. Sub. Note, 12.75%, 6/15/2010		468,000

			TOTAL		7,347,954

Principal Amount				Value
			CORPORATE BONDS--continued
			Ecological Services & Equipment--3.1%
$	500,000		Allied Waste North America, Inc., Company Guarantee, 7.625%, 1/1/2006	$	486,250
	650,000		Allied Waste North America, Inc., Company Guarantee, (Series B), 8.875%, 4/1/2008		646,750
	1,600,000	^1,2	Allied Waste North America, Inc., Sr. Secd. Note, 8.50%, 12/1/2008		1,580,000
	3,300,000		Allied Waste North America, Inc., Sr. Sub. Note, (Series B), 10.00%, 8/1/2009		3,275,250
	725,000	^1,2	Synagro Technologies, Inc., Sr. Sub. Note, 9.50%, 4/1/2009		746,750

			TOTAL		6,735,000

			Electronics--1.4%
	925,000		Fairchild Semiconductor Corp., Sr. Sub. Note, 10.375%, 10/1/2007		957,375
	850,000		Ingram Micro, Inc., Sr. Sub. Note, 9.875%, 8/15/2008		906,312
	850,000	^1,2	Seagate Technology HDD Holdings, Sr. Note, 8.00%, 5/15/2009		854,250
	1,925,000		Telecommunications Techniques Co., LLC, Sr. Sub. Note, 9.75%, 5/15/2008		394,625

			TOTAL		3,112,562

			Food Products--4.2%
	1,250,000		Agrilink Foods, Inc., Company Guarantee, 11.875%, 11/1/2008		1,318,750
	825,000	^1,2	American Seafoods Group LLC, Sr. Sub. Note, 10.125%, 4/15/2010		837,375
	475,000	^1,2	B&G Foods, Inc., Sr. Sub. Note, 9.625%, 8/1/2007		491,625
	1,350,000		Del Monte Corp., Company Guarantee, Series B, 9.25%, 5/15/2011		1,397,250
	725,000		Eagle Family Foods, Inc., Sr. Sub. Note, 8.75%, 1/15/2008		554,625
	1,375,000	^1,2	Land O'Lakes, Inc., Sr. Note, 8.75%, 11/15/2011		1,299,375
	1,050,000		Michael Foods, Inc., Sr. Sub. Note, Series B, 11.75%, 4/1/2011		1,149,750
	750,000		New World Pasta Co., Sr. Sub. Note, 9.25%, 2/15/2009		731,250
	500,000		Pilgrim's Pride Corp., Sr. Note, 9.625%, 9/15/2011		522,500
	825,000		Smithfield Foods, Inc., Sr. Note, 8.00%, 10/15/2009		835,312

			TOTAL		9,137,812

			Food Services--1.5%
	700,000		Advantica Restaurant Group, Sr. Note, 11.25%, 1/15/2008		549,500
	450,000	^1,2	Buffets, Inc., Sr. Sub. Note, 11.25%, 7/15/2010		448,875
	1,250,000		Carrols Corp., Sr. Sub. Note, 9.50%, 12/1/2008		1,231,250
	950,000		Domino's, Inc., Company Guarantee, 10.375%, 1/15/2009		1,035,500

			TOTAL		3,265,125

			Forest Products--2.5%
	1,450,000		Georgia-Pacific Corp., Note, 7.50%, 5/15/2006		1,393,812
	1,775,000		Georgia-Pacific Corp., Sr. Note, 8.125%, 5/15/2011		1,690,687
	1,000,000		Riverwood International Corp., Company Guarantee, 10.625%, 8/1/2007		1,057,500
	500,000		Riverwood International Corp., Sr. Sub. Note, 10.875%, 4/1/2008		523,750
	775,000	^1,2	Stone Container Corp., Sr. Note, 9.75%, 2/1/2011		831,187

			TOTAL		5,496,936

			Gaming--5.6%
	650,000	^1,2	Boyd Gaming Corp., Sr. Sub. Note, 8.75%, 4/15/2012		653,250
	500,000		Coast Hotels & Casinos, Inc., Company Guarantee, 9.50%, 4/1/2009		527,500
	625,000	^1,2	Isle of Capri Casinos, Inc., Sr. Sub. Note, 9.00%, 3/15/2012		634,375
	225,000		MGM Mirage, Inc., Sr. Note, 8.50%, 9/15/2010		235,039
	2,975,000		MGM Grand, Inc., Sr. Sub. Note, 9.75%, 6/1/2007		3,138,625
Principal Amount				Value
			CORPORATE BONDS--continued
			Gaming--continued
$	500,000		Mandalay Resort Group, Sr. Note, 9.50%, 8/1/2008	$	531,250
	1,325,000		Mandalay Resort Group, Sr. Sub. Note, 10.25%, 8/1/2007		1,391,250
	400,000		Mandalay Resort Group, Sr. Sub. Note, 9.375%, 2/15/2010		418,000
	1,925,000	^1,2	Park Place Entertainment Corp., Sr. Sub. Note, 7.875%, 3/15/2010		1,920,187
	400,000		Park Place Entertainment Corp., Sr. Sub. Note, 8.125%, 5/15/2011		400,000
	400,000		Park Place Entertainment Corp., Sr. Sub. Note, 9.375%, 2/15/2007		420,000
	500,000		Penn National Gaming, Inc., Company Guarantee, 11.125%, 3/1/2008		540,000
	625,000	^1,2	Sun International Hotels Ltd., Sr. Sub. Note, 8.875%, 8/15/2011		639,062
	825,000	^1,2	Venetian Casino/LV Sands, Mtg. Note, 11.00%, 6/15/2010		835,313

			TOTAL		12,283,851

			Health Care--7.8%
	275,000	^1,2	Advanced Medical Optics, Sr. Sub. Note, 9.25%, 7/15/2010		274,313
	300,000		Alaris Medical Systems, Company Guarantee, 9.75%, 12/1/2006		299,250
	825,000		Alaris Medical Systems, Sr. Secd. Note, 11.625%, 12/1/2006		919,875
	1,350,000		Alliance Imaging, Inc., Sr. Sub. Note, 10.375%, 4/15/2011		1,458,000
	900,000		CONMED Corp., Sr. Sub. Note, 9.00%, 3/15/2008		933,750
	1,475,000		Columbia/HCA Healthcare Corp., Sr. Note, 6.91%, 6/15/2005		1,526,197
	325,000	^1,2	Extendicare Health Services, Inc., Sr. Note, 9.50%, 7/1/2010		329,063
	1,825,000		Fisher Scientific International, Inc., Sr. Sub. Note, 9.00%, 2/1/2008		1,888,875
	500,000		HCA - The Healthcare Corp., Note, 8.75%, 9/1/2010		560,745
	1,250,000		HCA - The Healthcare Corp., Sr. Note, 7.875%, 2/1/2011		1,333,263
	225,000		Hanger Orthopedic Group, Inc., Company Guarantee, 10.375%, 2/15/2009		236,813
	1,575,000		Hanger Orthopedic Group, Inc., Sr. Sub. Note, 11.25%, 6/15/2009		1,614,375
	500,000		Hudson Respiratory Care, Inc., Sr. Sub. Note, 9.125%, 4/15/2008		252,500
	300,000		Insight Health Services, Company Guarantee, 9.875%, 11/1/2011		303,000
	1,725,000		Kinetic Concepts, Inc., Company Guarantee, 9.625%, 11/1/2007		1,725,000
	600,000	^1,2	Magellan Health Services, Inc., Sr. Note, 9.375%, 11/15/2007		465,000
	900,000		Magellan Health Services, Inc., Sr. Sub. Note, 9.00%, 2/15/2008		328,500
	325,000		Manor Care, Inc., Sr. Note, 8.00%, 3/1/2008		338,377
	550,000		Triad Hospitals, Inc., Company Guarantee, Series B, 8.75%, 5/1/2009		574,750
	675,000		US Oncology, Inc., Company Guarantee, 9.625%, 2/1/2012		661,500
	550,000		Vanguard Health Systems, Company Guarantee, 9.75%, 8/1/2011		574,750
	475,000	^1,2	Ventas Realty LP, Sr. Note, 9.00%, 5/1/2012		486,875

			TOTAL		17,084,771

			Hotels, Motels & Inns--5.5%
	600,000		Courtyard by Marriott II LP, Sr. Note, 10.75%, 2/1/2008		615,000
	572,000		Felcor Lodging LP, Company Guarantee, 8.50%, 6/1/2011		560,560
	325,000		Felcor Lodging LP, Company Guarantee, 9.50%, 9/15/2008		328,250
	1,150,000		Florida Panthers Holdings, Inc., Company Guarantee, 9.875%, 4/15/2009		1,196,000
	50,000		HMH Properties, Inc., Sr. Note, 7.875%, 8/1/2005		48,625
	1,725,000		HMH Properties, Inc., Sr. Note, (Series B), 7.875%, 8/1/2008		1,660,313
	1,000,000		HMH Properties, Inc., Sr. Note, (Series C), 8.45%, 12/1/2008		985,000
	850,000		Hilton Hotels Corp., Note, 7.625%, 5/15/2008		864,850
Principal Amount				Value
			CORPORATE BONDS--continued
			Hotels, Motels & Inns--continued
$	525,000		Hilton Hotels Corp., Sr. Note, 8.25%, 2/15/2011	$	544,451
	1,550,000		ITT Corp., Unsecd. Note, 6.75%, 11/15/2005		1,532,222
	150,000		MeriStar Hospitality Corp., Sr. Note, 9.00%, 1/15/2008		146,250
	1,050,000		MeriStar Hospitality Corp., Sr. Note, 9.125%, 1/15/2011		1,023,750
	400,000		RFS Partnership LP, Company Guarantee, 9.75%, 3/1/2012		404,000
	1,850,000	^1,2	Starwood Hotels & Resorts Worldwide, Inc., Note, 7.375%, 5/1/2007		1,844,173
	325,000		Vail Resorts, Inc., Sr. Sub. Note, 8.75%, 5/15/2009		329,875

			TOTAL		12,083,319

			Industrial Products & Equipment--4.0%
	540,000		Amphenol Corp., Sr. Sub. Note, 9.875%, 5/15/2007		564,300
	500,000		Cabot Safety Acquisition Corp., Sr. Sub. Note, 12.50%, 7/15/2005		517,500
	375,000		Continental Global Group, Inc., Sr. Note, 11.00%, 4/1/2007		191,250
	1,275,000		Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006		1,281,375
	775,000		Hexcel Corporation, Sr. Sub. Note, (Series B), 9.75%, 1/15/2009		592,875
	205,000		Hexcel Corporation, Sub. Note, 7.00%, 8/1/2003		160,925
	1,075,000		ISG Resources, Inc., Sr. Sub. Note, 10.00%, 4/15/2008		1,015,875
	1,325,000		MMI Products, Inc., Sr. Sub. Note, 11.25%, 4/15/2007		1,364,750
	1,400,000		Neenah Corp., Sr. Sub. Note, 11.125%, 5/1/2007		812,000
	400,000		Neenah Foundry Co., Sr. Sub Note, 11.25%, 5/1/2007		232,000
	875,000		Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003		883,750
	1,200,000		WESCO Distribution, Inc., Sr. Sub. Note, 9.125%, 6/1/2008		1,176,000

			TOTAL		8,792,600

			Leisure & Entertainment--1.9%
	750,000	^1,2	AMF Bowling Worldwide, Inc., Sr. Sub. Note, 13.00%, 2/28/2008		813,750
	900,000	⁴	Premier Parks, Inc., Sr. Disc. Note, 0/10.00%, 4/1/2008		868,500
	1,500,000		Premier Parks, Inc., Sr. Note, 9.75%, 6/15/2007		1,552,500
	875,000	^1,2	Regal Cinemas, Corp., Sr. Sub. Note, 9.375%, 2/1/2012		914,375

			TOTAL		4,149,125

			Machinery & Equipment--2.5%
	400,000		AGCO Corp., Sr. Note, 9.50%, 5/1/2008		426,000
	925,000		Briggs & Stratton Corp., Company Guarantee, 8.875%, 3/15/2011		975,875
	975,000	^1,3	Clark Material Handling Corp., Sr. Note, 10.75%, 11/15/2006		98
	1,100,000		Columbus McKinnon Corp., Sr. Sub. Note, 8.50%, 4/1/2008		1,006,500
	800,000	^1,3	Simonds Industries, Inc., Sr. Sub. Note, 10.25%, 7/1/2008		244,000
	1,075,000		United Rentals, Inc., Company Guarantee, 9.25%, 1/15/2009		1,048,125
	1,650,000		United Rentals, Inc., Company Guarantee, Series B, 10.75%, 4/15/2008		1,765,500

			TOTAL		5,466,098

			Oil & Gas--4.3%
	250,000		AmeriGas Partners LP, Sr. Note, 8.875%, 5/20/2011		261,250
	525,000	^1,2	Compton Petroleum Corp., Sr. Note, 9.90%, 5/15/2009		540,272
	225,000		Comstock Resources, Inc., Sr. Note, 11.25%, 5/1/2007		234,000
	1,000,000		Continental Resources, Inc., Sr. Sub. Note, 10.25%, 8/1/2008		905,000
	300,000		DI Industries, Inc., Sr. Note, 8.875%, 7/1/2007		310,500
Principal Amount				Value
			CORPORATE BONDS--continued
			Oil & Gas--continued
$	1,150,000		Dresser, Inc., Company Guarantee, 9.375%, 4/15/2011	$	1,178,750
	700,000		Forest Oil Corp., Sr. Sub. Note, 10.50%, 1/15/2006		745,500
	725,000	^1,2	Hanover Equipment Trust, Sr. Secd. Note, (Series 01 B), 8.75%, 9/1/2011		685,125
	800,000		Lone Star Technologies, Inc., Company Guarantee, Series B, 9.00%, 6/1/2011		768,000
	500,000	^1,2	Magnum Hunter Resources, Inc., Sr. Note, 9.60%, 3/15/2012		515,000
	600,000	^1,2	Petroleum Helicopters, Inc., Sr. Note, 9.375%, 5/1/2009		618,000
	900,000		Pogo Producing Co., Sr. Sub. Note, (Series B), 10.375%, 2/15/2009		972,000
	450,000		Swift Energy Co., Sr. Sub. Note, 9.375%, 5/1/2012		429,750
	1,475,000		Tesoro Petroleum Corp., Sr. Sub. Note, 9.625%, 11/1/2008		1,379,125

			TOTAL		9,542,272

			Printing & Publishing--2.2%
	775,000		Advanstar Communications, Company Guarantee, (Series B), 12.00%, 2/15/2011		631,625
	425,000	⁴	Advanstar, Inc., Company Guarantee, Series B, 0/15.00%, 10/15/2011		181,688
	950,000		American Media Operations, Inc., Company Guarantee, Series B, 10.25%, 5/1/2009		1,002,250
	400,000	^1,2	Block Communications, Inc., Sr. Sub. Note, 9.25%, 4/15/2009		400,000
	600,000	^1,2	Vertis, Inc., Sr. Note, 10.875%, 6/15/2009		597,000
	525,000	^1,2	Von Hoffmann Corp., Sr. Note, 10.25%, 3/15/2009		540,750
	1,525,000	⁴	Yell Finance BV, Sr. Disc. Note, 0/13.50%, 8/1/2011		1,067,500
	250,000		Yell Finance BV, Sr. Note, 10.75%, 8/1/2011		276,250
	350,000		Ziff Davis Media, Inc., Company Guarantee, Series B, 12.00%, 7/15/2010		89,250

			TOTAL		4,786,313

			Retailers--1.7%
	400,000		Advance Stores Co., Inc., Sr. Sub. Note, 10.25%, 4/15/2008		422,000
	875,000		Michaels Stores, Inc., Sr. Note, 9.25%, 7/1/2009		936,250
	975,000		Penney (J.C.) Co., Inc., Note, 7.375%, 6/15/2004		976,219
	1,075,000		Penney (J.C.) Co., Inc., Note, 7.60%, 4/1/2007		1,062,906
	325,000	^1,2	United Auto Group, Inc., Sr. Sub. Note, 9.625%, 3/15/2012		331,500

			TOTAL		3,728,875

			Services--0.8%
	425,000		American Tower Systems Corp., Sr. Note, 9.375%, 2/1/2009		233,750
	600,000	^1,2	Coinmach Corp., Sr. Note, 9.00%, 2/1/2010		603,000
	950,000		SITEL Corp., Sr. Sub. Note, 9.25%, 3/15/2006		888,250

			TOTAL		1,725,000

			Steel--0.3%
	625,000	³	Republic Technologies International, Inc., Company Guarantee, 13.75%, 7/15/2009		42,188
	700,000		Ryerson Tull, Inc., Sr. Note, 9.125%, 7/15/2006		689,500

			TOTAL		731,688

			Surface Transportation--1.2%
	975,000		Allied Holdings, Inc., Sr. Note, 8.625%, 10/1/2007		765,375
	700,000	^1,3	AmeriTruck Distribution Corp., Sr. Sub. Note, 12.25%, 11/15/2005		0
	900,000		Stena AB, Sr. Note, 8.75%, 6/15/2007		886,500
	1,000,000		Stena AB, Sr. Note, 10.50%, 12/15/2005		1,030,000
	800,000	^1,3	The Holt Group, Inc., Sr. Note, 9.75%, 1/15/2006		28,000

			TOTAL		2,709,875

Principal Amount or Shares				Value
			CORPORATE BONDS--continued
			Telecommunications & Cellular--4.2%
$	1,475,000	⁴	AirGate PCS, Inc., Sr. Sub. Note, 0/13.50%, 10/1/2009	$	302,375
	2,600,000	⁴	Alamosa PCS Holdings, Inc., Sr. Disc. Note, 0/12.875%, 2/15/2010		403,000
	847,605	^1,2	Call-Net Enterprises, Inc., Company Guarantee, 10.625%, 12/31/2008		250,043
	900,000	^3,4	Dolphin Telecom PLC, Sr. Disc. Note, 0/14.00%, 5/15/2009		4,590
	2,175,000	³	Global Crossing Holdings Ltd., Company Guarantee, 9.50%, 11/15/2009		27,188
	900,000	^1,2	Horizon PCS, Inc., Sr. Note, 13.75%, 6/15/2011		301,500
	1,700,000	⁴	Millicom International Cellular S.A., Sr. Disc. Note, 0/13.50%, 6/1/2006		603,500
	3,050,000	⁴	NEXTEL Communications, Inc., Sr. Disc. Note, 0/10.65%, 9/15/2007		1,677,500
	4,675,000		NEXTEL Communications, Inc., Sr. Note, 9.375%, 11/15/2009		2,395,938
	390,000	⁴	NEXTEL Partners, Inc., Sr. Disc. Note, 0/14.00%, 2/1/2009		103,350
	450,000		NEXTEL Partners, Inc., Sr. Note, 12.50%, 11/15/2009		191,250
	1,050,000		Rogers Cantel Mobile, Inc., Sr. Sub. Note, 8.80%, 10/1/2007		782,250
	1,250,000	^3,4	Teligent, Inc., Sr. Disc. Note, 0/11.50%, 3/1/2008		6,250
	585,000	⁴	Tritel PCS, Inc., Sub. Disc. Note, 0/12.75%, 5/15/2009		469,463
	925,000	⁴	Triton PCS, Inc., Sr. Disc. Note, 0/11.00%, 5/1/2008		568,875
	500,000	³	Viatel, Inc., Sr. Note, 11.50%, 3/15/2009		1,750
	900,000	^3,4	Viatel, Inc., Unit, 0/12.50%, 4/15/2008		3,150
	425,000	³	Viatel, Inc., Unit, 11.25%, 4/15/2008		1,488
	1,723,000	⁴	VoiceStream Wireless Corp., Sr. Disc. Note, 0/11.875%, 11/15/2009		1,124,258

			TOTAL		9,217,718

			Utilities--3.5%
	2,050,000		CMS Energy Corp., Sr. Note, 7.50%, 1/15/2009		1,691,250
	150,000		CMS Energy Corp., Sr. Note, 8.50%, 4/15/2011		117,000
	600,000		CMS Energy Corp., Sr. Note, 8.90%, 7/15/2008		471,000
	1,068,383		Caithness Coso Funding Corp., Sr. Secd. Note, (Series B), 9.05%, 12/15/2009		1,095,092
	2,100,000		Calpine Canada Energy Finance Corp., Company Guarantee, 8.50%, 5/1/2008		1,417,500
	4,275,000		Calpine Corp., Note, 8.50%, 2/15/2011		2,842,875

			TOTAL		7,634,717

			TOTAL CORPORATE BONDS (IDENTIFIED COST $246,700,695)		206,159,178

			PREFERRED STOCKS--1.4%
			Broadcast Radio & Television--0.8%
	16,800		Sinclair Broadcast Group, Inc., Cumulative Pfd., $11.63		1,717,800

			Business Equipment & Services--0.0%
	183	¹	Electronic Retailing Systems International, Inc., Conv. Pfd.		92

			Health Care--0.0%
	2,741		River Holding Corp., Sr. Exchangeable PIK		37,004

			Printing & Publishing--0.5%
	13,250		Primedia, Inc., Cumulative Pfd., (Series D), $10.00		400,813
	2,000		Primedia, Inc., Exchangeable Pfd. Stock, (Series G), $2.16		60,500
	18,950		Primedia, Inc., Pfd., $9.20		573,238

			TOTAL		1,034,551

Shares				Value
			PREFERRED STOCKS--continued
			Telecommunications & Cellular--0.1%
	11,079		McLeodUSA, Inc., Conv. Pfd., (Series A)	$	41,546
	946		NEXTEL Communications, Inc., Cumulative PIK Pfd., (Series D), 13.00%		279,070
	193		NEXTEL Communications, Inc., Exchangeable Pfd. Stock, (Series E), 11.125%		41,495

			TOTAL		362,111

			TOTAL PREFERRED STOCKS (IDENTIFIED COST $8,551,687)		3,151,558

			COMMON STOCKS--0.4%
			Business Equipment & Services--0.0%
	5,145		Systems Holdings, Inc.		51

			Container & Glass Products--0.0%
	15,500		Russell Stanley Holdings, Inc.		4,650

			Leisure & Entertainment--0.0%
	1,483	³	AMF Bowling Worldwide, Inc.		39,273

			Metals & Mining--0.4%
	76,313		Horizon Natural Resources Co.		820,365
	23,013	^1,3	Royal Oak Mines, Inc.		207

			TOTAL		820,572

			Printing & Publishing--0.0%
	300	^1,2,3	Medianews Group, Inc. Class A		27,787

			Telecommunications & Cellular--0.0%
	40,735		Call-Net Enterprises, Inc.		14,155

			TOTAL COMMON STOCKS (IDENTIFIED COST $3,863,819)		906,488

			WARRANTS--0.0%
			Broadcast Radio & TV--0.0%
	9,620	³	Loral Space & Communications Ltd.		10,822
	850	³	XM Satellite Radio, Inc.,		5,100

			TOTAL		15,922

			Cable Television--0.0%
	1,300	³	UIH Australia/Pacific		13

			Consumer Products--0.0%
	825	³	Jostens, Inc., Class E		8,456

			Container & Glass Products--0.0%
	650	³	Pliant Corp.		6,662

			Leisure & Entertainment--0.0%
	3,488	³	AMF Bowling Worldwide, Inc.		20,928
	3,408	³	AMF Bowling Worldwide, Inc.		17,040

			TOTAL		37,968

			Printing & Publishing--0.0%
	425	³	Advanstar, Inc.		4

Shares or Principal Amount				Value
			WARRANTS--continued
			Steel--0.0%
	625	³	Republic Technologies International, Inc.	$	6

			Telecommunications & Cellular--0.0%
	24,549	³	McLeodUSA, Inc.		3,069

			TOTAL WARRANTS (IDENTIFIED COST $511,857)		72,100

			REPURCHASE AGREEMENT--1.5%⁵
$	3,257,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		3,257,000

			TOTAL INVESTMENTS (IDENTIFIED COST $262,885,058)⁶	$	213,546,324

1 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At June 30, 2002, these securities amounted to $31,649,944 which represents 14.4% of net assets. Included in these amounts, securities which have been deemed liquid amounted to $31,276,259 which represents 14.2% of net assets.

2 Denotes a restricted security that has been deemed liquid by criteria approved by the fund's Board of Trustees.

3 Non-income producing security.

4 Denotes a zero coupon bond with effective rate at time of purchase.

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

6 The cost of investments for generally accepted accounting principles ("GAAP") is $262,885,058. Cost for federal tax purposes is $262,354,473. The difference between cost for GAAP and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. The net unrealized depreciation of investments on a federal tax basis amounts to $48,808,149, which is comprised of $6,113,889 appreciation and $54,922,038 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($219,932,201) at June 30, 2002.

The following acronyms are used throughout this portfolio:

GTD	--Guaranteed
PIK	--Payment in Kind

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $262,885,058)			$	213,546,324
Cash				465
Income receivable				4,908,126
Receivable for investments sold				1,462,530
Prepaid expenses				21,340

TOTAL ASSETS				219,938,785

Liabilities:
Accrued expenses	$	6,584

TOTAL LIABILITIES				6,584

Net assets for 31,910,575 shares outstanding			$	219,932,201

Net Assets Consist of:
Paid in capital			$	311,049,530
Net unrealized depreciation of investments				(49,338,734	)
Accumulated net realized loss on investments				(52,293,216	)
Undistributed net investment income				10,514,621

TOTAL NET ASSETS			$	219,932,201

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Primary Shares:
$206,237,521 ÷ 29,923,170 shares outstanding				$6.89

Service Shares:
$13,694,680 ÷ 1,987,405 shares outstanding				$6.89

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends				$	348,005
Interest					12,138,592

TOTAL INCOME					12,486,597

Expenses:
Investment adviser fee	$	740,922
Administrative personnel and services fee		92,862
Custodian fees		7,903
Transfer and dividend disbursing agent fees and expenses		24,574
Directors'/Trustees' fees		864
Auditing fees		6,421
Legal fees		494
Portfolio accounting fees		43,838
Distribution services fee--Service Shares		6,693
Shareholder services fee--Service Shares		9,794
Share registration costs		1,729
Printing and postage		30,501
Insurance premiums		494
Miscellaneous		124

TOTAL EXPENSES		967,213

Waiver of shareholder services fee--Service Shares		(5,876	)

Net expenses					961,337

Net investment income					11,525,260

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments					(16,066,864	)
Net change in unrealized depreciation of investments					1,978,880

Net realized and unrealized loss on investments					(14,087,984	)

Change in net assets resulting from operations				$	(2,562,724	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	11,525,260		$	23,989,528
Net realized loss on investments		(16,066,864	)		(27,322,810	)
Net change in unrealized depreciation of investments		1,978,880			5,947,780

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(2,562,724	)		2,614,498

Distributions to Shareholders:
Distributions from net investment income
Primary Shares		(23,097,381	)		(23,482,892	)
Service Shares		(1,326,711	)		(128,494	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(24,424,092	)		(23,611,386	)

Share Transactions:
Proceeds from sale of shares		122,097,098			234,814,186
Proceeds from shares issued in connection with the taxable transfer of assets from VIST High Income Bond Portfolio		--			2,406,744
Net asset value of shares issued to shareholders in payment of distributions declared		24,424,084			23,611,377
Cost of shares redeemed		(137,910,775	)		(210,468,958	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		8,610,407			50,363,349

Change in net assets		(18,376,409	)		29,366,461

Net Assets:
Beginning of period		238,308,610			208,942,149

End of period (including undistributed net investment income of $10,514,621 and $23,413,453, respectively)	$	219,932,201		$	238,308,610

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Primary Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999		1998		1997
Net Asset Value, Beginning of Period	$7.72		$8.46		$10.24		$10.92		$10.95		$10.24
Income From Investment Operations:
Net investment income	0.35	¹	0.83	^1,2	0.99		0.88		0.87		0.88
Net realized and unrealized gain (loss) on investments	(0.42	)	(0.69	)²	(1.84	)	(0.63	)	(0.57	)	0.48

TOTAL FROM INVESTMENT OPERATIONS	(0.07	)	0.14		(0.85	)	0.25		0.30		1.36

Less Distributions:
Distributions from net investment income	(0.76	)	(0.88	)	(0.93	)	(0.86	)	(0.26	)	(0.61	)
Distributions from net realized gain on investments	--		--		--		(0.07	)	(0.07	)	(0.04	)

TOTAL DISTRIBUTIONS	(0.76	)	(0.88	)	(0.93	)	(0.93	)	(0.33	)	(0.65	)

Net Asset Value, End of Period	$6.89		$7.72		$8.46		$10.24		$10.92		$10.95

Total Return³	(1.33	)%	1.38	%	(9.02	)%	2.31	%	2.70	%	13.83	%


Ratios to Average Net Assets:

Expenses	0.77	%⁴	0.76	%	0.76	%	0.79	%	0.78	%	0.80	%

Net investment income	9.34	%⁴	10.33	%²	10.50	%	9.20	%	9.01	%	8.70	%

Expense waiver/reimbursement⁵	--		--		0.00	%⁶	--		--		0.09	%

Supplemental Data:

Net assets, end of period (000 omitted)	206,238		$229,885		$208,516		$239,088		$212,290		$156,164

Portfolio turnover	31	%	37	%	19	%	34	%	27	%	52	%

1 Amount based on average shares outstanding.

2 As required, effective January 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began amortizing long-term premiums and discounts on debt securities. The effect of this change for the year ended December 31, 2001 was to increase net investment income per share by $0.02, decrease net realized and unrealized gain/loss per share by $0.02, and increased the ratio of net investment income to average net assets from 10.19% to 10.33%. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.

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

4 Computed on an annualized basis.

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

6 Amount represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Service Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000	¹
Net Asset Value, Beginning of Period	$7.72		$8.46		$9.01
Income From Investment Operations:
Net investment income	0.34	²	0.79	^2,3	0.13
Net realized and unrealized loss on investments	(0.41	)	(0.65	)³	(0.68	)

TOTAL FROM INVESTMENT OPERATIONS	(0.07	)	0.14		(0.55	)

Less Distributions:
Distributions from net investment income	(0.76	)	(0.88	)	--

Net Asset Value, End of Period	$6.89		$7.72		$8.46

Total Return⁴	(1.36	)%	1.38	%	(6.10	)%


Ratios to Average Net Assets:

Expenses	0.93	%⁵	0.86	%	0.86	%⁵

Net investment income	9.18	%⁵	10.27	%³	11.29	%⁵

Expense waiver/reimbursement⁶	0.09	%⁵	0.15	%	0.15	%⁵

Supplemental Data:

Net assets, end of period (000 omitted)	$13,695		$8,424		$427

Portfolio turnover	31	%	37	%	19	%

1 Reflects operations for the period from May 1, 2000 (date of initial public investment) to December 31, 2000.

2 Amount based on average outstanding shares.

3 As required, effective January 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing long-term premiums and discounts on debt securities. The effect of this change for the year ended December 31, 2001 was to increase net investment income per share by $0.01, decrease and net realized and unrealized gain/loss per share by $0.01, and increase the ratio of net investment income to average net assets from 10.13% to 10.27%. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated High Income Bond Fund II (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Primary Shares and Service Shares. The investment objective of the Fund is to seek high current income.

On December 28, 2001, the Fund received a taxable transfer of assets from VIST High Income Bond Portfolio as follows:

Shares of the Fund Issued in Relation to Taxable Transfer of Assets	Taxable Transfer of VIST High Income Bond Portfolio Net Assets Received	Net Assets of the Fund Immediately Prior to Combination	Net Assets of the Fund Immediately After Combined
312,159	$2,406,744	$234,536,426	$236,943,170

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

Listed corporate bonds are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. All discounts/ premiums are accreted/amortized for financial reporting purposes as required. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value. The Fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Change in Accounting Principle

Federal Taxes

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's rules and rates.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $36,614,015 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows.

Expiration Year		Expiration Amount
2007		$ 1,810,599

2008		7,050,529

2009		27,752,887

When-Issued and Delayed Delivery Transactions

RESTRICTED SECURITIES

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued to the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in good faith using methods approved by the Trustees. Additional information on each restricted security held at June 30, 2002 is as follows:

Security	Acquisition Date	Acquisition Cost
AmeriTruck Distribution Corp., Sr. Sub. Note, 12.25%, 11/15/2005	11/10/1995 - 10/22/1997	$715,134

Clark Material Handling Corp., 10.75%, 11/15/2006	10/23/1998 - 12/28/2001	938,008

Security	Acquisition Date	Acquisition Cost
Condor Systems, Inc., Sr, Sub. Note, 11.875%, 5/1/2009	04/08/1999	$ 325,000

Dyersburg Corp., Sr. Sub. Note, 9.75%, 9/1/2007	09/03/1997 - 10/20/1997	636,938

Electronic Retailing Systems International Inc., Sr. Disc. Note	01/21/1997 - 12/28/2001	78,951

Electronic Retailing Systems International, Inc., Conv. Pfd.	01/21/1997 -- 12/28/2001	0

Glenoit Corp., Sr. Sub. Note, 11.00%, 4/15/2007	03/26/1997 - 12/28/2001	590,616

The Holt Group, Inc., Sr. Note, 9.75%, 1/15/2006	01/14/1998 - 12/28/2001	740,313

Pillowtex Corp., Sr. Sub. Note, 9.00%, 12/15/2007	12/18/1997	153,563

Pillowtex Corp., Sr. Sub. Note, 10.00%, 11/15/2006	11/06/1996 - 07/08/1999	1,138,750

Royal Oak Mines, Inc.	02/24/1999	2,557

Simonds Industries, Inc., Sr. Sub. Note, 10.25%, 7/1/2008	12/12/2000 - 09/25/2001	17,875

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended (unaudited) 6/30/2002					Year Ended 12/31/2001
Primary Shares:	Shares			Amount		Shares			Amount
Shares sold	13,070,443		$	98,773,382		27,113,485		$	218,770,174
Shares issued in connection with taxable transfer of assets from VIST High Income Bond Portfolio	--			--		312,159			2,406,744
Shares issued to shareholders in payment of distributions declared	3,212,431			23,097,377		2,957,543			23,482,888
Shares redeemed	(16,121,712	)		(120,193,302	)	(25,278,212	)		(202,433,505	)

NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS	161,162		$	1,677,457		5,104,975			$42,226,301


	Six Months Ended (unaudited) 6/30/2002					Year Ended 12/31/2001
Service Shares:	Shares			Amount		Shares			Amount
Shares sold	3,107,608		$	23,323,716		2,064,769		$	16,044,012
Shares issued to shareholders in payment of distributions declared	184,521			1,326,707		16,182			128,489
Shares redeemed	(2,395,606	)		(17,717,473	)	(1,040,513	)		(8,035,453	)

NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS	896,523		$	6,932,950		1,040,438		$	8,137,048

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,057,685		$	8,610,407		6,145,413		$	50,363,349

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

Shareholder Service Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholders Services Company ("FSSC"), the Fund may pay FSSC up to 0.25% of the average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended June 30, 2002, Primary Shares did not incur a shareholder services fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	77,582,085

Sales	$	69,936,395

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated High Income Bond Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916306
Cusip 313916843

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G00433-02 (8/02)

Federated Investors
World-Class Investment Manager

Federated International Equity Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

Federated International Equity Fund II, a portfolio of Federated Insurance Series, is managed to offer total return opportunities by investing in large, high-quality corporations based outside the United States.¹ The fund's holdings are typically diversified across key businesses and industrial sectors.

This Semi-Annual Report covers the fund's six-month reporting period from January 1, 2002 through June 30, 2002. It opens with the fund manager's review of market conditions and discussion of fund performance and includes a complete listing of the fund's holdings and financial statements.

For the six-month reporting period ended June 30, 2002, the fund produced a total return of (5.98)%, and net asset value decreased by $0.68.² At the end of the period, the fund's net assets were $54.6 million.

As you know, the past several quarters have been especially difficult for equity investments worldwide. Markets clearly are experiencing a down cycle due to a series of corporate scandals as well as continuing concern about terrorism and Mid-East violence.

But many economic indicators have become more positive in recent months, suggesting that U.S. and global recoveries are indeed under way--although they have been clouded by discouraging headlines and may be occurring more gradually than we would like. Many international companies have higher earnings forecasts than their U.S. counterparts, and many analysts expect international stocks to outperform in the period ahead.

Please remember that the true measure of the performance of a long-term investment like Federated International Equity Fund II is in years rather than months. During times of market uncertainty, keep in mind the value of dollar-cost averaging, an investment method through which you can take advantage of price fluctuations by adding to your account on a regular basis. By investing the same amount on a regular schedule, you buy more fund shares when prices are low and fewer when prices are high.³

Thank you for choosing Federated International Equity Fund II as a diversified, professionally managed way to invest in top international companies. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 International investing involves special risks including currency risk, increased volatility of foreign securities and differences in auditing and other financial standards.

2 Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

3 Systematic investing does not assure a profit or protect against loss in declining markets. Because dollar-cost averaging involves continuous investment regardless of fluctuating price levels, investors should consider their financial ability to continue purchases during periods of low price levels.

Investment Review

MARKET OVERVIEW

As 2001 drew to a close, global equity markets rallied on the belief that the market had reached bottom, corporate fundamentals were improving and the U.S. economic recovery was finally under way. In this optimistic environment, "growth" stocks performed better than "value" investments. European stocks generally performed well, but small-cap stocks and equities in emerging markets, especially in Asian export economies, outshone all others, fueled by liquidity from the year's wave of central bank rate cuts.

Into the spring of 2002, however, some of this optimism faded, and value stocks regained the market's blessing, with the Morgan Stanley Capital International (MSCI) World Index Value and MSCI World Index Growth reporting six-month returns of (6.87)% and (10.86)%, respectively.¹ Although manufacturing and productivity indicators were positive, and most markets continued to enjoy low inflation, investors fretted about the less-than-robust pace of the U.S. recovery including high unemployment, reluctant capital spending and a series of post-Enron reports about other U.S. corporations' questionable practices or depressed profits. Lost confidence and disappointing earnings took a toll on stock prices and prompted sell-offs. Insecurities about the future shape of the U.S.-led War on Terrorism along with political upheaval in the Middle East also contributed to market volatility.

During this time, Asian markets remained vibrant, although Japan's lack of economic and corporate reform once again weighed on its stocks and discouraged investors. The MSCI All Country (AC) Asia Pacific Free Index and the MSCI AC Japan Index reported six-month returns of 6.83% and 6.56%, respectively.² Although European economies showed signs of beginning to decouple from the United States, suggesting that the high correlations between U.S. and international stocks may be drawing to a close, they were held back somewhat by uneven growth in the United States. The MSCI Europe Index and MSCI USA Index reported six-month returns of (4.60)% and (14.21)%, respectively.³ Late in the portfolio's reporting period, however, the high current account deficit in the United States and an increasing reticence by foreign investors to invest in U.S. equities began to drag down the dollar, which lost ground against the euro, yen and many other foreign currencies.

PERFORMANCE OF THE PORTFOLIO

The performance of Federated International Equity Fund II produced six-month total returns of (5.98)%, based on net asset value (NAV). The portfolio underperformed the (1.62)% return of its benchmark, the MSCI Europe, Australasia and Far East (MSCI-EAFE) Index.⁴

The portfolio's performance was held back by its European telecommunications exposure, such as Vodafone Group, and some media holdings. But transportation companies, such as Singapore Airlines, and some European pharmaceutical stocks, including Novartis AG, contributed positively to the portfolio. Positive contributions to performance also included our overweight in the Materials sectors. Other top performers were TotalFinaElf, Nikko Cordial Corp. and Henkel KGAA. On a country basis, our underweight in Japan hurt performance while our overweight in emerging market countries helped.

1 The MSCI World Index is an index that reflects the stock markets of 22 countries, including the United States, Europe, Canada, Australia, New Zealand and the Far East--comprising approximately 1,482 securities--with values expressed in U.S. dollars. The MSCI Value and Growth Indices cover the full range of developed, emerging and All Country MSCI Equity Indices, including Free indices where applicable. The indices use Price/Book Value (P/BV) ratios to divide the standard MSCI country indices into two sub-indices: Value and Growth. All securities are classified as either "value" securities (low P/BV securities) or "growth" securities (high P/BV securities), relative to each MSCI country index. In this manner, the definition of value and growth is relative to each individual market as represented by the MSCI index. Country Value/Growth indices are aggregated into regional Value/Growth indices. The index is unmanaged and investments cannot be made in an index

2 The MSCI AC Asia Pacific Free Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in Asian Pacific areas. As of April 2002 the MSCI AC Asia Pacific Free Index consisted of the following 13 developed and emerging market country indices: Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore and Taiwan. The MSCI Japan Index is a free float-adjusted market index that is designed to measure equity market performance in Japan. These indices are unmanaged and investments cannot be made in an index.

3 The MSCI Europe Index is a market value-weighted average of the performance of over 500 securities listed on the stock exchanges of 15 countries in the European region. The USA Index is a free float-adjusted market index that is designed to measure equity performance in the United States of America. These indices are unmanaged and investments cannot be made in an index.

4 The MSCI-EAFE Index is a market capitalization-weighted equity index comprising 20 of the 48 countries in the MSCI universe and representing the developed world outside of North America. Each MSCI country index is created separately, then aggregated, without change, into regional MSCI indices. EAFE performance data is calculated in U.S. dollars and in local currency. This index is unmanaged and investments cannot be made in an index.

TOP HOLDINGS

Some of our top holdings as of June 30, 2002 include: TotalFinaElf S.A. (4.2% of net assets), one of the world's largest integrated oil companies based in France; UBS AG (2.1%), one of the world's leading global financial firms based in Switzerland; and Unilever NV (1.8%), one of the world's largest packaged consumer goods companies based in the Netherlands.

OUTLOOK

In many respects, global economic conditions and market performance in coming quarters will be especially difficult to anticipate, due to worldwide uncertainties on the War on Terrorism, U.S. economic recovery and heightened accounting scrutiny. These uncertainties coupled with continued earnings and valuation risks could lead to potentially volatile circumstances in the near term. On the positive front, we expect the Federal Reserve to maintain a loose monetary stance through 2002.

While our modest overweight in technology and media has negatively impacted performance thus far, we believe that buying now for future growth prospects remains prudent. We own blue chip companies in these sectors such as ASM Lithography in the Netherlands and News Corp. in Australia. We want to stress that the Fund is investigating technology and media companies we believe have management teams experienced in prior economic slowdowns, strong financial flexibility and generating strong cash flows. Because the market may continue to remain volatile given concerns over accounting irregularities in the U.S, we look to take advantage of market fears to buy stocks as opportunities arise. Moreover, we continue to selectively add to oil stocks like BP and food and beverage stocks like Nestle and Diageo. We maintain an underweight position in Financials due to concerns over credit quality. And recently, we reduced our exposure to investment banks and some consumer discretionary names with German exposure.

In Asia, we continued to like Korea for the long-term. Specifically, we have been hit by our technology positions but believe prospects and valuations remain favorable going into 2003. In Japan, we remain underweight given our disappointment with the slow rate of reform. Nonetheless, we have been adding to some industrial cyclical companies like NGK Insulators.

STRATEGY

Despite all the uncertainties, we continue to believe economic fundamentals are slowly improving. Therefore, we are maintaining sector positions to benefit from gradual economic upturns, such as materials, semiconductors and oils. We look to take advantage of any market weakness to invest in good quality companies at attractive valuations for the long term.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value in U.S. Dollars
			COMMON STOCKS--94.8%
			AUSTRALIA--2.4%
			Materials--0.9%
	87,281		BHP Billiton Ltd.	$	506,179

			Media--1.5%
	43,809		News Corp. Ltd.		238,773
	24,900		News Corp. Ltd., ADR		570,957

			TOTAL		809,730

			TOTAL AUSTRALIA		1,315,909

			BELGIUM--0.0%
			Telecommunications--0.0%
	196		Telindus Group NV		2

			CANADA--4.6%
			Energy--0.7%
	8,849		Talisman Energy, Inc.		397,672

			Insurance--0.9%
	23,100		Sun Life Financial Services of Canada, Ltd.		500,726

			Materials--2.3%
	14,200		Alcan, Inc.		539,501
	20,300		Barrick Gold Corp.		385,362
	13,400	¹	Inco Ltd.		301,317

			TOTAL		1,226,180

			Retailing--0.7%
	40,800		Hudson's Bay Co.		364,559

			TOTAL CANADA		2,489,137

			FINLAND--2.6%
			Materials--1.4%
	19,450		UPM - Kymmene Oyj		764,229

			Technology Hardware & Equipment--1.2%
	45,320		Nokia Oyj		662,072

			TOTAL FINLAND		1,426,301

			FRANCE--15.7%
			Automobiles & Components--1.2%
	15,750		Valeo SA		653,626

			Banks--1.3%
	11,170		Societe Generale, Paris		734,422

			Capital Goods--1.9%
	38,600	¹	Alstom		407,515
	13,480		Compagnie de St. Gobain		603,936

			TOTAL		1,011,451

			Energy--4.2%
	14,179		TotalFinaElf SA		2,297,810

			Food Beverage & Tobacco--1.5%
	8,235		Pernod-Ricard		805,271

			Materials--1.6%
	62,630	¹	Arcelor		887,168

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			FRANCE--continued
			Media--1.5%
	22,670		Publicis Groupe	$	624,597
	8,376		Vivendi Universal SA		180,655

			TOTAL		805,252

			Pharmaceuticals & Biotechnology--1.5%
	11,625		Aventis SA		822,208

			Telecommunications --1.0%
	20,500		Bouygues SA		571,681

			TOTAL FRANCE		8,588,889

			GERMANY--5.9%
			Automobiles & Components--0.5%
	5,825		Volkswagen AG		280,209

			Insurance--1.4%
	3,903		Allianz AG		786,597

			Materials--0.6%
	17,200	¹	SGL Carbon AG		307,731

			Pharmaceuticals & Biotechnology--1.6%
	13,708		Schering Ag		861,838

			Transportation--1.1%
	44,700		Deutsche Lufthansa AG		634,508

			Utilities--0.7%
	6,550		E.On AG		379,329

			TOTAL GERMANY		3,250,212

			HONG KONG--2.1%
			Capital Goods--1.2%
	307,000		Citic Pacific Ltd.		661,252

			Media--0.4%
	52,000		Television Broadcasts Ltd.		220,674

			Real Estate--0.5%
	108,000		Wharf Holdings Ltd.		254,777

			TOTAL HONG KONG		1,136,703

			IRELAND--1.1%
			Diversified Financials--0.5%
	5,300	¹	DePfa Bank PLC		292,571

			Media--0.6%
	157,400		Independent News & Media PLC		310,314

			TOTAL IRELAND		602,885

			ITALY--2.5%
			Telecommunications--0.9%
	59,500		Telecom Italia SpA		465,111

			Transportation--1.6%
	108,190		Autostrade SpA		894,779

			TOTAL ITALY		1,359,890

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			JAPAN--14.6%
			Automobiles & Components--2.1%
	59,000		Fuji Heavy Industries, Ltd.	$	281,550
	33,000		Toyota Motor Corp.		875,485

			TOTAL		1,157,035

			Capital Goods--1.6%
	94,000		Komatsu Ltd.		336,429
	65,000		NGK Insulators, Ltd.		514,621

			TOTAL		851,050

			Consumer Durables & Apparel--1.2%
	27,700	¹	Sega Corp.		665,549

			Diversified Financials--2.0%
	122,700		Nikko Cordial Corp.		619,309
	31,000		Nomura Holdings, Inc.		455,179

			TOTAL		1,074,488

			Food & Drug Retailing--1.1%
	15,000		Seven-Eleven Japan Co., Ltd.		590,664

			Food Beverage & Tobacco--1.8%
	50,000		Ajinomoto Co., Inc.		536,437
	37,000		Nippon Meat Packers, Inc.		463,638

			TOTAL		1,000,075

			Real Estate--0.3%
	22,000	¹	Leopalace21 Corp.		156,009

			Retailing--0.8%
	35,400		Marui Co., Ltd.		448,610

			Software & Services--0.5%
	11,200		Capcom Co., Ltd.		289,659

			Technology Hardware & Equipment--1.8%
	10,000		TDK Corp.		472,198
	7,300		Tokyo Electron Ltd.		475,643

			TOTAL		947,841

			Telecommunications--0.5%
	96		Japan Telecom Co., Ltd.		274,709

			Transportation--0.9%
	28,000		Yamato Transport Co., Ltd.		510,408

			TOTAL JAPAN		7,966,097

			KOREA --1.8%
			Household & Personal Products--0.2%
	43,162	¹	Coreana Cosmetics Co., Ltd.		136,339

			Technology, Hardware & Equipment--0.9%
	1,700	¹	Samsung Electronics Co., Ltd.		464,921

			Utilities--0.7%
	21,700		Korea Electric Power Corp.		396,841

			TOTAL KOREA		998,101

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			NETHERLANDS--8.5%
			Diversified Financials--1.2%
	26,620		ING Groep NV	$	682,257

			Energy--1.2%
	11,430		Royal Dutch Petroleum Co.		635,466

			Food, Beverage & Tobacco--1.8%
	15,307		Unilever NV		1,000,392

			Media--1.0%
	28,820		Wolters Kluwer NV		546,027

			Technology, Hardware & Equipment--2.8%
	37,970	¹	ASM Lithography Holding NV		599,986
	33,399		Koninklijke (Royal) Philips Electronics NV		930,735

			TOTAL		1,530,721

			Telecommunications--0.5%
	55,500		Koninklijke (Royal) KPN NV		259,321

			TOTAL NETHERLANDS		4,654,184

			PANAMA--0.3%
			Food, Beverage & Tobacco--0.3%
	12,500		Panamerican Beverages, Inc., Class A		178,125

			RUSSIA--2.4%
			Energy--1.4%
	7,545		LUKOIL, ADR		489,471
	2,115		YUKOS, ADR		292,308

			TOTAL		781,779

			Materials--0.7%
	17,520		JSC Mining and Metallurgical Co. Norilsk Nickel, ADR		365,737

			Telecommunications--0.3%
	6,110	¹	AO VimpelCom, ADR		155,561

			TOTAL RUSSIA		1,303,077

			SINGAPORE--1.7%
			Real Estate--0.7%
	109,000		City Developments Ltd.		351,762

			Transportation--1.0%
	76,400		Singapore Airlines Ltd.		557,996

			TOTAL SINGAPORE		909,758

			SPAIN--3.0%
			Banks--0.5%
	37,000		Banco Santander Central Hispano, SA		293,241

			Telecommunications --0.8%
	50,900		Telefonica SA		426,485

			Utilities--1.7%
	23,500		Endesa SA		340,759
	31,010		Union Fenosa, SA		568,567

			TOTAL		909,326

			TOTAL SPAIN		1,629,052

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			SWITZERLAND--5.5%
			Banks--2.1%
	22,790		UBS AG	$	1,143,702

			Food, Beverage & Tobacco--1.2%
	2,660	¹	Nestle SA		618,854

			Pharmaceuticals & Biotechnology--1.2%
	15,005	¹	Novartis AG		658,449

			Technology Hardware & Equipment--1.0%
	22,950		STMicroelectronics N.V.		558,374

			TOTAL SWITZERLAND		2,979,379

			TAIWAN--2.1%
			Technology, Hardware & Equipment--2.1%
	438,000		Ase		291,038
	78,000	¹	Asustek Computer, Inc.		234,630
	128,700	¹	Taiwan Semiconductor Manufacturing Co., Ltd.		261,945
	298,850	¹	United Microelectronics Corp.		358,691

			TOTAL TAIWAN		1,146,304

			UNITED KINGDOM--18.0%
			Banking--2.6%
	38,800		HSBC Holdings PLC		446,463
	35,170		Royal Bank of Scotland PLC, Edinburgh		997,369

			TOTAL		1,443,832

			Capital Goods--1.6%
	170,165		BAE Systems PLC		869,131

			Commercial Services & Supplies--1.4%
	188,070		Rentokil Initial PLC		765,598

			Diversified Financials--0.5%
	31,410		Amvescap PLC		255,968

			Energy--1.1%
	70,050		BP PLC		588,478

			Food, Beverage & Tobacco--2.1%
	28,600		British American Tobacco PLC		307,415
	48,742		Diageo PLC		633,160
	11,300		Imperial Tobacco Group PLC		183,829

			TOTAL		1,124,404

			Hotels Restaurants & Leisure--1.3%
	123,754		Rank Group PLC		504,723
	22,200		Six Continents PLC		225,592

			TOTAL		730,315

			Materials--0.9%
	69,350		Hanson PLC		495,366

			Media--2.0%
	147,680		Carlton Communications PLC		472,837
	64,115		Pearson PLC		637,838

			TOTAL		1,110,675

Shares or Principal Amount				Value in U.S. Dollars
			COMMON STOCKS--continued
			UNITED KINGDOM--continued
			Retailing--1.5%
	81,363		Kingfisher PLC	$	392,309
	73,910		Marks & Spencer Group PLC		420,040

			TOTAL		812,349

			Telecommunications --1.6%
	626,207		Vodafone Group PLC		859,272

			Transportation--1.1%
	22,209		National Express Group PLC		196,394
	392,200		Stagecoach Group PLC		375,225

			TOTAL		571,619

			Utilities--0.3%
	21,100	¹	AWG PLC		176,936

			TOTAL UNITED KINGDOM		9,803,943

			TOTAL COMMON STOCKS (IDENTIFIED COST $51,665,665)		51,737,948

			PREFERRED STOCKS--1.6%
			GERMANY--1.6%
			Household & Personal Products--1.6%
	12,332		Henkel KGAA, Pfd. (identified cost $741,365)		859,448

			REPURCHASE AGREEMENT--3.2%²
$	1,776,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		1,776,000

			TOTAL INVESTMENTS (IDENTIFIED COST $54,183,030)³	$	54,373,396

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $54,183,030. The net unrealized appreciation of investments on a federal tax basis amounts to $190,366 which is comprised of $4,358,173 appreciation and $4,167,807 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($54,587,721) at June 30, 2002.

The following acronym is used throughout this portfolio:

ADR	--American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $54,183,030)			$	54,373,396
Cash				568
Cash denominated in foreign currencies (identified cost $573,122)				583,417
Income receivable				141,207
Receivable for investments sold				473,693

TOTAL ASSETS				55,572,281

Liabilities:
Payable for investments purchased	$	956,215
Net payable for foreign currency exchange contracts		1,488
Accrued expenses		26,857

TOTAL LIABILITIES				984,560

Net assets for 5,101,844 shares outstanding			$	54,587,721

Net Assets Consist of:
Paid in capital			$	84,460,386
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency				197,373
Accumulated net realized loss on investments and foreign currency transactions				(30,118,800	)
Undistributed net investment income				48,762

TOTAL NET ASSETS			$	54,587,721

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$54,587,721 ÷ 5,101,844 shares outstanding				$10.70

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $66,264)				$	570,599
Interest					40,910

TOTAL INCOME					611,509

Expenses:
Investment adviser fee	$	299,840
Administrative personnel and services fee		61,987
Custodian fees		42,425
Transfer and dividend disbursing agent fees and expenses		8,461
Directors'/Trustees' fees		815
Auditing fees		2,373
Legal fees		2,917
Portfolio accounting fees		27,463
Printing and postage		12,740
Insurance premiums		591
Miscellaneous		615

TOTAL EXPENSES		460,227

Waiver of investment adviser fee		(29,984	)

Net expenses					430,243

Net investment income					181,266

Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions					(4,587,585	)
Net change in unrealized depreciation of investments and translation of assets and liabilities in foreign currency					1,022,504

Net realized and unrealized loss on investments and foreign currency transactions					(3,565,081	)

Change in net assets resulting from operations				$	(3,383,815	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	181,266		$	177,221
Net realized loss on investments and foreign currency transactions		(4,587,585	)		(22,797,611	)
Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency		1,022,504			(4,295,454	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(3,383,815	)		(26,915,844	)

Distributions to Shareholders:
Distributions from net realized gain on investments and foreign currency transactions		--			(10,343,455	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		--			(10,343,455	)

Share Transactions:
Proceeds from sale of shares		131,429,510			140,049,470
Net asset value of shares issued to shareholders in payment of distributions declared		--			10,343,445
Cost of shares redeemed		(134,090,055	)		(150,681,218	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(2,660,545	)		(288,303	)

Change in net assets		(6,044,360	)		(37,547,602	)

Net Assets:
Beginning of period		60,632,081			98,179,683

End of period	$	54,587,721		$	60,632,081

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999		1998		1997
Net Asset Value, Beginning of Period	$11.38		$18.49		$27.64		$15.39		$12.27		$11.16
Income from Investment Operations:
Net investment income (net operating loss)	0.03		0.03	¹	0.05		(0.02	)	0.03	¹	0.07
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(0.71	)	(5.15	)	(4.93	)	12.72		3.11		1.05

TOTAL FROM INVESTMENT OPERATIONS	(0.68	)	(5.12	)	(4.88	)	12.70		3.14		1.12

Less Distributions:
Distributions from net investment income	--		--		--		--		--		(0.01	)
Distributions from net realized gain on investments and foreign currency transactions	--		(1.99	)	(4.27	)	(0.45	)	(0.02	)	--

TOTAL DISTRIBUTIONS	--		(1.99	)	(4.27	)	(0.45	)	(0.02	)	(0.01	)

Net Asset Value, End of Period	$10.70		$11.38		$18.49		$27.64		$15.39		$12.27

Total Return²	(5.98	)%	(29.42	)%	(22.61)	%	84.88	%	25.57	%	10.08	%


Ratios to Average Net Assets:

Expenses	1.43	%³	1.41	%	1.28	%	1.25	%	1.25	%	1.23	%

Net investment income (net operating loss)	0.60	%³	0.23	%	0.17	%	(0.34	)%	0.19	%	0.76	%

Expense waiver/reimbursement⁴	0.10	%³	0.10	%	0.02	%	0.46	%	0.47	%	0.98	%

Supplemental Data:

Net assets, end of period (000 omitted)	$54,588		$60,632		$98,180		$105,100		$52,308		$36,575

Portfolio turnover	64	%	206	%	262%		304	%	247	%	179	%

1 Per share information is based on average shares outstanding.

2 Based on NAV, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

3 Computed on an annualized basis.

4 This voluntary expense decrease is reflected in both the expense and net investment income (net operating loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated International Equity Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to obtain a total return on its assets.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. With respect to valuation of foreign securities, trading in foreign cities may be completed at times which vary from the closing of the New York Stock Exchange. Therefore, foreign securities are valued at the latest closing price on the exchange on which they are traded prior to the closing of the New York Stock Exchange. Foreign securities quoted in foreign currencies are translated into U.S. dollars at the foreign exchange rate in effect at noon, eastern-time, on the day the value of the foreign security is determined. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

However, federal taxes may be imposed on the Fund upon the disposition of certain investments in passive foreign investment companies. Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's tax rules and rates.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $23,887,554 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2009.

When-Issued and Delayed Delivery Transactions

Foreign Exchange Contracts

The Fund may enter into foreign currency commitments for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign currency contract transactions to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies; whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign currency transactions are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

At June 30, 2002, the Fund had outstanding foreign currency commitments as set forth below:

Settlement Date	Contracts to Receive/Deliver	In Exchange For	Contracts at Value	Unrealized Appreciation (Depreciation)
Contracts Bought:
July 1, 2002	425,799 Swiss Franc	$286,813	$285,484	$(1,329	)

July 1, 2002	287,745 Euro	283,113	283,645	532

July 1, 2002	94,003 Pound Sterling	143,683	143,321	(362	)

July 1, 2002	18,908,026 Japanese Yen	157,567	157,745	178

Contracts Sold:
July 1, 2002	1,024,417 Danish Krone	135,972	135,955	17

July 1, 2002	132,788 Pound Sterling	201,931	202,455	(524	)

NET UNREALIZED DEPRECIATION ON FOREIGN CURRENCY EXCHANGE CONTRACTS				$(1,488	)

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FC") are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	11,963,101		11,176,577
Shares issued to shareholders in payment of distributions declared	--		763,354
Shares redeemed	(12,189,715	)	(11,920,351	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(226,614	)	19,580

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Global Investment Management Corp., the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Administrative Fee

Shareholder Services Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund may pay FSSC up to 0.25% of the average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. For the six months ended June 30, 2002, the Fund did not incur a shareholder services fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	35,489,167

Sales	$	38,162,057

RISKS OF FOREIGN INVESTING

The Fund invests in securities of non-U.S. issuers. The political or economic developments within a particular country or region may have an adverse effect on the ability of domiciled issuers to meet their obligations. Additionally, political or economic developments may have an effect on the liquidity and volatility of portfolio securities and currency holdings.

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated International Equity Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916603

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G00433-06 (8/02)

Federated Investors
World-Class Investment Manager

Federated International Small Company Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

Federated International Small Company Fund II, a portfolio of Federated Insurance Series, is managed to bring you long-term capital growth opportunities from a portfolio of high-quality international small-cap stocks.¹

This Semi-Annual Report covers the fund's six-month reporting period from January 1, 2002 through June 30, 2002. It opens with the fund portfolio manager's review of market conditions and discussion of fund performance and includes a complete listing of the fund's holdings and financial statements.

For the six-month reporting period ended June 30, 2002, the fund produced a total return of (2.34)%, and its net asset value decreased by $0.12.² At the end of the period, the fund's net assets were $8.8 million.

Please remember that the true measure of the performance of a long-term investment like Federated International Small Company Fund II is in years rather than months. During times of market uncertainty, keep in mind the value of dollar-cost averaging, an investment method through which you can take advantage of price fluctuations by adding to your account on a regular basis. By investing the same amount on a regular schedule, you buy more fund shares when prices are low and fewer when prices are high.³

Thank you for choosing Federated International Small Company Fund II as a diversified, professionally managed way to participate in the growth potential of small companies overseas. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 International investing involves special risks including currency risk, increased volatility of foreign securities and differences in auditing and other financial standards. Smaller capitalization companies involve more risks than larger, more established companies.

Investment Review

How did the fund perform relative to its benchmark?

During the six-month reporting period, the Federated International Small Company Fund II had a return of (2.34)%, which underperformed the Morgan Stanley Capital International (MSCI) World ex-U.S. Small Cap Index. The performance of the MSCI World ex-U.S. Small Cap Index, measured in U.S. dollars, was 8.88%.¹

Strong individual country performances were turned in by Ireland, 19.33%, and Japan, 17.5%, as measured in U.S. dollars. This latter point is especially important, as the U.S. dollar continued to weaken, thereby enhancing returns to foreign investors. In local currency terms, Ireland gained 7.59% and Japan gained only 7.46%.

Weaker markets included Germany, (4.64)%, and the Netherlands, (2.60)%, as measured in U.S. dollars.

What were the dominant themes for the fund and the index?

Equity markets initially were buoyed by hopes of a recovery in the second half of 2002, which became less apparent as the first half ended, reflected by economic gloom and profit warnings. From the end of December 2001 to June 2002, the Federal Reserve held interest rates steady. The Bank of England and the European Central Bank also held rates steady. Profit warnings picked up again as analysts' expectations looked too optimistic. Earnings downgrades are thus likely to persist into the third quarter notwithstanding a tightening of accounting standards.

Were there any disappointments in the portfolio?

The fund's performance was largely attributable to the poor performance delivered by European markets and our asset allocation of nearly 45% to that region. Our media holdings in Europe underperformed due to the failure of the anticipated recovery in advertising spending to materialize. As such, we sold down our exposure in Havas (France) & Modern Times Group (Sweden).

Despite diversification across numerous industries, small cap stocks continued to suffer negative price performance, as they were broadly sold down by the market in a knee-jerk reaction to unrelated profit warnings.

Which portfolio holdings were the best performers?

Fund performance was positively affected by strong stock selection in Sweden and the Netherlands. Investments in Swedish Match (tobacco) in Sweden and IHC Caland (capital goods) in the Netherlands contributed positively to the fund.

What is your outlook for the next fiscal period?

We believe that the U.S. economic recovery is under way. The market seems to have become disillusioned and hence disappointed with the strength of the recovery. As the international markets continue to outperform in U.S dollar terms, liquidity should improve as investors, both U.S. and foreign, look to overseas markets. We do not anticipate significant changes to our portfolio. While we do not expect the market to roar ahead in the second half of this year, we do expect to continue to find niche leaders that are attractively priced with promising growth prospects. While the market may be overlooking these gems, we believe that the market will recognize them in time and reward current investors for their patience.

We continue to view the U.S dollar as potentially weakening further over the coming months. This position leads us to focus on companies that have very strong domestic franchises within their country or region, thereby avoiding or minimizing trade exposure to the U.S. dollar.

1 The MSCI World ex-U.S. Small Cap Index is created by selecting companies within the market capitalization range of USD 200-800 million. The dollar denominated range is applied across all 23 developed markets. The index is unmanaged and investments cannot be made in an index.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value in U.S. Dollars
			COMMON STOCKS--34.4%
			AUSTRALIA--2.2%
			Automobiles & Components--0.2%
	3,000		ION Ltd.	$	4,763
	7,255		Pacifica Group Ltd.		15,686

			TOTAL		20,449

			Capital Goods--0.2%
	2,641		Leighton Holdings Ltd.		15,450

			Food Beverage & Tobacco--0.4%
	4,051		Coca-Cola Amatil Ltd.		14,552
	7,560		Foster's Group Ltd.		20,091

			TOTAL		34,643

			Materials--0.8%
	5,448		Amcor Ltd.		25,276
	8,534		Boral Ltd.		18,019
	36,976		M.I.M. Holdings Ltd.		27,065

			TOTAL		70,360

			Transportation--0.6%
	2,765		Patrick Corp., Ltd.		25,532
	1,667		Toll Holdings Ltd.		29,754

			TOTAL		55,286

			TOTAL AUSTRALIA		196,188

			BELGIUM--0.2%
			Health Care Equipment & Services--0.2%
	398		Omega Pharma SA		17,792

			CANADA--4.5%
			Automobiles & Components--0.3%
	397		Magna International, Inc., Class A		27,369

			Capital Goods--0.9%
	2,995		CAE, Inc.		24,552
	1,025	¹	Masonite International Corp.		19,033
	800	¹	Royal Group Technologies Ltd.		16,583
	915		SNC-Lavalin Group, Inc.		21,087

			TOTAL		81,255

			Diversified Financials--0.5%
	2,800		C.I. Fund Management, Inc.		19,543
	1,300		Investors Group, Inc.		23,754

			TOTAL		43,297

			Energy--0.8%
	7,000	¹	Baytex Energy Ltd.		33,186
	1,200		Ensign Resource Service Group, Inc.		13,045
	516		Talisman Energy, Inc.		23,189

			TOTAL		69,420

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			CANADA--continued
			Food Beverage & Tobacco--0.1%
	443		Molson Ltd., Class A	$	9,611

			Hotels Restaurants & Leisure--0.2%
	660		Fairmont Hotels & Resorts, Inc.		17,015

			Insurance--0.4%
	1,280		Industrial Alliance Life Insurance Co.		34,969

			Materials--0.5%
	2,148		Domtar, Inc.		25,105
	3,700		Norske Skog Canada Ltd.		18,029

			TOTAL		43,134

			Pharmaceuticals & Biotechnology--0.3%
	273	¹	Angiotech Pharmaceuticals, Inc.		10,191
	7,000	¹	StressGen Biotechnologies Corp.		17,285

			TOTAL		27,476

			Retailing--0.3%
	2,270		Hudson's Bay Co.		20,283

			Software & Services--0.2%
	1,000	¹	Open Text Corp.		19,610

			TOTAL CANADA		393,439

			CHINA--0.2%
			Transportation--0.2%
	72,000		China National Aviation Co., Ltd.		17,262

			DENMARK--0.9%
			Food Beverage & Tobacco--0.6%
	660		Carlsberg A/S		34,511
	580		Danisco A/S		21,168

			TOTAL		55,679

			Health Care Equipment & Services--0.2%
	190		Coloplast A.S., Class B		15,382

			Materials--0.1%
	495		Novozymes A/S, Class B		11,168

			TOTAL DENMARK		82,229

			FRANCE--1.4%
			Capital Goods--0.2%
	282		Vallourec AS		17,165

			Health Care Equipment & Services--0.1%
	240		Essilor International SA		9,740

			Insurance--0.3%
	760		Scor SA		23,149

			Media--0.3%
	1,962	¹	JC Decaux SA		26,496

			Technology Hardware & Equipment--0.3%
	596	¹	Neopost SA		23,677

			Transportation--0.2%
	21,700	¹	Eurotunnel SA		19,038

			TOTAL FRANCE		119,265

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			GERMANY, FEDERAL REPUBLIC OF--1.4%
			Capital Goods--0.2%
	740		Buderus AG	$	16,953

			Commercial Services & Supplies-0.1%
	364		Gfk AG		6,764

			Health Care Equipment & Services--0.3%
	626		Gehe AG		26,102

			Materials--0.2%
	819	¹	SGL Carbon AG		14,653

			Pharmaceuticals & Biotechnology--0.4%
	863		Stada Arzneimittel AG		34,453

			Real Estate--0.0%
	230	¹	Aareal Bank AG		3,684

			Utilities--0.2%
	1,020	¹	Wedeco AG Water Technology		18,551

			TOTAL GERMANY, FEDERAL REPUBLIC OF		121,160

			HONG KONG--2.4%
			Banks--0.3%
	7,000		Wing Hang Bank Ltd.		23,199

			Capital Goods--0.3%
	12,000		Citic Pacific Ltd.		25,847

			Commercial Services & Supplies--0.2%
	22,000		Techtronic Industries Co.		18,757

			Food Beverage & Tobacco--0.1%
	42,000		Cofco International Ltd.		12,789

			Hotels Restaurants & Leisure--0.3%
	20,000		Cafe De Coral Holdings Ltd.		15,513
	24,000		Hong Kong & Shang Hotels Ltd.		11,154

			TOTAL		26,667

			Household & Personal Products--0.1%
	90,000		Natural Beauty Bio-Technology Ltd.		10,385

			Real Estate--0.1%
	13,000		Wheelock & Co. Ltd.		10,500

			Recreation--0.1%
	20,000	¹	Star Cruises Ltd.		8,205

			Retailing--0.5%
	16,000		Esprit Holdings Ltd.		30,770
	20,000		Giordano International Ltd.		12,308

			TOTAL		43,078

			Technology Hardware & Equipment--0.2%
	30,000		TPV Technology Ltd.		10,770
	17,000		Varitronix International Ltd.		10,516

			TOTAL		21,286

			Transportation--0.2%
	17,000		Cosco Pacific Ltd.		13,622

			TOTAL HONG KONG		214,335

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			IRELAND--0.6%
			Banks--0.3%
	4,200		Anglo Irish Bank Corp. PLC	$	26,895

			Diversified Financials--0.2%
	230	¹	DePfa Bank PLC		12,696

			Software & Services--0.1%
	783	¹	Riverdeep Group PLC, ADR		12,184

			TOTAL IRELAND		51,775

			ISRAEL--0.2%
			Pharmaceuticals & Biotechnology--0.2%
	585	¹	Taro Pharmaceutical Industries Ltd.		14,344

			ITALY--2.6%
			Commercial Services & Supplies--0.3%
	1,150		Permasteelisa SPA		22,049

			Consumer Durables & Apparel--0.7%
	3,800		De'Longhi SPA		20,415
	4,188		Ferretti SPA		14,738
	2,000		Merloni Elettrodomestic SPA		21,825

			TOTAL		56,978

			Energy--0.3%
	3,936		Saipem SPA		28,246

			Food Beverage & Tobacco--0.5%
	870		Davide Campari -- Milano SPA		28,730
	5,600		Parmalat Finanziaria SPA		17,278

			TOTAL		46,008

			Hotels Restaurants & Leisure--0.1%
	1,555		Lottomatica SPA		12,416

			Media--0.1%
	1,810		Mondadori (Arnoldo) Editore SPA		11,972

			Pharmaceuticals & Biotechnology--0.3%
	1,000		Recordati SPA		27,010

			Utilities--0.3%
	2,070		Italgas SPA		22,956

			TOTAL ITALY		227,635

			JAPAN--4.6%
			Automobiles & Components--0.3%
	1,000		Keihin Corp.		10,420
	600		Nissin Kogyo Co., Ltd.		13,590

			TOTAL		24,010

			Capital Goods--0.8%
	2,000		Central Glass Co., Ltd.		11,580
	16,000	¹	Kawasaki Heavy Industries Ltd.		20,423
	3,000		Koyo Seiko Co., Ltd.		14,867
	6,000		NTN Corp.		23,476

			TOTAL		70,346

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			JAPAN--continued
			Commercial Services & Supplies--0.1%
	30		Bellsystem 24, Inc.	$	10,499

			Consumer Durables & Apparel--0.4%
	400		Bandai Co., Ltd.		14,349
	700	¹	Sega Corp.		16,819

			TOTAL		31,168

			Diversified Financials--0.1%
	110		Shokoh Fund & Co., Ltd.		13,307

			Food Beverage & Tobacco--0.8%
	400		Ariake Japan Co., Ltd.		15,351
	360		Hokuto Corp.		9,371
	2,000		Kagome Co., Ltd.		16,452
	1,000		Katokichi Co., Ltd.		17,520
	1,000		Q.P. Corp.		8,334

			TOTAL		67,028

			Materials--0.4%
	700		Taisei Lamick Co., Ltd.		21,316
	3,500		Tokyo Steel Manufacturing Co., Ltd.		12,877

			TOTAL		34,193

			Pharmaceuticals & Biotechnology--0.1%
	1,000		Hisamitsu Pharmaceutical Co., Inc.		13,073

			Retailing--0.9%
	300		Don Quijote Co., Ltd.		28,882
	500		Komeri Co., Ltd.		14,558
	600		Nishimatsuya Chain Co., Ltd.		19,522
	200		Yamada Denki Co., Ltd.		17,520

			TOTAL		80,482

			Software & Services--0.4%
	300		Capcom Co., Ltd.		7,759
	500		CSK Corp.		17,812
	400		Meitec Corp.		13,215

			TOTAL		38,786

			Technology Hardware & Equipment--0.3%
	3,000	¹	Dainippon Screen Manufacturing Co., Ltd.		15,517
	3	¹	UMC Japan		7,959

			TOTAL		23,476

			TOTAL JAPAN		406,368

			KOREA, REPUBLIC OF--2.0%
			Automobiles & Components--0.2%
	470		Hyundai Mobis		9,924
	440		Hyundai Motor Co., Ltd.		13,222

			TOTAL		23,146

			Banks--0.2%
	2,500		Industrial Bank of Korea		15,482

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			KOREA, REPUBLIC OF--continued
			Consumer Durables & Apparel--0.1%
	850		Cheil Industries, Inc.	$	10,316

			Diversified Financials--0.2%
	1,100		Shinhan Financial Group Co., Ltd.		15,544

			Household & Personal Products--0.3%
	3,936		Coreana Cosmetics Co., Ltd.		12,433
	120		Pacific Corp.		13,965

			TOTAL		26,398

			Materials--0.2%
	1,600		Sungshin Cement Manufacturing Co., Ltd.		16,758

			Pharmaceuticals & Biotechnology--0.2%
	1,150		Daewoong Pharmaceutical Co., Ltd.		19,262

			Retailing--0.6%
	480		CJ39 Shopping Corp.		32,878
	100		Shinsegae Co., Ltd.		16,958

			TOTAL		49,836

			TOTAL KOREA, REPUBLIC OF		176,742

			MALAYSIA--0.7%
			Capital Goods--0.5%
	11,000		Gamuda Berhad		18,092
	11,000		IJM Corp. Berhad		14,908
	11,000		Road Builder (M) Holdings Berhad		15,632

			TOTAL		48,632

			Food Beverage & Tobacco--0.2%
	9,000		IOI Corp. Berhad		14,447

			TOTAL MALAYSIA		63,079

			NETHERLANDS--1.0%
			Capital Goods--0.2%
	344		IHC Caland NV		20,532

			Food Beverage & Tobacco--0.2%
	620		Nutreco Holding NV		21,073

			Materials--0.4%
	750		DSM NV		34,740

			Pharmaceuticals & Biotechnology--0.2%
	1,214	¹	Qiagen NV		14,336

			TOTAL NETHERLANDS		90,681

			NORWAY--0.5%
			Food Beverage & Tobacco--0.1%
	593		Orkla ASA		11,430

			Technology Hardware & Equipment--0.4%
	2,590	¹	Tandberg ASA		30,469

			TOTAL NORWAY		41,899

			PANAMA--0.1%
			Food Beverage & Tobacco--0.1%
	880		Panamerican Beverages, Inc. Class A		12,540

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			PORTUGAL--0.7%
			Media--0.2%
	6,700	¹	Impresa-Sociedade Gestora de Participacoes SA	$	16,511

			Telecommunication Services--0.2%
	2,201		Vodafone Telecel - Comunicacoes Pessoais SA		15,361

			Transportation--0.3%
	4,740		Brisa - Auto Estradas de Portugal SA		26,633

			TOTAL PORTUGAL		58,505

			RUSSIA--0.6%
			Food Beverage & Tobacco--0.2%
	700	¹	Wimm-Bill-Dann Foods OJSC, ADR		14,770

			Materials--0.2%
	800		JSC Mining and Metallurgical Co. Norilsk Nickel, ADR		16,700

			Telecommunication Services--0.2%
	755	¹	AO VimpelCom, ADR		19,222

			TOTAL RUSSIA		50,692

			SINGAPORE--0.4%
			Capital Goods--0.1%
	18,000		Amtek Engineering Ltd.		11,924

			Diversified Financials--0.3%
	34,000		Singapore Exchange Ltd.		22,330

			TOTAL SINGAPORE		34,254

			SPAIN--1.2%
			Capital Goods--0.7%
	587		Actividades de Construccion y Servicios SA (ACS)		18,864
	828		Fomento de Construcciones y Contratas SA		20,160
	890		Grupo Ferrovial SA		24,223

			TOTAL		63,247

			Food Beverage & Tobacco--0.3%
	2,000		Ebro Puleva SA		23,264

			Pharmaceuticals & Biotechnology--0.2%
	2,530	¹	Zeltia SA		20,076

			TOTAL SPAIN		106,587

			SWEDEN--0.8%
			Health Care Equipment & Services--0.7%
	2,919	¹	Capio AB		24,715
	2,029	¹	Elekta AB, Class B		22,686
	635		Getinge Industrier AB, Class B		12,407

			TOTAL		59,808

			Media--0.1%
	1,578		Eniro AB		12,076

			TOTAL SWEDEN		71,884

Shares				Value in U.S. Dollars
			COMMON STOCKS--continued
			SWITZERLAND--1.0%
			Capital Goods--0.1%
	47		Kaba Holding AG	$	10,084

			Health Care Equipment & Services--0.3%
	24		Galenica Holding AG		22,367

			Insurance--0.3%
	425	¹	Converium Holding AG		21,913

			Retailing--0.1%
	50		Valora Holding AG		10,694

			Technology Hardware & Equipment--0.2%
	400	¹	Logitech International SA		18,558

			TOTAL SWITZERLAND		83,616

			THAILAND--0.3%
			Diversified Financials--0.3%
	25,100		Kiatnakin Finance Public Co., Ltd.		24,158

			UNITED KINGDOM--3.7%
			Banks--0.2%
	2,130		Northern Rock PLC		22,132

			Capital Goods--0.2%
	2,544		AMEC PLC		16,232

			Commercial Services & Supplies--0.2%
	4,100		Amey PLC		11,221
	1,229		WS Atkins PLC		7,589

			TOTAL		18,810

			Diversified Financials--0.6%
	4,830		Cattles PLC		24,486
	1,993		Man Group PLC		31,298

			TOTAL		55,784

			Food Beverage & Tobacco--0.2%
	1,571		Wolverhampton & Dudley Breweries PLC		15,801

			Health Care Equipment & Services--0.2%
	2,340		Nestor Healthcare Group PLC		16,411

			Hotels Restaurants & Leisure--0.6%
	4,052		Enterprise Inns PLC		31,816
	2,786	¹	Fitness First PLC		15,207
	860	¹	William Hill PLC		3,475

			TOTAL		50,498

			Media--0.4%
	3,602		HIT Entertainment PLC		14,759
	2,850		United Business Media PLC		18,902

			TOTAL		33,661

			Pharmaceuticals & Biotechnology--0.1%
	627	¹	Cambridge Antibody Technology Group PLC		9,894

Shares or Prinicipal Amount				Value in U.S. Dollars
			COMMON STOCKS--continued
			United Kingdom--continued
			Real Estate--0.1%
	4,200		Countrywide Assured Group PLC	$	9,413

			Retailing--0.2%
	5,900	¹	HMV Group PLC		14,348

			Software & Services--0.3%
	3,431		Misys PLC		12,659
	1,780		Torex PLC		16,473

			TOTAL		29,132

			Transportation--0.4%
	3,700		FirstGroup PLC		14,216
	1,600		Tibbett & Britten Group PLC		18,357

			TOTAL		32,573

			TOTAL UNITED KINGDOM		324,689

			VENEZUELA--0.2%
			Telecommunication Services--0.2%
	1,200		Compania Anonima Nacional Telefonos de Venezuela (CANTV), Class D, ADR		17,076

			TOTAL COMMON STOCKS (IDENTIFIED COST $2,794,452)		3,018,194

			PREFERRED STOCKS--0.3%
			GERMANY, FEDERAL REPUBLIC OF--0.3%
			Capital Goods--0.3%
	441		Krones AG, Pfd. (identified cost $15,569)		23,909

			REPURCHASE AGREEMENT--63.7%²
$	5,577,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		5,577,000

			TOTAL INVESTMENTS (IDENTIFIED COST $8,387,021)³	$	8,619,103

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $8,387,021. The net unrealized appreciation of investments on a federal tax basis amounts to $232,082 which is comprised of $391,494 appreciation and $159,412 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($8,756,143) at June 30, 2002.

The following acronym is used throughout this portfolio:

ADR	--American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Investment in repurchase agreement	$	5,577,000
Investments in securities		3,042,103

Total investments in securities, at value (identified cost $8,387,021)			$	8,619,103
Cash				599
Cash denominated in foreign currencies (identified cost $109,840)				114,501
Income receivable				6,102
Receivable for investments sold				60,936

TOTAL ASSETS				8,801,241

Liabilities:
Payable for investments purchased		15,156
Accrued expenses		29,942

TOTAL LIABILITIES				45,098

Net assets for 1,616,920 shares outstanding			$	8,756,143

Net Assets Consist of:
Paid in capital			$	14,037,989
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency				237,206
Accumulated net realized loss on investments and foreign currency transactions				(5,441,229	)
Net operating loss				(77,823	)

TOTAL NET ASSETS			$	8,756,143

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$8,756,143 ÷ 1,616,920 shares outstanding				$5.42

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $4,016)							$	30,405
Interest								12,847

TOTAL INCOME								43,252

Expenses:
Investment adviser fee				$	28,779
Administrative personnel and services fee					61,985
Custodian fees					84,643
Transfer and dividend disbursing agent fees and expenses					11,371
Directors'/Trustees' fees					558
Auditing fees					5,951
Legal fees					2,170
Portfolio accounting fees					37,486
Shareholder services fee					2,302
Share registration costs					25
Printing and postage					12,907
Insurance premiums					672
Miscellaneous					328

TOTAL EXPENSES					249,177

Waiver and Reimbursement:
Waiver of investment adviser fee	$	(28,779	)
Reimbursement of other operating expenses		(181,145	)

TOTAL WAIVER AND REIMBURSEMENT					(209,924	)

Net expenses								39,253

Net investment income								3,999

Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions (net of foreign taxes withheld of $2,920)								(49,375	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								92,362

Net realized and unrealized gain on investments and foreign currency transactions								42,987

Change in net assets resulting from operations							$	46,986

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income (operating loss)	$	3,999		$	(9,566	)
Net realized loss on investments and foreign currency transactions		(49,375	)		(3,051,238	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency		92,362			(42,257	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		46,986			(3,103,061	)

Share Transactions:
Proceeds from sale of shares		78,201,155			41,870,104
Cost of shares redeemed		(72,518,495	)		(45,185,319	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		5,682,660			(3,315,215	)

Change in net assets		5,729,646			(6,418,276	)

Net Assets:
Beginning of period		3,026,497			9,444,773

End of period	$	8,756,143		$	3,026,497

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000	¹
Net Asset Value, Beginning of Period	$ 5.54		$ 7.93		$10.00
Income From Investment Operations:
Net investment income (operating loss)	0.01	²	(0.01	)²	(0.02	)
Net realized and unrealized loss on investments and foreign currency transactions	(0.13	)	(2.38	)	(2.05	)

TOTAL FROM INVESTMENT OPERATIONS	(0.12	)	(2.39	)	(2.07	)

Net Asset Value, End of Period	$ 5.42		$ 5.54		$ 7.93

Total Return³	(2.34	)%	(30.01	)%	(20.70	)%


Ratios to Average Net Assets:

Expenses	1.70	%⁴	1.65	%	1.50	%⁴

Net investment income (operating loss)	0.17	%⁴	(0.11	)%	(0.34	)%⁴

Expense waiver/reimbursement⁵	9.12	%⁴	3.49	%	4.34	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$8,756		$3,026		$9,445

Portfolio turnover	65	%	246	%	177	%

1 Reflects operations for the period from May 1, 2000 (date of initial public investment) to December 31, 2000.

2 Per share information is based on average shares outstanding.

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

4 Computed on an annualized basis.

5 This voluntary expense decrease is reflected in both the expense and the net investment income (operating loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated International Small Company Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide long-term growth of capital.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuations

Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. With respect to valuation of foreign securities, trading in foreign cities may be completed at times which vary from the closing of the New York Stock Exchange. Therefore, foreign securities are valued at the latest closing price on the exchange on which they are traded prior to the closing of the New York Stock Exchange. Foreign securities quoted in foreign currencies are translated into U.S. dollars at the foreign exchange rate in effect at noon, eastern time, on the day the value of the foreign security is determined. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees ("Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $4,945,190 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2008		$1,531,482

2009		$3,413,708

Additionally, net capital losses of $476,857 attributed to security and currency transactions incurred after October 31, 2001 are treated as arising on the first day of the fund's next taxable year.

When-Issued and Delayed Delivery Transactions

Foreign Exchange Contracts

At June 30, 2002, the Fund had outstanding foreign currency commitments as set forth below:

Settlement Date	Contract to Deliver	In Exchange For	Contract at Value	Unrealized Appreciation (Depreciation)
Contract Sold:
7/2/2002	141,480 Norwegian Krone	$18,806	$18,806	$0

Foreign Currency Translation

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	14,001,578		6,964,744
Shares redeemed	(12,930,748	)	(7,609,131	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,070,830		(644,387	)

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Global Investment Management Corp., the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion.

Administrative Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases		$2,008,963

Sales		$2,017,331

RISK OF FOREIGN INVESTING

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated International Small Company Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916850

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

25671 (8/02)

Federated Investors
World-Class Investment Manager

Federated Kaufmann Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

Here is the Semi-Annual Report of Federated Kaufmann Fund II.

This report covers the period from April 30, 2002, through June 30, 2002. It begins with a discussion with the fund's portfolio co-managers, and is followed by a complete listing of the fund's stock holdings and financial statements.

At the end of the reporting period, the portfolio's core holdings represented businesses that have continued to experience high rates of growth in sales and earnings--right through the country's economic recession. These companies included PETsMART, Inc., Cendant Corp.,Lincare Holdings, Inc., Concord EFS, Inc., Affiliated Computer Services, Inc., Dollar Tree Stores, Inc., Unilab Corp., Advance Auto Parts, Inc., and Ace, Ltd.

For the reporting period, the fund produced a total return of (6.80)%.¹ On June 30, 2002, the fund's net assets totaled $93,460.

The reporting period was an unusually difficult one for stocks. Please remember that the true measure of investment performance is in years rather than months, and anticipate the relatively brief periods of negative, as well as positive, returns.

Thank you for entrusting a portion of your wealth to Federated Kaufmann Fund II. We welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such changes would lower performance. Please refer to the variable insurance product prospectus for a complete listing for these expenses.

Investment Review

The equity markets continue to be challenged by economic, budgetary and geopolitical uncertainties and, by growing investor distrust of corporate managements. In such an environment, we believe that it is especially important to genuinely know the managements and understand the business models, competitive advantages and corporate cultures of the companies in which one invests. Fortunately, this has been the essence of Federated Kaufmann's investment process. The Federated Kaufmann Fund II was initialized on April 30, 2002. For the reporting period ending June 30, 2002, the fund lost 6.80%, which compared favorably to the Russell Midcap Growth Index,² which lost 13.60%. As it happens from time to time, some of the fund's biggest losses during the quarter were in companies we know exceedingly well, in this case Ace, Ltd. (a property and casualty insurance company) and Kinder Morgan, Inc. (a natural gas pipeline company).

The strategy has not changed during the reporting period. We continue to focus on individual companies, not market sectors, those companies that have strengthening fundamentals for both near-term and long-term growth in sales and earnings. While many of the elements necessary for an economic recovery appear to be in place, there is a good likelihood that the pace of recovery will be relatively modest. In such a case, companies with strong growth prospects should become relatively more valuable because they will be harder to find.

Compared to our benchmark, we continue to be distinctly underweight in the Technology sectors. It's still true that, in these sectors, we are patiently waiting either for prices to correct or for business fundamentals to catch up to prices. Once the supply and demand disturbances of the last few years begin to be resolved, we think some of the companies that we have followed for years and know well should present attractive investment opportunities.

2 The Russell Midcap Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. These stocks are also members of the Russell 1000 Growth Index.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value
			COMMON STOCKS--97.6%
			FINANCIAL--11.5%
			Finance--3.2%
	100	¹	Concord EFS, Inc.	$	3,014

			Insurance--8.3%
	100		Ace, Ltd.		3,160
	100	¹	Philadelphia Consolidated Holding Corp.		4,534

			TOTAL		7,694

			TOTAL FINANCIAL		10,708

			HEALTH--38.0%
			Health Care Services--19.6%
	200	¹	Laboratory Corporation of America Holdings		9,130
	200	¹	Lincare Holdings, Inc.		6,460
	100	¹	Unilab Corp.		2,739

			TOTAL		18,329

			Medical Equipment & Supplies--14.7%
	100		Cardinal Health, Inc.		6,141
	100	¹	Orthofix International NV		3,515
	100	¹	Varian Medical Systems, Inc.		4,055

			TOTAL		13,711

			Pharmaceuticals & Biotech--3.7%
	100	¹	Charles River Laboratories International, Inc.		3,505

			TOTAL HEALTH		35,545

			RETAIL--20.7%
			Retail--20.7%
	100	¹	Advance Auto Parts, Inc.		5,451
	100	¹	Dollar Tree Stores, Inc.		3,941
	100		Family Dollar Stores, Inc.		3,525
	400	¹	PETsMART, Inc.		6,416

			TOTAL RETAIL		19,333

			SERVICES--13.6%
			Business Services--7.1%
	200	¹	Cendant Corp.		3,176
	100	¹	Corporate Executive Board Co.		3,425

			TOTAL		6,601

			Media--6.5%
	100	¹	Comcast Corp.		2,384
	100	¹	Lamar Advertising Co.		3,721

			TOTAL		6,105

			TOTAL SERVICES		12,706

Shares or Principal Amount				Value
			COMMON STOCKS--continued
			TECHNOLOGY--5.1%
			Data Processing Services--5.1%
	100	¹	Affiliated Computer Services, Inc., Class A	$	4,748

			OTHER--8.7%
			Energy--4.0%
	100		Kinder Morgan, Inc.		3,802

			Industrial Conglomerate--4.7%
	100		Philip Morris Cos., Inc.		4,368

			TOTAL OTHER		8,170

			TOTAL COMMON STOCKS (IDENTIFIED COST $97,851)		91,210

			REPURCHASE AGREEMENT--2.1%
$	2,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		2,000

			TOTAL INVESTMENTS (IDENTIFIED COST $99,851)²	$	93,210

1 Non-income producing security.

2 The cost of investments for federal tax purposes amounts to $99,851. The net unrealized depreciation of investments on a federal tax basis amounts to $6,641 which is comprised of $1,688 appreciation and $8,329 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($93,460) at June 30, 2002.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $99,851)			$	93,210
Cash				307
Income receivable				84

TOTAL ASSETS				93,601

Liabilities:
Accrued expenses	$	141

TOTAL LIABILITIES				141

Net assets for 10,025 shares outstanding			$	93,460

Net Assets Consist of:
Paid in capital			$	100,250
Net unrealized depreciation of investments				(6,641	)
Net operating loss				(149	)

TOTAL NET ASSETS			$	93,460

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$93,460 ÷ 10,025 shares outstanding				$9.32

See Notes which are an integral part of the Financial Statements

Statement of Operations

Period Ended June 30, 2002 (unaudited)

Investment Income:
Dividends							$	84
Interest								15

TOTAL INCOME								99

Expenses:
Investment adviser fee				$	235
Administrative personnel and services fee					20,890
Custodian fees					25
Transfer and dividend disbursing agent fees and expenses					27
Auditing fees					32
Legal fees					11
Portfolio accounting fees					78
Share registration costs					4
Printing and postage					36
Insurance premiums					3
Miscellaneous					4

TOTAL EXPENSES					21,345

Waiver and Reimbursement:
Waiver of investment adviser fee	$	(207	)
Reimbursement of other operating expenses		(20,890	)

TOTAL WAIVER AND REIMBURSEMENT					(21,097	)

Net expenses								248

Net operating loss								(149	)

Realized and Unrealized Loss on Investments:
Net change in unrealized appreciation/depreciation of investments								(6,641	)

Net realized and unrealized loss on investments								(6,641	)

Change in net assets resulting from operations							$	(6,790	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Period Ended (unaudited) 6/30/2002			¹
Increase (Decrease) in Net Assets
Operations:
Net operating loss		$	(149	)
Net change in unrealized appreciation/depreciation of investments			(6,641	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS			(6,790	)

Share Transactions:
Proceeds from sale of shares			100,250

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS			100,250

Change in net assets			93,460

Net Assets:
Beginning of period			--

End of period		$	93,460

1 For the period from April 30, 2002 (date of initial public investment) to June 30, 2002.

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Period Ended (unaudited) 6/30/2002	¹
Net Asset Value, Beginning of Period	$10.00
Income From Investment Operations:
Net operating loss	(0.01	)
Net realized and unrealized loss on investments	(0.67	)

TOTAL FROM INVESTMENT OPERATIONS	(0.68	)

Net Asset Value, End of Period	$ 9.32

Total Return²	(6.80	)%


Ratios to Average Net Assets:

Expenses	1.50	%³

Net investment income (loss)	(0.90	)%³

Expense waiver/reimbursement⁴	128.01	%³

Supplemental Data:

Net assets, end of period (000 omitted)	$93

1 Reflects operations for the period from April 30, 2002 (date of initial investment) to June 30, 2002.

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

3 Computed on an annualized basis.

4 This voluntary expense decrease is reflected in both the expense and the net operating loss ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Kaufmann Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide capital appreciation.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuations

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

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

When-Issued and Delayed Delivery Transactions

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Period Ended (unaudited) 6/30/2002¹
	Shares		Amount
Shares sold	10,025	$	100,250

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	10,025	$	100,250

1 Reflects operations for the period from April 30, 2002 (date of initial investment) to June 30, 2002.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 1.425% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Administrative Fee

Federated Services Company ("FServ"), under the Administrative Services Agreement provides the Fund with administrative personnel and services. The fee paid to FServ is based on a scale that ranges from 0.150% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries or Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund, annually, to compensate FSC. For the period ended June 30, 2002, the Fund did not incur a distribution services fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

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

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the period ended June 30, 2002, were as follows:

Purchases	$	97,851

Sales	$	0

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Kaufmann Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916827

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

27619 (8/02)

Federated Investors
World-Class Investment Manager

Federated Prime Money Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Prime Money Fund II, a portfolio of Federated Insurance Series.

This high-quality money market mutual fund keeps your ready cash pursuing daily income while seeking to keep your principal stable.¹ In addition, you have convenient, daily access to your money.

To provide a competitive daily yield, the fund invests in a diversified portfolio of high-quality money market securities. At the end of the reporting period, the fund was invested in commercial paper (31.2%), variable rate instruments (34.4%), overnight securities (1.7%) and bank instruments (19.0%).

For the six-month reporting period, the fund paid a total of $0.008 per share in dividends to shareholders while maintaining a stable $1.00 share price. The fund's total return for the reporting period was 0.76% while the fund's 7-day net yield was 1.44% at the end of the reporting period. On June 30, 2002, net assets were $180.3 million.²

Thank you for choosing Federated Prime Money Fund II to put your cash to work earning income every day. We will continue to keep you up to date on your investment and welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

2 Past performance is no guarantee of future results. Yields will vary. Yields quoted for money market funds most closely reflect the fund's current earnings. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

Investment Review

Federated Prime Money Market Fund II invests in money market instruments maturing in 397 days or less. The average maturity of these securities, computed on a dollar weighted basis, is restricted to 90 days or less. Portfolio securities must be rated in one of the two highest short-term rating categories by one or more of the nationally recognized statistical rating organizations or be of comparable quality to securities having such ratings. Typical security types include, but are not limited to, commercial paper, certificates of deposit, time deposits, variable rate instruments and repurchase agreements.

Last year's surprising 475 basis points in interest rate cuts moved the federal funds target rate to a low of 1.75% by December 2001. As 2002 began, we saw signs that the forces restraining the economy during 2001 were beginning to diminish. Business inventories were declining, mortgage rates were at a 30-year low and the consumer was continuing to spend money. The markets were beginning to believe that the next move by the Federal Reserve Board (the "Fed") would be an increase in rates in the second quarter of 2002 to keep inflation at bay. As the first half of 2002 progressed, the gains in consumer spending and business spending that caused the U.S. economy to grow at a 5.6% annual rate in the first three months appear to have moderated. Although the Fed expresses confidence that the economic recovery from last year's recession remains on track, declining stock prices, corporate distrust and the continuing terrorism threats still pose a risk to economic growth going forward. The Fed will probably keep interest rates on hold through the remainder of the year.

The thirty-day commercial paper started the reporting period at 1.77% on January 1, 2002, and ended the reporting period at 1.77% on June 30, 2002. It reached a high of 1.83% in March 2002 and a low of 1.62% in January 2002.

The target average maturity range for the fund remained in the 45-55 day area for the entire reporting period reflecting a positive position regarding Fed policy and the money market yield curve. In structuring the fund, there is continued emphasis placed on positioning 30-35% of the fund's net assets in variable rate demand notes and maintaining a modest barbell structure.

During the six-month reporting period ended June 30, 2002, the net assets of the fund decreased from $214.3 to $180.3 million while the 7-day net yield decreased from 1.82% to 1.44%. The effective average maturity of the Fund on June 30, 2002 was 59 days.

Portfolio of Investments

June 30, 2002 (unaudited)

Principal Amount			Value
		CERTIFICATES OF DEPOSIT--19.0%
		Banking--19.0%
$	3,700,000	BNP Paribas SA, 2.220% - 3.880%, 7/24/2002 - 2/18/2003	$	3,700,029
	9,000,000	Bayerische Hypotheken-und Vereinsbank AG, 1.950%, 8/15/2002		9,000,000
	1,500,000	Chase Manhattan Bank (USA) N.A., Wilmington, 1.920%, 8/5/2002		1,500,000
	6,000,000	Comerica Bank, 2.275% - 3.832%, 7/26/2002 - 6/23/2003		5,999,481
	2,000,000	Mercantile Safe Deposit & Trust Co., Baltimore, MD, 2.100%, 6/30/2003		2,000,000
	1,500,000	Societe Generale, Paris, 3.865%, 7/29/2002		1,499,961
	1,500,000	Svenska Handelsbanken, Stockholm, 3.880%, 7/23/2002		1,499,982
	2,000,000	UBS AG, 1.850%, 8/29/2002		2,000,160
	7,000,000	Westdeutsche Landesbank Girozentrale,1.820% - 1.940%, 7/19/2002 - 8/27/2002		6,998,180

		TOTAL CERTIFICATES OF DEPOSIT		34,197,793

		COLLATERALIZED LOAN AGREEMENT--3.9%
	7,000,000	Merrill Lynch, Pierce, Fenner and Smith, 2.040%, 7/1/2002		7,000,000

		COMMERCIAL PAPER--31.2%¹
		Banking--13.0%
	3,000,000	Barclays US Funding Corp., (Barclays Bank PLC GTD), 1.830%, 8/15/2002		2,993,137
	6,028,000	Fountain Square Commercial Funding Corp., 1.848% - 1.849%, 7/18/2002 - 7/22/2002		6,022,307
	3,000,000	J.P. Morgan Chase & Co., 1.900%, 8/6/2002		2,994,300
	5,345,000	Stellar Funding Group Inc., 1.870% - 2.000%, 7/17/2002 - 8/27/2002		5,332,449
	5,078,000	Three Rivers Funding Corp., 1.800%, 7/22/2002		5,072,668
	1,000,000	UBS Finance (Delaware), Inc., (UBS AG LOC), 1.950%, 8/30/2002		996,750

		TOTAL		23,411,611

		Entertainment--0.8%
	1,500,000	Walt Disney Co., 2.050%, 7/29/2002		1,497,608

		Finance - Automotive--3.3%
	1,000,000	FCAR Auto Loan Trust (A1+/P1 Series II), 1.920%, 8/6/2002		998,080
	2,000,000	Ford Motor Credit Co., 2.120% - 2.170%, 7/2/2002 - 7/8/2002		1,999,527
	3,000,000	New Center Asset Trust, A1/P1, 2.010%, 8/12/2002		2,992,965

		TOTAL		5,990,572

		Finance - Retail--8.0%
	3,000,000	American General Finance Corp., 1.825%, 9/10/2002		2,989,202
	3,000,000	Mortgage Interest Networking Trust A1+/P1, 1.830%, 8/5/2002		2,994,663
	8,500,000	Wells Fargo Financial, Inc., 1.890%, 8/5/2002		8,484,381

		TOTAL		14,468,246

		Finance - Securities--3.3%
	6,000,000	Ivory Funding Corp., 1.820%, 9/12/2002		5,977,857

		Food & Beverage--1.1%
	2,000,000	General Mills, Inc., 2.130%, 7/8/2002		1,999,172

		Retail--0.6%
	1,000,000	Safeway, Inc., 2.040%, 8/7/2002		997,903

		Telecommunications--1.1%
	2,000,000	Verizon Global Funding, 2.000%, 11/15/2002		1,984,778

		TOTAL COMMERCIAL PAPER		56,327,747

Principal Amount			Value
		CORPORATE BONDS--1.4%
		Brokerage--0.3%
$	500,000	Merrill Lynch & Co., Inc., 2.450%, 3/24/2003	$	500,000

		Chemicals--1.1%
	2,000,000	Bayer Corp., (Bayer AG Support Agreement), 4.450%, 3/19/2003		2,021,052

		TOTAL CORPORATE BONDS		2,521,052

		SHORT-TERM NOTES--7.2%
		Banking--0.5%
	1,000,000	National City Bank, Ohio, 2.500%, 3/10/2003		999,898

		Finance - Automotive--1.9%
	34,777	Chase Manhattan Auto 2001-B Owner Trust, Class A1, 2.180%, 11/15/2002		34,777
	977,950	Ford Credit Auto 2002-B Owner Trust, Class A1, 2.010%, 12/16/2002		977,950
	500,000	Ford Credit Auto 2002-C Owner Trust, Class A1, 1.860%, 3/17/2003		500,000
	1,058,914	Honda Auto Receivables 2002-2 Owner Trust, Class A1, 1.950%, 6/13/2003		1,058,914
	784,830	Nissan Auto Receivables 2002-B Owner Trust, Class A1, 2.090%, 5/9/2003		784,830

		TOTAL		3,356,471

		Finance - Securities--4.8%
	7,600,000	Beta Finance, Inc., (Beta Finance Corp. GTD), 2.540%-2.990%,9/30/2002- 4/2/2003		7,600,000
	1,000,000	Sigma Finance, Inc., (Sigma Finance Corp. GTD), 3.650%, 9/10/2002		1,000,000

		TOTAL		8,600,000

		TOTAL SHORT-TERM NOTES		12,956,369

		LOAN PARTICIPATION--0.9%
		Electrical Equipment--0.4%
	600,000	Mt. Vernon Phenol Plant Partnership, (General Electric Co. LOC), 1.860%, 5/19/2003		600,000

		Finance - Automotive--0.5%
	954,000	General Motors Acceptance Corp., Mortgage of PA (General Motors Acceptance Corp. GTD), 2.320%, 7/11/2002		954,000

		TOTAL LOAN PARTICIPATION		1,554,000

		NOTES - VARIABLE--34.4%²
		Banking--13.2%
	100,000	Alabama State Industrial Development Authority, (Wellborn Cabinet, Inc.), Tax Revenue Bonds, (Fleet National Bank LOC), 1.950%, 7/4/2002		100,000
	155,000	Edgefield County, SC (Series 1997), (Bondex, Inc. Project), (HSBC Bank USA LOC), 1.855%, 7/4/2002		155,000
	170,000	Franklin County, OH, Edison Welding (Series 1995), (Huntington National Bank, Columbus, OH LOC), 1.950%, 7/4/2002		170,000
	4,500,000	Hanna Steel Corp., (SouthTrust Bank of Alabama, Birmingham LOC), 1.960%, 7/5/2002		4,500,000
	4,340,000	Home City Ice Co. & H.C. Transport (Series 2000), (Firstar Bank, N.A. LOC), 2.020%, 7/4/2002		4,340,000
	100,000	Lynn Haven, FL, Taxable Revenue Bond (Series 1998-B), (Bank One, N.A. (Ohio) LOC), 2.190%, 7/4/2002		100,000
	4,495,000	Miller, James & Deborah (Series 1997), (Allfirst Bank LOC), 2.040%, 7/2/2002		4,495,000
	4,635,000	Omni, HC, Inc. (Series 2002A), (Columbus Bank and Trust Co., GA LOC), 1.910%, 7/4/2002		4,635,000
	265,000	Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC), 1.905%, 7/4/2002		265,000
	5,000,000	SMM Trust (Series 2001-M), (JPMorgan Chase Bank Swap Agreement), 1.890%, 9/13/2002		5,000,000
	93,000	Vista Funding Corp. (Series 1994-A), (Fifth Third Bank of Northwestern OH LOC), 1.850%, 7/4/2002		93,000

		TOTAL		23,853,000

		Brokerage--6.1%
	10,000,000	Goldman Sachs Group, Inc., 1.860%, 7/22/2002		10,000,000
	1,000,000	Merrill Lynch & Co., Inc., 1.889%, 7/11/2002		1,000,000

		TOTAL		11,000,000

		Consumer Products--0.1%
	200,000	Unilever N.V., 2.060%, 7/24/2002		200,084

		Finance - Automotive--0.6%
	1,000,000	GMAC Residential Holding Corp., (General Motors Acceptance Corp. GTD), 2.238%, 7/1/2002		998,076

Principal Amount			Value
		NOTES - VARIABLE--continued²
		Finance - Commercial--5.3%
$	6,000,000	Compass Securitization LLC, 1.795%-1.798%, 7/3/2002-7/14/2002	$	5,999,761
	3,500,000	General Electric Capital Corp., 1.869%, 7/9/2002		3,500,000

		TOTAL		9,499,761

		Finance - Securities--2.8%
	5,000,000	Sigma Finance, Inc., (Sigma Finance Corp. GTD), 1.880%, 8/1/2002		4,999,582

		Insurance--5.5%
	1,000,000	Allstate Life Insurance Co., 1.983%, 7/1/2002		1,000,000
	5,000,000	GE Capital Assurance Co., 2.020%, 8/9/2002		5,000,000
	1,000,000	GE Life and Annuity Assurance Co., 1.997%, 9/3/2002		1,000,000
	2,000,000	Jackson National Life Insurance Co., 1.930%-2.167%, 7/1/2002- 7/22/2002		2,000,000
	1,000,000	Travelers Insurance Co., 1.960%, 9/28/2002		1,000,000

		TOTAL		10,000,000

		Telecommunications--0.8%
	1,000,000	BellSouth Telecommunications, Inc., 1.907%, 9/2/2002		1,000,000
	500,000	Verizon Global Funding, 1.819%, 7/18/2002		499,929

		TOTAL		1,499,929

		TOTAL NOTES -- VARIABLE		62,050,432

		REPURCHASE AGREEMENT--1.7%³
	3,141,000	Warburg Dillon Reed LLC, 1.970%, dated 6/28/2002, due 7/1/2002		3,141,000

		TOTAL INVESTMENTS (AT AMORTIZED COST)⁴	$	179,748,393

1 Each issue shows the rate of discount at the time of purchase.

2 Floating rate note with current rate and next reset date shown.

3 The repurchase agreement is fully collateralized by U.S. Treasury or government agency obligations based on market prices at the date of the portfolio. The investment in the repurchase agreement is through participation in a joint account with other Federated funds.

4 Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets ($180,263,031) at June 30, 2002.

The following acronyms are used throughout this portfolio:

GTD	--Guaranteed
LOC	--Letter of Credit
SA	--Support Agreement

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at amortized cost and value			$	179,748,393
Cash				693
Income receivable				754,104

TOTAL ASSETS				180,503,190

Liabilities:
Income distribution payable	$	227,693
Accrued expenses		12,466

TOTAL LIABILITIES				240,159

Net assets for 180,495,785 shares outstanding			$	180,263,031

Net Assets Consist of:
Paid in capital			$	180,495,785
Accumulated net realized loss on investments				(232,754	)

TOTAL NET ASSETS			$	180,263,031

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$180,263,031 ÷ 180,495,785 shares outstanding				$1.00

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Interest			$	2,117,159

Expenses:
Investment adviser fee	$	490,293
Administrative personnel and services fee		73,740
Custodian fees		3,110
Transfer and dividend disbursing agent fees and expenses		8,531
Directors'/Trustees' fees		920
Auditing fees		5,740
Legal fees		1,742
Portfolio accounting fees		25,124
Printing and postage		11,736
Insurance premiums		2,087
Miscellaneous		793

TOTAL EXPENSES				623,816

Net investment income				1,493,343

Net realized gain on investments				1,610

Change in net assets resulting from operations			$	1,494,953

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	1,493,343		$	6,515,352
Net realized gain on investments		1,610			30,642

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		1,494,953			6,545,994

Distributions to Shareholders:
Distributions from net investment income		(1,493,343	)		(6,515,352	)

Share Transactions:
Proceeds from sale of shares		646,569,686			1,081,547,043
Net asset value of shares issued to shareholders in payment of distributions declared		1,266,609			6,513,485
Cost of shares redeemed		(681,886,021	)		(1,030,807,682	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(34,049,726	)		57,252,846

Change in net assets		(34,048,116	)		57,283,488

Net Assets:
Beginning of period		214,311,147			157,027,659

End of period	$	180,263,031		$	214,311,147

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999		1998		1997
Net Asset Value, Beginning of Period	$1.00		$1.00		$1.00		$1.00		$1.00		$1.00
Income From Investment Operations:
Net investment income	0.01		0.04		0.06		0.05		0.05		0.05
Less Distributions:
Distributions from net investment income	(0.01	)	(0.04	)	(0.06	)	(0.05	)	(0.05	)	(0.05	)

Net Asset Value, End of Period	$1.00		$1.00		$1.00		$1.00		$1.00		$1.00

Total Return¹	0.76	%	3.75	%	5.95	%	4.63	%	4.92	%	4.93	%


Ratios to Average Net Assets:

Expenses	0.64	%²	0.66	%	0.67	%	0.73	%	0.80	%	0.80	%

Net investment income	1.52	%²	3.54	%	5.75	%	4.60	%	4.80	%	4.84	%

Expense waiver/reimbursement³	--		--		0.02	%	--		0.01	%	0.20	%

Supplemental Data:

Net assets, end of period (000 omitted)	$180,263		$214,311		$157,028		$193,870		$103,097		$59,659

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

2 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Prime Money Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

The Fund uses the amortized cost method to value its portfolio securities in accordance with Rule 2a-7 under the Act.

Repurchase Agreements

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

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to guidelines and/or standards reviewed or established by the Board of Trustees (the `Trustees"). Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities. The Fund, along with other affiliated investment companies may utilize a joint account for the purpose of entering into one or more repurchase agreements.

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. All discounts/premiums are accreted/amortized as required. Distributions to shareholders are recorded on the ex-dividend date.

Federal Taxes

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $234,364, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2008.

Certain prior year amounts have been reclassified for financial statement purposes.

When-Issued and Delayed Delivery Transactions

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value.)

Transactions in capital stock were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	646,569,686		1,081,547,043
Shares issued to shareholders in payment of distributions declared	1,266,609		6,513,485
Shares redeemed	(681,886,021	)	(1,030,807,682	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(34,049,726	)	57,252,846

INVETSMENT ADVISER FEE AND TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.50% of the Fund's average daily net assets.

Administrative Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Prime Money Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916504

Federated is a registered mark of Federated Investors, Inc. 2002 ©Federated Investors, Inc.

G00433-05 (8/02)

Federated Investors
World-Class Investment Manager

Federated Quality Bond Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Quality Bond Fund II, a portfolio of Federated Insurance Series. This portfolio is managed to offer shareholders current income through a diversified mix of investment grade, fixed income securities, such as U.S. Treasury and U.S. government agency securities as well as corporate bonds.

This report covers the period from January 1, 2002 through June 30, 2002. It begins with a commentary by the fund's portfolio manager, which is followed by a complete listing of the fund's stock holdings and financial statements.

During the reporting period, the fund's Primary shares recorded a total return of 2.59% and paid out dividend income of $0.404 per share; its Service shares had a 1.29% return and no dividend income.¹ Primary shares had a net asset value of $11.27 at the beginning of the reporting period and $10.99 at the end of the period. Service shares had a net asset value of $10.85 at the beginning of the period which increased to $10.99 at the end of the period.

The fund paid a capital gain of $0.151 per Primary share. As of June 30, 2002, fund assets grew to $400 million.

Thank you for participating in the classic income opportunities of investment-grade, fixed income securities through the diversification and professional management of this fund.

We look forward to keeping you up-to-date on the progress of your investment, and we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

Investment Review

Equity investors are in agony while bond investors continue to be rewarded, albeit less than prior years. That was the continued saga in the financial markets so far for 2002. Increasing terror in the Middle East, accounting scandals at a number of major corporations, and less than robust economic statistics all contributed to lower stock prices and higher bond prices for the first six months of the year.

Interest rates rose considerably in the first three months of the year, then plunged in the next three months. On balance, rates were down about 25 basis points. The yield curve steepened dramatically. The 2-year Treasury yield stood at 2.81% on June 30 while the 30-year Treasury yield was 5.51%, a spread of 270 basis points.

Bond investors showed a preference for quality, and Treasuries and Agency securities were the star performers year-to-date, showing total returns of as much as 4.75% at the longer maturities. Corporate bonds, as measured by the Lehman Brothers Credit Bond (LBCB) Index, had total returns of around 3% for the first six months of the year and underperformed similar duration Treasuries by a significant 136 basis points.² Lower-quality corporate bonds significantly lagged similar duration Treasuries and have had total returns of just of 1%.

FEDERATED QUALITY BOND FUND II PORTFOLIO REVIEW

Investors in the Federated Quality Bond Fund II's Primary shares enjoyed a total return of 2.59% after fees in the first half of 2002, well above returns on cash equivalents. Performance was slightly below average relative to the benchmark as the fund was overweighted in corporate bonds, particularly A-rated and Baa-rated corporates. In addition, performance was hurt slightly by the portfolio being more barbelled.

Federated Quality Bond Fund II continued its fast-paced growth in the portfolio due to the attractive asset class, duration and sector niches that Federated Quality Bond Fund II enjoys.³ The fund saw a resurgence of new investors with $113 million of new monies.

2 LBCB is composed of all publicly issued, fixed-rate, nonconvertible, investment-grade corporate debt. Issues are rated at least Baa by Moody's Investors Service or BBB by Standard & Poor's, if unrated by Moody's. Collateralized Mortgage Obligations (CMOs) are not included. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. This index is unmanaged and investments cannot be made in an index.

3 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

We actively managed portfolio duration the past six months. New monies coming into the fund pose a challenge and a potential benefit. In the first quarter, with rates on the rise, we used the new funds to gradually shorten portfolio duration back in to the benchmark. But in the second quarter, with rates going down, we were challenged to get money invested, particularly in corporates. Current levels of interest rates appear to have already priced in a weak recovery.

We significantly increased the portfolio's exposure to corporate bonds in May, which in retrospect turned out to be poorly timed. Corporates still offer attractive value in the fixed income market. We are holding with our call to be overweighted in corporates. As of June 30, 2002, approximately 70% of the portfolio was invested in corporate bonds, compare to 60% on March 31 and 65% at year-end. Also in terms of sector management, we trimmed back mortgage-backed securities in March and April as this sector of the bond market had enjoyed significant excess returns and we hoped to avoid a give-back. We have made no major additions to our position in asset-backed securities, which we view as a very rich sector.

Portfolio of Investments

June 30, 2002 (unaudited)

Principal Amount				Value
			ASSET-BACKED SECURITIES--0.8%
$	900,000		Green Tree Financial Corp. (Series 1999-5), Class B1, 9.20%, 4/1/2031	$	703,570
	1,250,000		MBNA Master Credit Card Trust (Series 2000-A), Class A, 7.35%, 7/16/2007		1,358,287
	522,536	¹	Option One Mortgage Securities Corp. (Series 1999-3), Class CTFS, 9.66%, 9/26/2031		523,189
	450,000		Prime Credit Card Master Trust (Series 2000-1), Class A, 6.70%, 10/15/2009		482,746

			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $3,119,605)		3,067,792

			CORPORATE BONDS--70.8%
			Aerospace & Defense--3.1%
	2,000,000		Boeing Capital Corp., 6.50%, 2/15/2012		2,100,860
	1,500,000		Boeing Capital Corp., 6.68%, MTN, 12/1/2003		1,567,425
	4,000,000		Lockheed Martin Corp., Note, 8.20%, 12/1/2009		4,583,440
	4,000,000		Raytheon Co., Note, 6.30% - 6.75%, 3/15/2005 -- 8/15/2007		4,192,840

			TOTAL		12,444,565

			Air Transportation--0.4%
	62,756		Continental Airlines, Inc., Pass Thru Cert., (Series 1999-2), Class C1, 7.73%, 3/15/2011		55,617
	450,000		Delta Air Lines, Inc., Pass Thru Cert., (Series 2000-1), Class B, 7.92%, 11/18/2010		464,575
	718,308		Northwest Airlines Corp., Pass Thru Cert. (Series 2000-1), Class G, 8.072%, 10/1/2019		771,678
	200,000		United Air Lines, Pass Thru Cert. (Series 2000-1), Class A2, 7.73%, 7/1/2010		187,006

			TOTAL		1,478,876

			Automotive--1.1%
	195,000		Ford Motor Co., Unsecd. Note, 7.45%, 7/16/2031		182,842
	3,000,000		General Motors Corp., Note, 7.20%, 1/15/2011		3,052,860
	200,000		General Motors Corp., MTN, 9.45%, 11/1/2011		236,034
	558,000		Hertz Corp., Jr. Sub. Note, 7.00%, 7/15/2003		571,866
	350,000		Hertz Corp., Sr. Note, 7.625%, 8/15/2007		363,160

			TOTAL		4,406,762

			Banking--3.2%
	250,000		Banco Santander Central Hispano, SA, Bank Guarantee, 7.875%, 4/15/2005		272,770
	2,275,000	¹	Barclays Bank PLC, Bond, 8.55%, 9/29/2049		2,623,514
	1,000,000		Capital One Bank, 6.875%, 2/1/2006		1,014,570
	675,000		City National Bank, Sub. Note, 6.375%, 1/15/2008		683,969
	1,300,000		Hudson United Bancorp, 7.00%, 5/15/2012		1,334,463
	285,000		PNC Funding Corp., Sub. Note, 6.875%, 7/15/2007		309,615
	1,750,000		PNC Funding Corp., Sub. Note, 7.50%, 11/1/2009		1,935,010
	745,017	¹	Regional Diversified Funding, Sr. Note, 9.25%, 3/15/2030		796,514
	3,895,000		U.S. Bank N.A., 6.30%, 2/4/2014		3,945,323

			TOTAL		12,915,748

			Beverage & Tobacco--0.7%
	1,000,000		Anheuser-Busch Cos., Inc., Note, 7.00%, 9/1/2005		1,008,050
	1,500,000		Anheuser-Busch Cos., Inc., Sr. Note, 7.10%, 6/15/2007		1,604,730

			TOTAL		2,612,780

Principal Amount				Value
			CORPORATE BONDS--continued
			Broadcast Radio & TV--3.3%
$	4,000,000		AOL Time Warner, Inc., Note, 6.75%, 4/15/2011	$	3,711,920
	3,500,000		Clear Channel Communications, Inc., Sr. Note 7.65%, 9/15/2010		3,530,975
	1,700,000	¹	Grupo Televisa SA, 8.00%, 9/13/2011		1,619,250
	4,000,000		Univision Communications, Inc., 7.85%, 7/15/2011		4,204,120

			TOTAL		13,066,265

			Cable Television--1.1%
	1,125,000		Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013		1,163,520
	3,400,000		Cox Communications, Inc., MTN, 6.69%, 9/20/2004		3,416,422

			TOTAL		4,579,942

			Consumer Products--0.8%
	850,000		Alberto-Culver Co., Unsecd. Note, 8.25%, 11/1/2005		949,084
	2,250,000		Sara Lee Corp., 6.25%, 9/15/2011		2,329,920

			TOTAL		3,279,004

			Ecological Services & Equipment--1.4%
	3,000,000		Republic Services, Inc., Note, 6.75%, 8/15/2011		3,105,660
	2,575,000		USA Waste Services, Inc., Sr. Note, 7.125%, 10/1/2007		2,682,120

			TOTAL		5,787,780

			Education--0.1%
	250,000		Boston University, 7.625%, 7/15/2097		252,727

			Finance - Automotive--1.2%
	3,250,000		Ford Motor Credit Co., Note, 7.375%, 10/28/2009		3,329,560
	400,000		General Motors Acceptance Corp., MTN, 6.75%, 12/10/2002		406,004
	900,000		General Motors Acceptance Corp., MTN, 7.50%, 7/15/2005		961,056

			TOTAL		4,696,620

			Finance - Retail--2.3%
	4,500,000		Household Finance Corp., Unsecd. Note, 5.75%, 1/30/2007		4,468,770
	4,512,000		Sears Roebuck Acceptance Corp., 6.70% - 6.75%, 4/15/2012 -- 8/15/2011		4,650,001

			TOTAL		9,118,771

			Financial Intermediaries--5.2%
	3,060,000		Amvescap PLC, Sr. Note, 6.60%, 5/15/2005		3,229,922
	1,500,000	¹	Fidelity Investments, Bond, 7.57%, 6/15/2029		1,605,555
	2,000,000		Goldman Sachs Group, Inc., 6.60%, 1/15/2012		2,038,740
	1,500,000		Goldman Sachs Group, Inc., Note, Series B, MTN, 7.35%, 10/1/2009		1,632,825
	2,750,000		Lehman Brothers Holdings, Inc., Bond, 7.875%, 8/15/2010		3,030,225
	850,000		Lehman Brothers Holdings, Inc., MTN, 7.00%, 5/15/2003		881,535
	1,445,000		Marsh & McLennan Cos., Inc., Sr. Note, 7.125%, 6/15/2009		1,551,410
	2,000,000		Merrill Lynch & Co., Inc., Note, 7.375%, 5/15/2006		2,178,660
	2,000,000		Morgan Stanley Group, Inc., Sr. Unsub, 7.125%, 1/15/2003		2,054,160
	1,000,000		Salomon Smith Barney Holdings, Inc., Sr. Note, 6.125%, 1/15/2003		1,018,100
	575,000		Salomon, Inc., Note, 7.20%, 2/1/2004		609,034
	950,000		Waddell & Reed Financial, Inc., 7.50%, 1/18/2006		1,002,810

			TOTAL		20,832,976

Principal Amount				Value
			CORPORATE BONDS--continued
			Financial Services--3.1%
$	1,500,000		Associates Corp. of North America, Sr. Note, 6.875%, 8/1/2003	$	1,566,780
	1,000,000		General Electric Capital Corp., 7.25%, 5/3/2004		1,067,470
	1,000,000		General Electric Capital Corp., MTN, 6.65%, 9/3/2002		1,007,680
	3,500,000		MBNA Corp., 7.50%, 3/15/2012		3,677,240
	4,000,000		SLM Corporation, 5.625%, 4/10/2007		4,192,840
	800,000		Washington Mutual Financial Corp., Sr. Note, 5.85%, 1/27/2004		826,976

			TOTAL		12,338,986

			Food & Drug Retailers--2.5%
	3,750,000		Albertsons, Inc., 7.50%, 2/15/2011		4,087,987
	3,000,000		Kroger Co., 7.25%, 6/1/2009		3,222,780
	400,000		Safeway, Inc., 6.05%, 11/15/2003		415,376
	1,600,000		Safeway, Inc., Note, 7.25%, 9/15/2004		1,708,656
	500,000		Safeway, Inc., Note, 7.50%, 9/15/2009		542,330

			TOTAL		9,977,129

			Food Products--2.6%
	3,000,000		General Mills, Inc., 6.00%, 2/15/2012		2,987,400
	4,000,000	¹	Kellogg Co., 7.45%, 4/1/2031		4,383,360
	3,000,000		Kraft Foods, Inc., 5.625%, 11/1/2011		2,967,510

			TOTAL		10,338,270

			Forest Products--1.8%
	3,000,000		Abitibi-Consolidated, Inc., Bond, 8.55%, 8/1/2010		3,136,170
	3,000,000	¹	Weyerhaeuser Co., Unsecd. Note, 5.50%, 3/15/2005		3,059,640
	1,000,000		Weyerhaeuser Co., Unsecd. Note, 6.125%, 3/15/2007		1,026,310

			TOTAL		7,222,120

			Health Care--1.0%
	4,000,000		HCA - The Healthcare Corp., 6.95%, 5/1/2012		4,045,640

			Health Services--0.8%
	1,400,000		Guidant Corp., 6.15%, 2/15/2006		1,437,618
	1,750,000		UnitedHealth Group, Inc., Note, 7.50%, 11/15/2005		1,920,257

			TOTAL		3,357,875

			Industrial Products & Equipment--1.6%
	2,750,000		Kennametal, Inc., 7.20%, 6/15/2012		2,735,287
	1,650,000		Textron Financial Corp., 5.875%, 6/1/2007		1,668,793
	1,850,000		Tyco International Group, 6.375%, 10/15/2011		1,429,125
	500,000		Tyco International Group, Note, 4.95%, 8/1/2003		428,125

			TOTAL		6,261,330

			Insurance--1.4%
	500,000		AXA Financial, Inc., Sr. Note, 7.75%, 8/1/2010		556,905
	1,000,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		1,143,940
	400,000		Allmerica Financial Corp., Sr. Note, 7.625%, 10/15/2025		399,376
	1,250,000		CNA Financial Corp., Note, 6.95%, 1/15/2018		1,067,188
	500,000		Continental Corp., Note, 7.25%, 3/1/2003		498,125
	900,000		Delphi Financial Group, Inc., Sr. Note, 8.00%, 10/1/2003		929,520
	250,000		MBIA Insurance Corp., Sr. Deb., 6.625%, 10/1/2028		242,415
	400,000		USF&G Capital II, Company Guarantee, 8.47%, 1/10/2027		396,068
	250,000	¹	Union Central Life Insurance Co., Note, 8.20%, 11/1/2026		248,473

			TOTAL		5,482,010

Principal Amount				Value
			CORPORATE BONDS--continued
			Leisure & Entertainment--1.3%
$	750,000		International Speedway Corp., Company Guarantee, 7.875%, 10/15/2004	$	786,315
	3,750,000		Viacom, Inc., 7.70%, 7/30/2010		4,084,725
	250,000		Viacom, Inc., Sr. Deb., 8.25%, 8/1/2022		259,238

			TOTAL		5,130,278

			Metals & Mining--1.3%
	2,137,000		Barrick Gold Finance, Inc. Company Guarantee, 7.50%, 5/1/2007		2,351,320
	1,000,000		Inco Ltd., Note, 9.60%, 6/15/2022		1,055,140
	1,625,000		Noranda, Inc., Deb., 8.125%, 6/15/2004		1,685,385
	125,000		Noranda, Inc., Deb., 8.625%, 7/15/2002		125,350

			TOTAL		5,217,195

			Oil & Gas--5.9%
	500,000		Apache Finance Pty Ltd., Company Guarantee, 7.00%, 3/15/2009		524,955
	2,000,000		Conoco, Inc., 6.35%, 10/15/2011		2,076,780
	1,200,000	¹	EOG Company of Canada, Company Guarantee, Series 144A, 7.00%, 12/1/2011		1,243,632
	250,000		Enterprise Oil, Bond, 7.00%, 5/1/2018		267,108
	250,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		271,475
	2,500,000		Husky Oil Ltd., Sr. Unsecd. Note, 7.125%, 11/15/2006		2,669,675
	1,250,000		Norcen Energy Resources, Inc., Sr. Deb., 6.80%, 7/2/2002		1,251,688
	1,415,000		Occidental Petroleum Corp., Sr. Note, 6.75%, 11/15/2002		1,435,150
	3,500,000	¹	Pemex Project Funding Master, 9.125%, 10/13/2010		3,631,460
	2,485,000		Tosco Corp., Unsecd. Note, 8.125%, 2/15/2030		2,884,538
	650,000		Union Pacific Resources Group, Inc., Unsecd. Note, 7.00%, 10/15/2006		697,990
	4,000,000		Valero Energy Corp., 6.875%, 4/15/2012		4,119,120
	1,800,000	¹	WCG Note Trust, Sr. Note, 8.25%, 3/15/2004		1,743,012
	750,000		Williams Cos., Inc. (The), Note, 6.625%, 11/15/2004		634,688

			TOTAL		23,451,271

			Pharmaceutical--1.1%
	2,500,000		American Home Products Corp., Note, 6.25%, 3/15/2006		2,613,425
	880,000		American Home Products Corp., Note, 7.90%, 2/15/2005		963,195
	900,000		Merck & Co., Inc., Sr. Deb., 6.30%, 1/1/2026		891,225

			TOTAL		4,467,845

			Printing & Publishing--1.8%
	1,000,000		News America Holdings, Inc., Sr. Deb., 9.25%, 2/1/2013		1,121,480
	1,750,000		News America Holdings, Inc., Sr. Note, 8.50%, 2/15/2005		1,877,610
	3,885,000		Reed Elsevier, Inc., 6.75%, 8/1/2011		4,073,772

			TOTAL		7,072,862

			Rail Industry--0.9%
	228,395		Burlington Northern Santa Fe, Pass Thru Cert., 7.57%, 1/2/2021		249,383
	3,400,000		Canadian Pacific RR, 6.25%, 10/15/2011		3,504,006

			TOTAL		3,753,389

Principal Amount				Value
			CORPORATE BONDS--continued
			Real Estate--1.9%
$	1,250,000		EOP Operating LP, 7.375%, 11/15/2003	$	1,306,613
	3,150,000		EOP Operating LP, 7.75%, 11/15/2007		3,480,687
	2,200,000		Masco Corp., Note, 5.875%, 7/15/2012		2,174,766
	400,000		Price REIT, Inc., Sr. Note, 7.50%, 11/5/2006		426,908
	393,000		Storage USA, Deb., 7.50%, 12/1/2027		407,313

			TOTAL		7,796,287

			Retailers--2.2%
	1,600,000	¹	CVS Corp., 5.625%, 3/15/2006		1,634,272
	200,000		Dayton-Hudson Corp., Deb., 8.50%, 12/1/2022		212,576
	1,500,000		Federated Department Stores, Inc., Sr. Note, 8.125%, 10/15/2002		1,529,235
	2,500,000		TJX Cos., Inc., 7.45%, 12/15/2009		2,611,275
	115,000		Target Corp., 5.40%, 10/1/2008		115,808
	295,000		Target Corp., Unsecd. Note, 7.50%, 8/15/2010		328,615
	2,000,000		Wal-Mart Stores, Inc., Sr. Unsecd. Note, 6.875%, 8/10/2009		2,190,260

			TOTAL		8,622,041

			Sovereign--1.4%
	1,000,000		Korea Development Bank, Sr. Unsub., 6.50%, 11/15/2002		1,012,100
	1,000,000		Quebec, Province of, 5.50%, 4/11/2006		1,043,700
	500,000		Quebec, Province of, 5.75%, 2/15/2009		520,930
	2,000,000		Quebec, Province of, Deb., 7.50%, 9/15/2029		2,314,900
	500,000		Sweden, Kingdom of, Deb., 10.25%, 11/1/2015		629,900

			TOTAL		5,521,530

			Steel--0.2%
	1,250,000	¹	Allegheny Technologies, Inc., Note, 8.375%, 12/15/2011		1,316,488

			Supranational--0.4%
	1,500,000		Corp Andina De Fomento, Bond, 7.375%, 1/18/2011		1,584,600

			Technology Services--2.7%
	3,875,000		Computer Sciences Corp., 7.375%, 6/15/2011		4,149,854
	2,000,000		Dell Computer Corp., Deb., 7.10%, 4/15/2028		1,983,480
	3,150,000		International Business Machines Corp., 4.875%, 10/1/2006		3,163,104
	339,000		International Business Machines Corp., Note, 7.25%, 11/1/2002		345,627
	1,250,000		Unisys Corp., 8.125%, 6/1/2006		1,243,750

			TOTAL		10,885,815

			Telecommunications & Cellular--5.4%
	4,000,000	¹	AT&T Corp., 7.30%, 11/15/2011		3,444,320
	3,950,000	¹	AT&T Wireless Group, Inc., Sr. Note, 7.875%, 3/1/2011		3,247,888
	2,000,000		CenturyTel, Inc., 8.375%, 10/15/2010		2,083,440
	1,000,000		Citizens Communications Co., 6.375%, 8/15/2004		1,009,560
	2,100,000		Citizens Communications Co., Unsecd. Note, 9.25%, 5/15/2011		2,146,431
	900,000		Citizens Utilities Co., Deb., 6.80%, 8/15/2026		904,599
	550,000	²	Intermedia Communications, Inc., Sr. Disc. Note, Series B, 0/12.25%, 3/1/2009		63,250
	200,000		MetroNet Communications Corp., Sr. Note, 10.625%, 11/1/2008		21,000
	250,000		MetroNet Communications Corp., Sr. Note, 12.00%, 8/15/2007		26,250
	1,000,000	¹	Qwest Capital Funding, 7.25%, 2/15/2011		545,000
	2,000,000	¹	Qwest Capital Funding, 7.75%, 2/15/2031		1,000,000
Principal Amount or Shares				Value
			CORPORATE BONDS--continued
			Telecommunications & Cellular--continued
$	100,000		Sprint Capital Corp., 5.875%, 5/1/2004	$	85,125
	1,900,000		Sprint Capital Corp., Company Guarantee, 6.375%, 5/1/2009		1,563,548
	1,500,000	¹	Sprint Capital Corp., 8.75%, 3/15/2032		1,147,500
	750,000		Telecom de Puerto Rico, Sr. Note, 6.65%, 5/15/2006		753,135
	3,500,000		Verizon Global Funding, Note, 7.25%, 12/1/2010		3,598,735

			TOTAL		21,639,781

			Utilities--5.6%
	4,000,000		Arizona Public Service Co., 6.375%, 10/15/2011		4,015,880
	4,250,000	¹	DPL, Inc., Note, 6.875%, 9/1/2011		4,266,660
	2,700,000		FirstEnergy Corp., 6.45%, 11/15/2011		2,614,275
	3,400,000	¹	Israel Electric Corp. Ltd. Note, 7.95%, 5/30/2011		3,541,814
	100,000	¹	Israel Electric Corp. Ltd., Sr. Note, 7.875%, 12/15/2026		88,564
	3,500,000		MidAmerican Energy Co., Unsecd. Note, 6.75%, 12/30/2031		3,349,535
	325,000	¹	Oncor, Inc., 6.375%, 5/1/2012		333,996
	3,750,000	¹	PSEG Power LLC, 7.75%, 4/15/2011		4,003,725
	350,000		Utilicorp United, Inc., Sr. Note, 7.95%, 2/1/2011		308,287

			TOTAL		22,522,736

			TOTAL CORPORATE BONDS (IDENTIFIED COST $281,422,442)		283,478,294

			MORTGAGE BACKED SECURITIES--8.2%
			Federal Home Loan Mortgage Corporation--3.1%
	12,319,003		4.05% - 8.00%, 6/21/2005 -- 9/1/2030		12,403,026

			Federal National Mortgage Association--5.0%
	19,857,041		5.00% - 6.50%, 1/20/2007 - 8/1/2016		20,275,812

			Government National Mortgage Association--0.1%
	317,521		8.00%, 8/15/2029 - 9/15/2030		338,013

			TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST $32,630,238)		33,016,851

			MUNICIPALS--0.2%
			Education--0.2%
	625,000		Harvard University, Revenue Bonds, 8.125% Bonds, 4/15/2007 (IDENTIFIED COST $683,585)		717,219

			U.S. TREASURY OBLIGATIONS--11.5%
	44,875,800		U.S. Treasury Note 3.50% - 5.625%, 1/15/2011 -- 11/15/2008 (IDENTIFIED COST $45,530,749)		45,940,618

			PREFERRED STOCKS--0.1%
			Financial Intermediaries--0.1%
	5,000		Citigroup, Inc., Cumulative Pfd., $3.18 (IDENTIFIED COST $238,830)		243,282

			REPURCHASE AGREEMENT--7.0%³
$	28,119,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		28,119,000

			TOTAL INVESTMENTS (IDENTIFIED COST $391,744,449)⁴	$	394,583,056

1 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. These securities have been deemed liquid based upon criteria approved by the fund's Board of Trustees. At June 30, 2002, these securities amounted to $46,047,826 which represents 11.5% of net assets.

2 Denotes a zero coupon bond with effective rate at time of purchase.

4 The cost of investments for federal tax purposes amounts to $391,744,449. The net unrealized appreciation of investments on a federal tax basis amounts to $2,838,607 which is comprised of $8,399,876 appreciation and $5,561,269 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($400,300,023) at June 30, 2002.

The following acronyms are used throughout this portfolio:

MTN	--Medium Term Note
REIT	--Real Estate Investment Trust

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $391,744,449)			$	394,583,056
Cash				919
Income receivable				5,666,637
Receivable for shares sold				64,176

TOTAL ASSETS				400,314,788

Liabilities:
Accrued expenses	$	14,765

TOTAL LIABILITIES				14,765

Net assets for 36,427,230 shares outstanding			$	400,300,023

Net Assets Consist of:
Paid in capital			$	390,883,220
Net unrealized appreciation of investments				2,838,607
Accumulated net realized loss on investments				(2,145,383	)
Undistributed net investment income				8,723,579

TOTAL NET ASSETS			$	400,300,023

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Primary Shares:
$400,000,150 ÷ 36,399,940 shares outstanding				$10.99

Service Shares:
$299,873 ÷ 27,290 shares outstanding				$10.99

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends							$	11,984
Interest								9,889,917

TOTAL INCOME								9,901,901

Expenses:
Investment adviser fee				$	1,002,723
Administrative personnel and services fee					125,674
Custodian fees					9,103
Transfer and dividend disbursing agent fees and expenses					9,039
Directors'/Trustees' fees					1,081
Auditing fees					6,094
Legal fees					1,905
Portfolio accounting fees					41,806
Distribution services fee--Service Shares					28
Shareholder services fee--Primary Shares					415,359
Share registration costs					6,134
Printing and postage					13,132
Insurance premiums					668
Miscellaneous					423

TOTAL EXPENSES					1,633,169

Waivers:
Waiver of investment adviser fee	$	(39,751	)
Waiver of shareholder services fee--Primary Shares		(415,359	)

TOTAL WAIVERS					(455,110	)

Net expenses								1,178,059

Net investment income								8,723,842

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(2,115,596	)
Net change in unrealized appreciation of investments								2,048,951

Net realized and unrealized loss on investments								(66,645	)

Change in net assets resulting from operations							$	8,657,197

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	8,723,842		$	11,760,153
Net realized gain (loss) on investments		(2,115,596	)		4,371,004
Net change in unrealized appreciation of investments		2,048,951			(1,923,084	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		8,657,197			14,208,073

Distributions to Shareholders:
Distributions from net investment income
Primary Shares		(11,759,211	)		(3,850,644	)
Distributions from net realized gain on investments
Primary Shares		(4,399,882	)		(390,500	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(16,159,093	)		(4,241,144	)

Share Transactions:
Proceeds from sale of shares		127,123,721			224,904,936
Net asset value of shares issued to shareholders in payment of distributions declared		16,159,090			4,241,144
Cost of shares redeemed		(23,167,226	)		(71,209,648	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		120,115,585			157,936,432

Change in net assets		112,613,689			167,903,361

Net Assets:
Beginning of period		287,686,334			119,782,973

End of period (including undistributed net investment income of $8,723,579 and $11,758,948, respectively)	$	400,300,023		$	287,686,334

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Primary Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,				Period Ended
	6/30/2002		2001		2000		12/31/1999	¹
Net Asset Value, Beginning of Period	$11.27		$10.72		$ 9.80		$10.00
Income From Investment Operations:
Net investment income	0.29	²	0.39		0.26		0.18
Net realized and unrealized gain (loss) on investments	(0.02	)	0.46		0.76		(0.38	)

TOTAL FROM INVESTMENT OPERATIONS	0.27		0.85		1.02		(0.20	)

Less Distributions:
Distributions from net investment income	(0.40	)	(0.27	)	(0.10	)	--
Distributions from net realized gain on investments	(0.15	)	(0.03	)	--		--

TOTAL DISTRIBUTIONS	(0.55	)	(0.30	)	(0.10	)	--

Net Asset Value, End of Period	$10.99		$11.27		$10.72		$ 9.80

Total Return³	2.59	%	8.01	%	10.45	%	(2.00	)%


Ratios to Average Net Assets:

Expenses	0.70	%⁴	0.70	%	0.70	%	0.68	%⁴

Net investment income	5.22	%⁴	5.64	%	6.57	%	6.11	%⁴

Expense waiver/reimbursement⁵	0.27	%⁴	0.30	%	0.57	%	2.82	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$400,000		$287,686		$119,783		$18,622

Portfolio turnover	65	%	106	%	65	%	119	%

1 Reflects operations for the period from April 28, 1999 (date of initial investment) to December 31, 1999.

2 Per share information is based on average shares outstanding.

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Service Shares

(For a Share Outstanding Throughout the Period)

	Period Ended (unaudited)
	6/30/2002	¹
Net Asset Value, Beginning of Period	$10.85
Income From Investment Operations:
Net investment income	0.09	²
Net realized and unrealized gain on investments	0.05

TOTAL FROM INVESTMENT OPERATIONS	0.14

Net Asset Value, End of Period	$10.99

Total Return³	1.29	%


Ratios to Average Net Assets:

Expenses	0.95	%⁴

Net investment income	5.52	%⁴

Expense waiver/reimbursement⁵	0.02	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$300

Portfolio turnover	65	%

1 Reflects operations for the period from April 30, 2002 (date of initial investment) to June 30, 2002.

2 Per share information is based on average shares outstanding.

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Quality Bond Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Effective April 30, 2002, Service Shares were added. The Fund offers two classes of shares: Primary Shares and Service Shares. The investment objective of the Fund is to provide current income.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end, regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended, (the "Code"), applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

When-Issued and Delayed Delivery Transactions

Restricted Securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in good faith using methods approved by the Trustees.

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002					Year Ended 12/31/2001
Primary Shares:	Shares			Amount		Shares			Amount
Shares sold	11,454,132		$	126,822,001		20,311,463		$	224,904,936
Shares issued to shareholders in payment of distributions declared	1,513,023			16,159,090		392,335			4,241,144
Shares redeemed	(2,092,067	)		(23,166,896	)	(6,350,808	)		(71,209,648	)

NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS	10,875,088		$	119,814,195		14,352,990		$	157,936,432


	Period Ended 6/30/2002¹

Service Shares:	Shares			Amount
Shares sold	27,320		$	301,720

Shares redeemed	(30	)		(330	)

NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS	27,290		$	301,390

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	10,902,378		$	120,115,585

1 Reflects operations for the period from April 30, 2002 (date of initial investment) to June 30, 2002

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.60% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at its sole discretion.

Administrative Fee

Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on a scale that the ranges from 0.150% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Primary and Service shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund, annually, to compensate FSC. For the period ended June 30, 2002, the Primary shares did not incur a distribution services fee.

Shareholder Services Fee

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

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	112,069,919

Sales	$	14,616,460

Purchases and sales of long-term U.S. government securities for the six months ended June 30, 2002, were as follows:

Purchases	$	191,610,408

Sales	$	182,875,425

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Quality Bond Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916884
Cusip 313916785

G02590-01 (8/02)

Federated Investors
World-Class Investment Manager

Federated Small Cap Strategies Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Small Cap Strategies Fund II, a portfolio of Federated Insurance Series. This report covers the period from January 1, 2002, through June 30, 2002. It begins with a commentary by the fund's portfolio manager, which is followed by a complete listing of the fund's stock holdings and financial statements.

Federated Small Cap Strategies Fund II is managed to offer shareholders significant opportunities for long-term growth by owning a highly diversified portfolio of small capitalization stocks.¹ These stocks, issued by companies with a typical market capitalization of less than $2 billion, offer the potential for high returns over time in exchange for a higher level of risk as compared to stocks issued by large, well-established companies. To help reduce risk and seek opportunities in this dynamic market, the fund's portfolio is carefully selected and broadly diversified. At the end of the reporting period, its holdings included more than 85 stocks spread across 8 industry sectors.

For the six-month reporting period, the fund produced a total return of (6.50)% through a net asset value decrease of $0.61.² On June 30, 2002, the fund's net assets were $4.6 million.

As you have been previously notified, the Board of Trustees has decided to liquidate the fund. The liquidations will take place as of October 4, 2002.

Thank you for your participation in the long-term growth of up-and-coming American companies through Federated Small Cap Strategies Fund II. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

Investment Review

During the semi-annual reporting period, equity market performance was weak, however, small cap stocks performed better than both large cap and mid cap stocks. Significant weakness in small cap technology stocks was evident during the reporting period. Technology stock fundamentals, both revenues and earnings, continued to weaken, however, some signs of bottoming fundamentals was evident during the reporting period. In addition, broad economic fundamentals across all sectors was mixed with some signs of a bottoming in economic fundamentals. In terms of style, small cap growth stocks materially underperformed small cap value.

The fund returned (6.50)% during the semi-annual reporting period slightly behind the Russell 2000 Index's³ (4.70)% return in the same period. The fund traded roughly in line with its benchmark during most of the second quarter of 2002. Some slight weakness in the portfolio was due to under weights in the Financials and Industrial sectors. Stock selection in the Healthcare and Technology sectors was positive during the second quarter of 2002.

During the reporting period, our strategy has been to keep the major sector weightings much closer to neutral relative to the benchmark than they have been historically. In addition, small cap value stocks now represent approximately 34% of the portfolio. A significant cash position was accumulated during the last three weeks of the quarter in order to meet significant redemption activity. While some of the anticipated redemption activity did occur, it is not yet completed. We anticipate all of the fund holdings to be liquidated during the third quarter of 2002. In anticipation of this event, we will maintain the extraordinarily high cash position in the fund.

3 The Russell 2000 Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Indexes are unmanaged and investments cannot be made in an index.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares				Value
			COMMON STOCKS--34.3%
			Consumer Discretionary--5.3%
	400	¹	99 Cents Only Stores	$	10,260
	1,100		Bandag, Inc.		31,152
	400	¹	Christopher & Banks Corp.		16,920
	300	¹	Electronics Boutique PLC		8,790
	450		Fred's, Inc.		16,551
	900	¹	Genesco, Inc.		21,915
	600	¹	Gtech Holdings Corp.		15,324
	1,000		M/I Schottenstein Homes, Inc.		37,680
	600	¹	Macrovision Corp.		7,866
	900	¹	Midway Games, Inc.		7,650
	600		Polaris Industries, Inc.		39,000
	600	¹	Timberland Co., Class A		21,492
	500	¹	Tweeter Home Entertainment Group, Inc.		8,170

			TOTAL		242,770

			Energy--2.7%
	1,375	¹	FMC Technologies, Inc.		28,545
	600	¹	Forest Oil Corp.		17,058
	600		Helmerich & Payne, Inc.		21,432
	800	¹	Key Production Co.		15,600
	1,600	¹	Oceaneering International, Inc.		43,200

			TOTAL		125,835

			Financials--2.7%
	600		Bank of Hawaii Corp.		16,800
	700		Downey Financial Corp.		33,110
	900	¹	Federal Agricultural Mortgage Association, Class C		24,030
	600		Greater Bay Bancorp		18,456
	600	¹	Labranche & Co. Inc.		13,740
	700	¹	Silicon Valley Bancshares		18,452

			TOTAL		124,588

			Healthcare--4.0%
	1,000	¹	AmeriPath, Inc.		24,000
	800	¹	Applera Corp. -- Celera Genomics		9,600
	500	¹	Cerus Corp.		16,940
	1,100	¹	Cryolife, Inc.		17,666
	800	¹	INAMED Corp.		21,376
	400	¹	InterMune, Inc.		8,440
	900	¹	Medarex, Inc.		6,678
	500	¹	Medicis Pharmaceutical Corp., Class A		21,380
	400	¹	Myriad Genetics, Inc.		8,136
	300	¹	Neurocrine Biosciences, Inc.		8,595
	500	¹	Transkaryotic Therapies, Inc.		18,025
	600		Varian Medical Systems, Inc.		24,330

			TOTAL		185,166

Shares				Value
			COMMON STOCKS--continued
			Industrials--6.1%
	600		Arbitron, Inc.	$	18,720
	900	¹	Checkfree Corp.		14,076
	400	¹	DRS Technologies, Inc.		17,100
	500	¹	Genlyte Group, Inc.		20,315
	800	¹	ITT Educational Services, Inc.		17,440
	450	¹	Iron Mountain, Inc.		13,882
	800	¹	Jacobs Engineering Group, Inc.		27,824
	500	¹	Learning Tree International, Inc.		9,270
	500	¹	Mercury Computer Systems, Inc.		10,350
	1,100	¹	National Processing, Inc.		28,380
	300	¹	Simpson Manufacturing Co., Inc.		17,139
	600		SkyWest, Inc.		14,034
	300		Strayer Education, Inc.		19,080
	1,300	¹	Veridian Corp.		29,510
	400		Woodward Governor Co.		23,648

			TOTAL		280,768

			Information Technology--8.5%
	800	¹	Acxiom Corp.		13,992
	800	¹	Amphenol Corp., Class A		28,800
	800	¹	Avocent Corp.		12,736
	600	¹	Black Box Corp.		24,438
	912	¹	Brooks Automation, Inc.		23,311
	700	¹	Documentum, Inc.		8,400
	500	¹	Dupont Photomasks, Inc.		16,240
	700	¹	F5 Networks, Inc.		6,846
	450		Fair Isaac & Co., Inc.		14,791
	700		Fisher Scientific International, Inc.		19,600
	600	¹	FreeMarkets, Inc.		8,478
	700		Keane, Inc.		8,680
	400	¹	Kronos, Inc.		12,196
	800	¹	Macromedia, Inc.		7,096
	600	¹	National Instruments Corp.		19,536
	600	¹	NetIQ Corp.		13,578
	400	¹	Photon Dynamics, Inc.		12,000
	600	¹	Plantronics, Inc.		11,406
	600	¹	Polycom, Inc.		7,194
	800	¹	Powerwave Technologies, Inc.		7,328
	600	¹	Retek, Inc.		14,580
	500		Roper Industries, Inc.		18,650
	600	¹	Silicon Laboratories, Inc.		16,236
	500	¹	Tollgrade Communications, Inc.		7,335
	900	¹	UTStarcom, Inc.		18,153
	600	¹	Veeco Instruments, Inc.		13,866
	600	¹	WebEx Communications, Inc.		9,540
	700	¹	Websense, Inc.		17,899

			TOTAL		392,905

Shares or Principal Amount				Value
			COMMON STOCKS--continued
			Materials--2.9%
	600		Arch Coal, Inc.	$	13,626
	600	¹	Cytec Industries, Inc.		18,864
	800	¹	FMC Corp.		24,136
	700		Lubrizol Corp.		23,450
	800		Massey Energy Co.		10,160
	700		OM Group, Inc.		43,400

			TOTAL		133,636

			Utilities--2.1%
	600		Alliant Energy Corp.		15,420
	1,000		Black Hills Corp.		34,610
	1,900		DQE, Inc.		26,600
	800		NUI Corp.		22,000

			TOTAL		98,630

			TOTAL COMMON STOCKS (IDENTIFIED COST $1,897,854)		1,584,298

			REPURCHASE AGREEMENT--65.8%²
$	3,035,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		3,035,000

			TOTAL INVESTMENTS (IDENTIFIED COST $4,932,854)³	$	4,619,298

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $4,932,854. The net unrealized depreciation of investments on a federal tax basis amounts to $313,556 which is comprised of $87,373 appreciation and $400,929 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($4,614,263) at June 30, 2002.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Investments in securities	$	1,584,298
Investments in repurchase agreements		3,035,000

Total investments in securities, at value (identified cost $4,932,854)			$	4,619,298

Cash				969
Income receivable				2,289

TOTAL ASSETS				4,622,556

Liabilities:
Accrued expenses		8,293

TOTAL LIABILITIES				8,293

Net assets for 526,290 shares outstanding			$	4,614,263

Net Assets Consist of:
Paid in capital			$	6,421,399
Net unrealized depreciation of investments				(313,556	)
Accumulated net realized loss on investments				(1,471,442	)
Accumulated net operating loss				(22,138	)

TOTAL NET ASSETS			$	4,614,263

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$4,614,263 ÷ 526,290 shares outstanding				$8.77

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $11)							$	20,269
Interest								4,564

TOTAL INCOME								24,833

Expenses:
Investment adviser fee				$	24,125
Administrative personnel and services fee					61,987
Custodian fees					4,042
Transfer and dividend disbursing agent fees and expenses					9,314
Directors'/Trustees' fees					428
Auditing fees					8,216
Legal fees					2,011
Portfolio accounting fees					24,536
Share registration costs					13
Printing and postage					9,610
Insurance premiums					525
Miscellaneous					134

TOTAL EXPENSES					144,941

Waiver and Reimbursement:
Waiver of investment adviser fee	$	(22,868	)
Reimbursement of other operating expenses		(75,102	)

TOTAL WAIVER AND REIMBURSEMENT					(97,970	)

Net expenses								46,971

Net operating loss								(22,138	)

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(69,003	)
Net change in unrealized appreciation of investments								(321,451	)

Net realized and unrealized loss on investments								(390,454	)

Change in net assets resulting from operations							$	(412,592	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net operating loss	$	(22,138	)	$	(5,365	)
Net realized loss on investments		(69,003	)		(55,778	)
Net change in unrealized appreciation of investments		(321,451	)		(74,532	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(412,592	)		(135,675	)

Distributions to Shareholders:
Distributions from net investment income		--			(2,595	)

Share Transactions:
Proceeds from sale of shares		518,317			1,588,613
Net asset value of shares issued to shareholders in payment of distributions declared		--			2,382
Cost of shares redeemed		(2,252,277	)		(1,186,741	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(1,733,960	)		404,254

Change in net assets		(2,146,552	)		265,984

Net Assets:
Beginning of period		6,760,815			6,494,831

End of period	$	4,614,263		$	6,760,815

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999	¹
Net Asset Value, Beginning of Period	$ 9.38		$ 9.51		$13.91		$10.00
Income From Investment Operations:
Net investment income (net operating loss)	(0.04	)	(0.00	)²	0.00	²	(0.01)
Net realized and unrealized gain (loss) on investments	(0.57	)	(0.13	)	(3.75)		3.92

TOTAL FROM INVESTMENT OPERATIONS	(0.61	)	(0.13	)	(3.75)		3.91

Less Distributions:
Distributions from net investment income	--		(0.00	)²	(0.01)		--
Distributions from net realized gain on investments and foreign currency transactions	--		--		(0.64)		--

TOTAL DISTRIBUTIONS	--		(0.00	)²	(0.65)		--

Net Asset Value, End of Period	$ 8.77		$ 9.38		$ 9.51		$13.91

Total Return³	(6.50	)%	(1.33	)%	(28.56)	%	39.10	%


Ratios to Average Net Assets:

Expenses	1.46	%⁴	1.21	%	1.11	%	1.03	%⁴

Net investment income (net operating loss)	(0.69)	%⁴	(0.08)	%	0.05	%	(0.17)	%⁴

Expense waiver/reimbursement⁵	3.05	%⁴	3.05	%	4.53	%	12.12	%⁴

Supplemental Data:

Net assets, end of period (000 omitted)	$4,614		$6,761		$6,495		$2,702

Portfolio turnover	18	%	140	%	236	%	77	%

1 Reflects operations for the period from May 28, 1999 (date of initial public investment) to December 31, 1999.

2 Represents less than $0.01 per share.

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Small Cap Strategies Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide capital appreciation.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Repurchase Agreements

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. All discounts/premiums are accreted/amortized for financial statement purposes as required. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value.

Federal Taxes

At December 31, 2001, the Fund for federal tax purposes, had a capital loss carryforward of $1,384,188, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2008		$769,010

2009		$ 615,178

When-Issued and Delayed Delivery Transactions

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	55,515		173,135
Shares issued to shareholders in payment of distributions declared	--		261
Shares redeemed	(249,690	)	(136,085	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(194,175	)	37,311

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.75% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion.

Administrative Fee

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund, annually, to compensate FSC. For the six months ended June 30, 2002, the Fund did not incur a distribution services fee.

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

Investment Transactions

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases		$1,010,759

Sales		$4,596,476

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Small Cap Strategies Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916876

G02584-01 (8/02)

Federated Investors
World-Class Investment Manager

Federated Total Return Bond Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the semi-annual report for Federated Total Return Bond Fund II, a portfolio of Federated Insurance Series. This report covers the six-month reporting period from January 1, 2002 through June 30, 2002. It opens with an investment review by the fund's portfolio manager, Joseph M. Balestrino, CFA, Senior Vice President, Federated Investment Management Company, and includes a complete listing of the fund's holdings and its financial statement.

Federated Total Return Bond Fund II is managed to offer shareholders total return opportunities. The fund invests its assets primarily in a diversified portfolio of investment grade fixed income securities, including mortgage backed securities, corporate debt securities and U.S. government obligations. The fund may also invest in domestic high yield bonds and foreign fixed income securities.¹

The fund's total return consists primarily of income received from portfolio securities but also from changes in the market value of its securities (both realized and unrealized appreciation). Through an analysis of economic and market conditions and corporate earnings, fund managers allocate to the sectors and select the securities they expect to provide the best balance between risk and the greatest potential for return.

During the six-month reporting period ended June 30, 2002, the fund produced a total return of 2.92% and dividend income of $0.001 per share.² Its net asset value increased from $9.62 at the beginning of the reporting period to $9.90 at the end of the reporting period. As of June 30, 2002, its net assets were $3.7 million.

Thank you for choosing Federated Total Return Bond Fund II as a diversified, professionally managed way to participate in the total return opportunities of different sectors of the bond market. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

1 International investing involves special risks, including currency risk, increased volatility of foreign securities and differences in auditing and other financial standards. Lower-rated bonds involve a higher degree of risk than investment-grade bonds in return for higher yield potential.

2 Past performance is no guarantee of future results. Investment return and principal value will fluctuate so than an investor's shares, when redeemed, may be worth more or less than their original cost. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses.

Investment Review

The six-month reporting period ending June 30, 2002 can economically be characterized as a gradually improving environment. The various manufacturing and employment indicators, which formed the basis of the 2001 slowdown, reversed course and demonstrated steady upward progress during the first half of 2002. In this environment, the bond markets would typically respond with higher interest rates and relative outperformance in the higher-yielding sectors such as investment grade corporate and high-yield debt securities. This is precisely what occurred in the first quarter of 2002 but not so during the second quarter. The latter half of the six-month reporting period was dominated by high profile corporate accounting restatements and scandals, causing a serious lack of investor confidence. As a result, a "flight to quality" ensued which resulted in falling interest rates and dramatic underperformance of corporate bonds. In essence, the financial markets disconnected from the improving economic story in the second quarter of 2002.

In retrospect, the bond sector relative winners in the first quarter--corporates and mortgages--became the second quarter relative losers as investor confidence fell. The portfolio, in concert with an improving economic landscape, remained most overweight in the investment grade corporate bond market over the past six months. Thus, as a high-quality bond portfolio, the fund was in a position to benefit from generally lower interest rates; however, the benefits were somewhat offset by the under-performance of corporate bonds relative to comparable maturity U.S. treasury securities. For the six-month reporting period, the fund generated a 2.92% total return, falling between the 2.48% return of the Lipper Intermediate Investment Grade Debt category and the 3.79% return of the Lehman Brothers Aggregate Bond Index.³

The majority of economic releases continues to point towards a gradually improving domestic recovery, which historically has favored the return of corporate bonds over treasury securities. Additionally, an improving economy would ultimately be expected to result in higher interest rates. Thus, the fund continues to target a shorter duration with a corporate bond overweight.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges. Lehman Brothers Aggregate Bond Index is an unmanaged index composed of securities from the Lehman Brothers Government/corporate Bond Index, Mortgage Backed Securities Index and the Asset-Backed Securities Index. Total return comprises prices appreciation/depreciation and income as a percentage of the original investment. Indexes are rebalanced monthly by marked capitalization. Indexes are unmanaged and investments cannot be made in an index.

Portfolio of Investments

June 30, 2002 (unaudited)

Principal Amount			Value
		U.S. CORPORATE BONDS--39.4%
		Automotive--2.7%
$	100,000	Hertz Corp., Jr. Sub. Note, 7.00%, 7/15/2003	$	102,485

		Banking--2.7%
	100,000	U.S. Bank N.A., 6.30%, 2/4/2014		101,292

		Broadcast Radio & TV--2.4%
	100,000	AOL Time Warner, Inc., Note, 6.75%, 4/15/2011		92,798

		Ecological Services & Equipment--5.5%
	100,000	Republic Services, Inc., Note, 6.75%, 8/15/2011		103,522
	100,000	USA Waste Services, Inc., Sr. Note, 7.00%, 10/1/2004		103,842

		TOTAL		207,364

		Finance - Retail--4.9%
	100,000	Green Tree Financial Corp. 1999-5, Class B1, 9.20%, 4/1/2031		78,174
	100,000	Waddell & Reed Financial, Inc., 7.50%, 1/18/2006		105,559

		TOTAL		183,733

		Financial Services--2.8%
	100,000	MBNA Corp., 7.50%, 3/15/2012		105,064

		Food & Drug Retailers--2.8%
	100,000	Safeway, Inc., Sr. Note, 6.85%, 9/15/2004		105,958

		Oil & Gas--5.3%
	100,000	Union Pacific Resources Group, Inc., Note, 6.50%, 5/15/2005		105,157
	100,000	WCG Note Trust, Sr. Note, Series 144A, 8.25%, 3/15/2004		96,834

		TOTAL		201,991

		Printing & Publishing--5.5%
	100,000	News America Holdings, Inc., Company Guarantee, 8.00%, 10/17/2016		102,999
	100,000	Reed Elsevier Capital, 6.75%, 8/1/2011		104,859

		TOTAL		207,858

		Real Estate--2.9%
	100,000	EOP Operating LP, 7.75%, 11/15/2007		110,497

		Telecommunications & Cellular--1.9%
	50,000	Sprint Capital Corp., 5.875%, 5/1/2004		42,563
	33,000	Tritel PCS, Inc., Sr. Sub. Note, 10.375%, 1/15/2011		30,113

		TOTAL		72,676

		TOTAL U.S. CORPORATE BONDS (IDENTIFIED COST $1,504,763)		1,491,716

		INTERNATIONAL BONDS--5.7%
		CANADA--2.9%
		Metals & Mining--2.9%
	100,000	Barrick Gold Corp., Deb., 7.50%, 5/1/2007		110,029

		ISRAEL--2.8%
		Utilities--2.8%
	100,000	Israel Electric Corp. Ltd., 7.95%, 5/30/2011		104,171

		TOTAL INTERNATIONAL BONDS (IDENTIFIED COST $209,775)		214,200

Principal Amount			Value
		U.S. GOVERNMENT AGENCIES--22.9%
$	247,000	Federal Home Loan Mortgage Corp., Pool, 5.625%, 3/15/2011	$	252,787
	358,606	Federal Home Loan Mortgage Corp., Pool C48271, 7.00%, 2/1/2031		371,495
	225,755	Government National Mortgage Association, Pool 780339, 8.00%, 12/15/2023		243,745

		TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $839,470)		868,027

		U.S. TREASURY NOTES--23.3%
	900,000	U.S. Treasury Note, 3.50%, 11/15/2006 (identified cost $865,957)		884,394

		REPURCHASE AGREEMENT--7.0%¹
	265,000	Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		265,000

		TOTAL INVESTMENTS (IDENTIFIED COST $3,684,965)²	$	3,723,337

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

2 The cost of investments for generally accepted accounting principles ("GAAP") is $3,684,965. Cost for federal tax purposes is $3,690,122. The difference between cost for GAAP and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. The net unrealized appreciation of investments on a federal tax basis amounts to $33,215, which is comprised of $81,228 appreciation and $48,013 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($3,788,391) at June 30, 2002.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $3,684,965)			$	3,723,337
Cash				124
Income receivable				44,169
Prepaid expenses				22,391

TOTAL ASSETS				3,790,021

Liabilities:
Accrued expenses	$	1,630

TOTAL LIABILITIES				1,630

Net assets for 382,574 shares outstanding			$	3,788,391

Net Assets Consist of:
Paid in capital			$	4,408,503
Net unrealized appreciation of investments				38,372
Accumulated net realized loss on investments				(780,389	)
Undistributed net investment income				121,905

TOTAL NET ASSETS			$	3,788,391

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$3,788,391 ÷ 382,574 shares outstanding				$9.90

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Interest							$	143,948

Expenses:
Investment adviser fee				$	21,908
Administrative personnel and services fee					61,987
Custodian fees					1,619
Transfer and dividend disbursing agent fees and expenses					2,221
Directors'/Trustees' fees					315
Auditing fees					1,500
Legal fees					3,775
Portfolio accounting fees					19,299
Share registration costs					10
Printing and postage					8,871
Insurance premiums					400
Miscellaneous					93

TOTAL EXPENSES					121,998

Waiver and Reimbursement:
Waiver of investment adviser fee	$	(21,908	)
Reimbursement of other operating expenses		(78,055	)

TOTAL WAIVER AND REIMBURSEMENT					(99,963	)

Net expenses								22,035

Net investment income								121,913

Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								38,256
Net change in unrealized appreciation of investments								(26,150	)

Net realized and unrealized loss on investments								12,106

Change in net assets resulting from operations							$	134,019

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	121,913		$	1,222,125
Net realized gain (loss) on investments		38,256			(796,889	)
Net change in unrealized appreciation/depreciation of investments		(26,150	)		1,023,647

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		134,019			1,448,883

Distributions to Shareholders:
Distributions from net investment income		(353	)		(1,248,506	)

Share Transactions:
Proceeds from sale of shares		803,994			1,378,223
Net asset value of shares issued to shareholders in payment of distributions declared		292			375,901
Cost of shares redeemed		(4,695,332	)		(10,432,999	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(3,891,046	)		(8,678,875	)

Change in net assets		(3,757,380	)		(8,478,498	)

Net Assets:
Beginning of period		7,545,771			16,024,269

End of period (including undistributed net investment income of $121,905 and $345, respectively)	$	3,788,391		$	7,545,771

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,				Period Ended
	6/30/2002		2001		2000		12/31/1999	¹
Net Asset Value, Beginning of Period	$ 9.62		$ 9.46		$10.37		$10.00
Income From Investment Operations:
Net investment income	0.23	²	0.69	³	0.86		0.38
Net realized and unrealized gain (loss) on investments	0.05		0.17	³	(0.50	)	(0.01	)

TOTAL FROM INVESTMENT OPERATIONS	0.28		0.86		0.36		0.37

Less Distributions:
Distributions from net investment income	(0.00	)⁴	(0.70	)	(1.26	)	--
Distributions from net realized gain on investments	--		--		(0.01	)	--

TOTAL DISTRIBUTIONS	--		(0.70	)	(1.27	)	--

Net Asset Value, End of Period	$ 9.90		$ 9.62		$ 9.46		$10.37

Total Return⁵	2.92	%	9.19	%	3.56	%	3.70	%


Ratios to Average Net Assets:

Expenses	0.85	%⁶	0.85	%	0.85	%	0.85	%⁶

Net investment income	4.73	%⁶	6.98	%³	8.77	%	7.89	%⁶

Expense waiver/reimbursement⁷	3.88	%⁶	1.33	%	1.45	%	1.73	%⁶

Supplemental Data:

Net assets, end of period (000 omitted)	$3,788		$7,546		$16,024		$16,159

Portfolio turnover	168	%	122	%	62	%	4	%

1 For the period July 7, 1999 (date of initial public investment) to December 31, 1999.

2 Per share information is based on average shares outstanding.

3 As required, effective January 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began amortizing long-term premiums and discounts on debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.03, increase net realized and unrealized gain/loss per share by $0.03, and decrease the ratio of net investment income to average net assets from 7.36% to 6.98%. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.

4 Amount is less than $0.01.

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

6 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Total Return Bond Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide total return on its assets.

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

U.S. government securities, listed corporate bonds, (other fixed income and asset-backed securities), and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Change in Accounting Principle

As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing long-term discounts or premiums on debt securities. Prior to January 1, 2001, the Fund did not amortize long-term discounts or premiums on debt securities. The cumulative effect of this accounting change had no impact on total net assets of the Fund, but resulted in a $44,041 increase in cost of securities and a corresponding $44,041 increase in net unrealized appreciation and an increase to net investment income of $44,041, based on securities held by the Fund on January 1, 2001.

The effect of this change for the year ended December 31, 2001 was to decrease net investment income by $65,797, decrease net unrealized appreciation by $52,856 and decrease net realized losses by $12,941. The statement of changes in net assets and financial highlights for prior periods have not been restated to reflect this change in presentation.

Federal Taxes

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $809,830 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant the Code, such capital loss carryforward will expire in 2009.

When-Issued and Delayed Delivery Transactions

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	83,187		138,953
Shares issued to shareholders in payment of distributions declared	31		39,373
Shares redeemed	(485,283	)	(1,086,703	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(402,065	)	(908,377	)

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Under the terms of a sub-adviser agreement between the Adviser and Federated Global Investment Management Corp. ("FGIMC"), FGIMC receives an allocable portion of the Fund's investment adviser fee. Such allocation is based on the amount of foreign securities which FGIMC manages for the Fund. This fee is paid by the Adviser out of its resources and is not an incremental Fund expense.

Administrative Fee

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp., ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund, annually, to compensate FSC. For the six months ended June 30, 2002, the Fund did not incur a distribution services fee.

Shareholder Services Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund may pay FSSC up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. For the six months ended June 30, 2002, the Fund shares did not incur a shareholder services fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases	$	5,271,960

Sales	$	5,079,609

Purchases and sales of long-term U.S. government securities for the six months ended June 30, 2002, were as follows:

Purchases	$	2,866,406

Sales	$	6,876,340

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Total Return Bond Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916868

25670 (8/02)

Federated Investors
World-Class Investment Manager

Federated Utility Fund II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Utility Fund II, a portfolio of Federated Insurance Series.

This report covers the six-month period from January 1, 2002 through June 30, 2002. It begins with a commentary by the fund's portfolio managers, which is followed by a complete listing of the fund's utility holdings and the fund's financial statements.

Federated Utility Fund helps shareholders participate in the income and growth opportunities of a market that provides critical, ongoing services to the U.S. and other nations.

For the six-month period ended June 30, 2002, the fund produced a total return of (13.23)%.¹ Dividend income totaled $0.472 per share. On June 30, 2002, net assets totaled 108.5 million.

Any fund that invests in a particular sector is subject to greater volatility than a broad equity fund that may invest in all industry sectors of the S&P 500 Index (S&P 500).² Please remember that the true measure of this fund's performance is in years rather than months, and anticipate relatively brief periods of negative, as well as positive, returns.

Thank you for participating in the income and growth opportunities of U.S. and foreign utility stocks through Federated Utility Fund II. As always, we welcome your comments and suggestions.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

2 S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. This index is unmanaged, and investments cannot be made in an index.

Investment Review

In the first quarter, the overall market appeared to be locked into a trading range as stocks trended higher only to fall back in late January and early February. As signs began to point to an economic recovery, stocks rebounded during the remainder of the quarter with S&P 500 returning 0.27% for the entire period. Utilities tracked the overall market, however, telecommunication stocks trailed considerably. The Utility sector actually outperformed the market with rising electricity prices and successful balance sheet restructurings driving performance. In the communications area, deteriorating fundamentals along with balance sheet concerns and liquidity issues negatively impacted the whole sector including the more mature, local and long distance telephone companies. For the quarter, this composite benchmark's Utility sector returned 3.38% while the Telecommunication Services sector returned (15.53)%, a 1,891 basis point spread.

During the second quarter, the overall market headed lower as favorable economic news was discounted due to disappointments in earnings expectations and new revelations of corporate greed and accounting shenanigans. For the quarter, S&P 500 returned (13.40)%. Unfortunately, both the Utility and Telecommunications Sectors were tainted with these disappointments and their returns trailed the overall market. The composite benchmark's Utility sector returned (16.90)% while the Telecommunication Services sector returned (23.38)%, a 648 basis point spread.³ Relative performance trends from the second quarter of 2001 reestablished themselves as growth utility and telecommunication stocks significantly under performed traditional electric utilities and local telephone companies.

3 S&P Utility Index is an unmanaged market cap-weighted index of natural gas and electric companies. The S&P Communications Index is an unmanaged market cap-weighted index of communications companies.

PERFORMANCE

The fund returned (13.23)% during the first six months of 2002, performing inline with the S&P 500 Index which returned (13.16)%. The portfolio also outperformed by 289 basis points the average Lipper Variable Annuity Utility fund that returned (16.18)%.⁴ With respect to its composite (telecom/utility) benchmark, the fund surpassed the benchmark return of (24.68)% by 1,139 basis points. During the period, the composite benchmark's Utility sector returned (14.08)%, while the Communication Services sector returned (35.28)%, a 2,120 basis point spread. Compared to our competitors, the fund's exposure to communications stocks hindered performance while the fund's repositioning into traditional electric utilities and away from high expectation, growth utilities helped. However, when compared to the benchmark's return, the portfolio's lower sector weight in the communications area meaningfully aided performance.

The five positions contributing most to performance for the period were equity convertibles in TXU Corp. up 5.3%, Cinergy Corp. up 5.9% and common stock positions in Progress Energy up 15.5%, NICOR, Inc. up 9.9% and KeySpan Corp. up 8.7%. The five positions detracting most from performance were SBC Communications down 22.2%, Verizon Communications down 15.4%, Alltel Corp. down 23.9% and equity convertibles in CMS Energy Corp. down 53.3%, and El Paso Corp. down 53.9%.

4 Lipper figures represent the average total returns reported by all mutual funds designated by Lipper Inc. as falling into the respective categories indicated. They do not reflect sales charges.

POSITIONING AND STRATEGY

During the first six months of 2002, the fund's diversified value style was a key component of the fund's outperformance. Going forward, we anticipate that this disciplined methodology should continue to aid performance. With its value bias, the fund maintains core investments in both the Utility and Telecommunication sectors for diversification and appreciation potential. This barbell sector strategy allows for both income and growth opportunities. As economic data continues to support a strengthening economy, the fund has begun to reposition itself into Utility and Telecommunication stocks that, in our opinion, will participate with the upward move in the market while maintaining the basic characteristics of value stocks. Particular attention will be given to the quality of earnings, balance sheets and management credibility.

Portfolio of Investments

June 30, 2002 (unaudited)

Shares					Value
			COMMON STOCKS--58.3%
			Basic Material-0.1%
	2,000		Du Pont (E.I.) de Nemours & Co.	$	88,800

			Communication Services--15.5%
	28,700	¹	Alltel Corp.		1,348,900
	259,155		AT&T Corp.		2,772,958
	62,900		BCE, Inc.		1,095,718
	38,800		BellSouth Corp.		1,222,200
	149,800		SBC Communications, Inc.		4,568,900
	7,800	¹	Telecom Italia SpA, ADR		609,180
	8,700		Telefonos de Mexico, Class L, ADR		279,096
	123,500		Verizon Communications, Inc.		4,958,525

			TOTAL		16,855,477

			Energy--1.6%
	1,000		ChevronTexaco Corp.		88,500
	24,600	¹	CONSOL Energy, Inc.		522,750
	10,800		Conoco, Inc.		300,240
	8,800		Diamond Offshore Drilling, Inc.		250,800
	10,100		Marathon Oil Corp.		273,912
	5,600		Schlumberger Ltd.		260,400

			TOTAL		1,696,602

			Financials--2.9%
	13,100		AMB Property Corp.		406,100
	13,000		Archstone-Smith Trust		347,100
	15,200		Highwoods Properties, Inc.		395,200
	45,500		iStar Financial, Inc.		1,296,750
	10,000		Public Storage, Inc.		371,000
	7,500		Vornado Realty Trust		346,500

			TOTAL		3,162,650

			Utilities--38.2%
	18,200		Allegheny Energy, Inc.		468,650
	60,400		Alliant Energy Corp.		1,552,280
	45,400		American Electric Power Co., Inc.		1,816,908
	33,600	¹	Consolidated Edison Co.		1,402,800
	18,900		Constellation Energy Group, Inc.		554,526
	11,200		DPL, Inc.		296,240
	15,700		DTE Energy Co.		700,848
	8,700		E.On AG, ADR		504,774
	43,200	¹	El Paso Corp.		890,352
	69,200	¹	Endesa SA, ADR		990,944
Shares					Value
			COMMON STOCKS--continued
			Utilities--continued
	55,900	¹	Energy East Corp.	$	1,263,340
	12,900		Entergy Corp.		547,476
	27,900		Exelon Corp.		1,459,170
	55,500		Great Plains Energy, Inc.		1,129,425
	16,300	¹	IDA Corp, Inc.		451,510
	73,100	¹	KeySpan Corp.		2,752,215
	46,200	¹	Korea Electric Power Corp., ADR		483,714
	14,600		MDU Resources Group, Inc.		383,834
	89,900	¹	NICOR, Inc.		4,112,925
	35,200		NSTAR		1,576,256
	25,700		National Fuel Gas Co.		578,507
	13,100		National Grid Group PLC, ADR		460,596
	87,700		Northeast Utilities Co.		1,649,637
	36,300		OGE Energy Corp.		829,818
	62,900	¹	Peoples Energy Corp.		2,293,334
	19,200		Piedmont Natural Gas, Inc.		710,016
	49,400		Pinnacle West Capital Corp.		1,951,300
	19,900		PNM Resources, Inc.		481,580
	21,900		Potomac Electric Power Co.		470,412
	39,500		Progress Energy, Inc.		2,054,395
	11,700		Public Service Enterprises Group, Inc.		506,610
	14,500	¹	Questar Corp.		358,150
	37,800	¹	SCANA Corp.		1,166,886
	27,400	¹	Sempra Energy		606,362
	77,500	¹	Southern Co.		2,123,500
	17,100		Vectren Corp.		429,210
	18,500		Westar Energy, Inc.		283,975
	21,300		Wisconsin Energy Corp.		538,251
	14,700	¹	WPS Resources Corp.		600,201

			TOTAL		41,430,927

			TOTAL COMMON STOCKS (IDENTIFIED COST $65,271,000)		63,234,456

			PREFERRED STOCKS--35.8%
			Communication Services--3.0%
	44,000	²	Alltel Corp., DECS, $3.88		2,135,760
	56,200		Citizens Communications Co., Conv. Pfd., $1.69		1,088,875

			TOTAL		3,224,635

			Energy--1.0%
	96,800		NRG Energy, Inc., Conv. Pfd., $1.63		1,093,840

Shares or Principal Amount					Value
			PREFERRED STOCKS--continued
			Utilities--31.8%
	44,000		Ameren Corp., ACES, $2.44	$	1,204,500
	47,000		American Electric Power Co., Inc., DECS, $4.63		2,313,810
	103,900		Aquila, Inc., Conv. Pfd.		1,058,741
	9,000		Calpine Corp., Conv. Pfd., $2.75		260,730
	96,500		Cinergy Corp., Conv. Pfd., $4.75		5,640,425
	100,000	¹	CMS Energy Corp., Conv. Pfd., $0.91		1,400,000
	16,700		CMS Energy Corp., PEPS, $1.81		296,425
	25,200		Dominion Resources, Inc., Conv. Pfd., $4.75		1,530,900
	147,000		Duke Energy Corp., PRIDES, (Series B), $2.00		3,197,250
	32,000		El Paso Corp., DECS, $4.50		1,641,600
	63,300		El Paso Corp., PRIDES, $1.66		917,850
	92,700		FPL Group, Inc., DECS, $4.25		5,136,507
	44,000		KeySpan Corp., DECS, $4.38		2,296,800
	21,900	¹	NiSource, Inc., Conv. Pfd., $3.88		938,963
	37,000	¹	PPL Capital Funding Trust I, PEPS, $1.94		703,000
	26,000		Sempra Energy, DECS, $2.13		607,750
	27,000		TECO Energy, Inc., Conv. Pfd., $2.38		678,375
	87,000		TXU Corp., Conv. Pfd., $4.38		4,741,500

			TOTAL		34,565,126

			TOTAL PREFERRED STOCKS (IDENTIFIED COST $41,527,958)		38,883,601

			CORPORATE BONDS--2.1%
			Utilities--2.1%
$	450,000		AES Corp., Conv. Bond, 4.50%, 8/15/2005		258,791
	340,000		Calpine Corp., Conv. Bond, 4.00%, 12/26/2006		256,523
	2,300,000		Mirant Corp., Conv. Bond, 2.50%, 6/15/2021		1,706,577

			TOTAL CORPORATE BONDS (IDENTIFIED COST $2,372,679)		2,221,891

			REPURCHASE AGREEMENT--3.0%³
	3,251,000		Warburg Dillon Reed LLC, 1.97%, dated 6/28/2002, due 7/1/2002 (at amortized cost)		3,251,000

			TOTAL INVESTMENTS (IDENTIFIED COST $112,422,637)⁴	$	107,590,948

1 All or a portion of these shares are temporarily on loan to unaffiliated broker/dealers.

2 Non-income producing security.

4 The cost of investments for generally accepted accounting principles ("GAAP") is $112,422,637. The cost for federal tax purposes is $112,420,354. The difference between cost for GAAP and cost on a tax basis is related to amortization/accretion tax elections on fixed income securities. The net unrealized depreciation of investments on a federal tax basis is $4,829,406 which is comprised of $6,249,051 appreciation and $11,078,457 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($108,500,872) at June 30, 2002.

The following acronyms are used throughout this portfolio:

ACES	--Adjustable Convertible Extendable Securities
ADR	--American Depositary Receipt
DECS	--Dividend Enhanced Convertible Stock
PEPS	--Participating Equity Preferred Stock
PRIDES	--Preferred Redeemable Increased Dividend Equity Securities

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Total investments in securities, at value (identified cost $112,422,637)			$	107,590,948
Cash				193
Income receivable				312,117
Receivable for investments sold				2,300,005
Cash held as collateral for securities lending				14,028,217
Prepaid expense				28,808

TOTAL ASSETS				124,260,288

Liabilities:
Payable for investments purchased	$	1,721,244
Payable on collateral due to broker		14,028,217
Accrued expenses		9,955

TOTAL LIABILITIES				15,759,416

Net assets for 12,648,962 shares outstanding			$	108,500,872

Net Assets Consist of:
Paid in capital			$	162,759,919
Net unrealized depreciation of investments and translation of assets and liabilities in foreign currency				(4,831,496	)
Accumulated net realized loss on investments and foreign currency transactions				(52,250,646	)
Undistributed net investment income				2,823,095

TOTAL NET ASSETS			$	108,500,872

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$108,500,872 ÷ 12,648,962 shares outstanding				$8.58

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Dividends (net of foreign taxes withheld of $18,001)				$	3,277,649
Interest (including income on securities loaned of $28,291)					135,713

TOTAL INCOME					3,413,362

Expenses:
Investment adviser fee	$	467,469
Administrative personnel and services fee		61,987
Custodian fees		5,299
Transfer and dividend disbursing agent fees and expenses		12,322
Directors'/Trustees' fees		643
Auditing fees		4,121
Legal fees		2,293
Portfolio accounting fees		24,076
Share registration costs		238
Printing and postage		22,348
Insurance premiums		456
Miscellaneous		533

TOTAL EXPENSES		601,785

Fees paid indirectly from directed broker arrangements		(4,356	)

Net expenses					597,429

Net investment income					2,815,933

Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions					(15,251,252	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency					(5,067,457	)

Net realized and unrealized loss on investments and foreign currency transactions					(20,318,709	)

Change in net assets resulting from operations				$	(17,502,776	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,815,933		$	6,164,758
Net realized loss on investments and foreign currency transactions		(15,251,252	)		(16,208,655	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency		(5,067,457	)		(13,460,661	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(17,502,776	)		(23,504,558	)

Distributions to Shareholders:
Distributions from net investment income		(6,136,892	)		(5,509,180	)

Share Transactions:
Proceeds from sale of shares		10,636,593			28,051,879
Net asset value of shares issued to shareholders in payment of distributions declared		6,136,889			5,509,177
Cost of shares redeemed		(22,903,072	)		(41,491,704	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(6,129,590	)		(7,930,648	)

Change in net assets		(29,769,258	)		(36,944,386	)

Net Assets:
Beginning of period		138,270,130			175,214,516

End of period (including undistributed net investment income of $2,823,095 and $6,138,277, respectively)	$	108,500,872		$	138,270,130

See Notes which are an integral part of the Financial Statements

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)			Year Ended December 31,
	6/30/2002			2001			2000			1999			1998			1997
Net Asset Value, Beginning of Period	$10.37			$12.44			$14.35			$15.27			$14.29			$11.81
Income From Investment Operations:
Net investment income	0.23	¹		0.47			0.39			0.42			0.37			0.40
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(1.55	)¹		(2.14	)		(1.59	)		(0.23	)		1.55			2.62

TOTAL FROM INVESTMENT OPERATIONS	(1.32	)		(1.67	)		(1.20	)		0.19			1.92			3.02

Less Distributions:
Distributions from net investment income	(0.47	)		(0.40	)		(0.43	)		(0.37	)		(0.13	)		(0.28	)
Distributions from net realized gain on investments and foreign currency transactions	--			--			(0.28	)		(0.74)			(0.81	)		(0.26	)

TOTAL DISTRIBUTIONS	(0.47	)		(0.40	)		(0.71	)		(1.11	)		(0.94	)		(0.54	)

Net Asset Value, End of Period	$ 8.58			$10.37			$12.44			$14.35			$15.27			$14.29

Total Return²	(13.23	)%		(13.72	)%		(8.95	)%		1.69	%		13.95	%		26.63	%


Ratios to Average Net Assets:

Expenses	0.97	%^3,4		0.92	%⁴		0.91	%		0.94	%		0.93	%		0.85	%

Net investment income	4.52	%^1,3		3.86	%		2.95	%		3.20	%		3.20	%		3.41	%

Expense waiver/reimbursement⁵	--			--			--			--			0.07	%		0.27	%

Supplemental Data:

Net assets, end of period (000 omitted)	$108,501		$138,270			$175,215			$187,666			$162,038			$104,462

Portfolio turnover	61	%		97	%		107	%		119	%		84	%		95	%

1 Effective January 1, 2002 the Fund adopted the provisions of the American Institute of Certified Accountants ("AICPA") Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. For the six months ended June 30, 2002, this change had no effect on net investment income per share or net realized and unrealized gain (loss) on investments per share, but increased the ratio of net investment income to average net assets from 4.51% to 4.52%. Per share, ratios and supplemental data for periods prior to January 1, 2002 have not been restated to reflect this change in presentation.

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

3 Computed on an annualized basis.

4 The expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The expense ratio for the six months ended June 30, 2002 and the year ended December 31, 2001 are 0.96% and 0.91%, respectively, after taking into account these expense reductions.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Utility Fund II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to achieve high current income and moderate capital appreciation.

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

Listed foreign and domestic corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed foreign and domestic equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

Investment Income, Expenses and Distributions

Effective January 1, 2002, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. Prior to January 1, 2002, the Fund did not accrete discount and amortize premium on long-term debt securities. The cumulative effect of this accounting change had no impact on the total net assets of the Fund, but resulted in adjustments to the financial statements as follows:

As of 1/1/2002			For the Six Months Ended 6/30/2002
	Cost of Investments	Undistributed Net Investment Income	Net Investment Income	Net Unrealized Appreciation/ (Depreciation)	Net Realized Gain/(Loss)
Increase (decrease)	$5,777	$5,777	$3,034	$3,494	$(6,528)

Federal Taxes

Withholding taxes on foreign interest and dividends have been provided for in accordance with the applicable country's tax rules and rates.

At December 31, 2001, the Fund, for federal tax purposes, had a capital loss carryforward of $36,145,225 which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows.

Expiration Year		Expiration Amount
2008		$20,096,146

2009		$16,049,079

When-Issued and Delayed Delivery Transactions

Foreign Exchange Contracts

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FC") are translated into U.S. dollars on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amount of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of assets and liabilities other than investment in securities at fiscal year end, resulting from changes in the exchange rate.

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. Collateral for securities loaned must be in cash or government securities. Collateral is maintained at a minimum level of 102% of the market value on investments loaned, plus interest, if applicable. In accordance with the Fund's securities lending agreement, the market value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the custodian, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of June 30, 2002, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$13,615,817		$14,028,217

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	1,085,757		2,427,719
Shares issued to shareholders in payment of distributions declared	633,322		488,402
Shares redeemed	(2,407,575	)	(3,658,195	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(688,496	)	(742,074	)

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Shareholder Services Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. For the six months ended June 30, 2002 the Fund did not incur a shareholder services fee.

Transfer and Dividend Disbursing Agent Fees and Expenses

Expense Reduction

The Fund directs certain portfolio trades to a broker that in turns pays a portion of the Fund's operating expenses. For the six months ended June 30, 2002, the Fund's expenses were reduced by $4,356 under these arrangements.

Portfolio Accounting Fees

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

General

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

Investment Transactions

Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the six months June 30, 2002 were as follows:

Purchases	$	70,595,209

Sales	$	71,882,896

Risks of Foreign Investing

The Fund invests in securities of non-U.S. issuers. The political or economic development within a particular country or region may have an adverse effect on the ability of domiciled issuers to meet their obligations. Additionally, political or economic developments may have an effect on the liquidity and volatility of portfolio securities and currency holdings.

At June 30, 2002, the diversification of non-U.S. countries was as follows:

Country		Percentage of Net Assets
Canada		1.0%
Spain		0.9%
Italy		0.6%
Germany, Federal Republic of		0.5%
Korea, Republic of		0.4%
United Kingdom		0.4%
Mexico		0.3%

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Utility Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916108

G00433-03 (8/02)

Federated Investors
World-Class Investment Manager

Federated Fund for U.S. Government Securities II

A Portfolio of Federated Insurance Series

SEMI-ANNUAL REPORT

June 30, 2002

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

President's Message

Dear Shareholder:

I am pleased to present the Semi-Annual Report for Federated Fund for U.S. Government Securities II, a portfolio of Federated Insurance Series.

The report covers the six-month reporting period from January 1, 2002 through June 30, 2002. It begins with an investment review by the fund's portfolio manager, which is followed by a complete listing of the fund's holdings as well as its financial statements.

To pursue an attractive level of income, the fund invests primarily in U.S. government securities, including mortgage-backed securities issued by U.S. government agencies.

During the six-month reporting period, the fund made distributions totaling $0.445 per share, and its total return was 3.95%.¹ The fund's net asset value decreased slightly over the reporting period, starting at $11.43 per share and ending at $11.42 per share. On June 30, 2002, the fund's net assets reached $382.2 million.

Thank you for pursuing income through the diversification and professional management of Federated Fund for U.S. Government Securities II. Your comments and suggestions are always welcome.

Sincerely,

J. Christopher Donahue

J. Christopher Donahue
President
August 15, 2002

Investment Review

The Fund invests primarily in U.S. government securities, which include agency mortgage (Federal Home Loan Mortgage Corporation (FHLMC), Fannie Mae (FNMA), and Government National Mortgage Association (GNMA)), U.S. Treasurys and agency debenture securities. In addition, the Fund may invest up to 20% of its assets in investment grade non-governmental mortgage-backed securities. The "base" portfolio is approximately a two-thirds/one-third blend of mortgage-backed and Treasury/agency securities, respectively.

The domestic economy rebounded as indications of recovery appeared firmly in place after the recession of 2001. Consumer spending continued, most notably in the Housing and Auto sectors. After an extended period of contraction, manufacturing activity expanded as goods makers began replenishing depleted inventories. Treasury yields initially increased during the reporting period as economic fundamentals reflected surprisingly strong growth, however, yields reversed course, coinciding with dramatic equity market declines. Two and ten-year Treasurys yielded 2.81% and 4.98%, decreases of 0.21% and 0.07%, respectively.

Economic growth was surprisingly robust based on first quarter Gross Domestic Product, which grew at a 6.1% annualized rate. According to the Institute for Supply Management (ISM) surveys, manufacturing activity expanded over the final five months of the reporting period after contracting in each of the previous 18 months. Better than expected demand and depleted inventories necessitated increased manufacturing activity while consumer spending continued, fueled by low borrowing costs. While low mortgage rates sustained healthy home building activity, mortgage refinancing reduced consumer debt loads and increased disposable income. Subsidized finance rates supported robust motor vehicle sales as well.

At the outset, historically attractive spreads, elevated market volatility and expectations for market stability attracted investors to the Mortgage-Backed Security (MBS) sector. Although mortgages lost momentum in the latter stages of the reporting period as Treasury yields plummeted, the sector performed well. On a total return basis, mortgages outperformed agencies and Treasurys as mortgage-to-Treasury spreads tightened approximately 30 basis points.

Agency debt also performed well as investors were attracted to incremental yield. Strong demand coupled with increasing Treasury supply positively impacted the sector as agency debt spreads tightened across maturities.

Generally speaking, one might expect the bond market to respond to improving economic fundamentals with expectations for higher yields and tighter monetary policy. In fact, this was more or less the path followed by the bond market in the first half of the reporting period. However, as questions of corporate governance and scandal were revealed, capital moved quickly into the Treasury market as a defensive stance in the face of falling equities. As Treasury yields declined, the Fund's asset allocation was adjusted according to the changing environment.

Given early-period MBS outperformance and greater refinance risk as Treasury yields declined, the mortgage allocation was reduced in favor of Treasurys and agency debt. Asset allocation adjustments positively impacted performance. However, the fund's duration¹ position was slightly below that of the benchmark, based on indications of economic recovery. Due to the disconnect between economic fundamentals and the bond market in the latter stages of the six-month reporting period, the fund's duration position marginally detracted from performance.

Mortgage-backed and Treasury/agency allocations ended the period at approximately 65% and 33%, respectively. Fund duration is 3.4 years versus 3.5 years for the blended index (67% Lehman MBS Index and 33% Lehman Government Index).² The fund's total return for the six-month reporting period ended June 30, 2002, was 3.95% versus 4.27% for the unmanaged benchmark.

1 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

2 The Lehman brothers Mortgage Backed Securities Index is composed of all fixed rate, securitized mortgage pools by GNMA, FNMA and FHLMC, including GNMA Graduated Payment Mortgages. The Lehman Brothers Government Index includes the Treasury and Agency Indexes. The Treasury component includes public obligations of the U.S. Treasury that have remaining maturities of more than one year. The Agency component includes both callable and non-callable agency securities. This includes publicly issued debt of U.S. government agencies, quasi-federal corporation and corporate or foreign debt guaranteed by the U.S. government. These indexes are unmanaged, and investments cannot be made in an index.

Portfolio of Investments

June 30, 2002 (unaudited)

Principal Amount				Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--2.2%
$	2,559,952		Countrywide Home Loans (Series 1999-3), 6.500%, 4/25/2029	$	2,627,880
	2,230,247		Residential Funding Mortgage Securities I (Series 1999-S4), 6.500%, 2/25/2029		2,276,792
	3,289,352		Wells Fargo Mortgage Backed Securities Trust (Series 2001-14), 6.500%, 8/25/2016		3,384,891

			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $7,938,658)		8,289,563

			INTERMEDIATE-TERM U.S. GOVERNMENT OBLIGATIONS--9.5%
	1,000,000		Federal Farm Credit Bank, 5.750%, 12/7/2028		947,870
	1,000,000		Federal Farm Credit Bank, 7.350%, 3/24/2005		1,098,610
	6,000,000		Federal Home Loan Bank, 4.500%, 5/15/2003		6,127,200
	3,000,000		Federal Home Loan Bank, 4.875%, 11/15/2011		2,893,680
	4,000,000		Federal Home Loan Bank, 5.250%, 8/15/2006		4,158,000
	1,000,000		Federal Home Loan Bank, 5.875%, 2/15/2011		1,041,110
	750,000		Federal Home Loan Bank, 6.185%, 5/6/2008		806,010
	6,500,000		Federal Home Loan Bank, 6.375%, 11/14/2003		6,829,940
	3,300,000		Federal Home Loan Bank, 6.500%, 11/15/2005		3,574,032
	1,000,000		Federal Home Loan Bank, 6.625%, 11/15/2010		1,093,210
	1,000,000		Federal Home Loan Bank, 6.750%, 8/15/2007		1,102,000
	1,000,000		Federal Home Loan Bank, 7.125%, 2/15/2005		1,090,630
	1,000,000		Federal Home Loan Bank, 7.660%, 7/20/2004		1,090,540
	1,000,000		Student Loan Marketing Association, 3.625%, 9/30/2004		1,009,670
	3,200,000		Tennessee Valley Authority, 6.000%, 3/15/2013		3,288,288

			TOTAL INTERMEDIATE-TERM U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST $34,873,777)		36,150,790

			LONG-TERM U.S. GOVERNMENT OBLIGATIONS--63.8%
			Federal Home Loan Mortgage Corporation--19.3%
	17,355,331		6.000%, 1/1/2014 - 2/1/2032		17,464,440
	16,599,083		6.500%, 6/1/2015 - 5/1/2031		17,063,476
	11,700,000	¹	6.500%, 8/1/2032		11,934,000
	16,282,319		7.000%, 9/1/2015 - 4/1/2032		16,870,501
	9,133,357		7.500%, 9/1/2030 - 5/1/2032		9,583,731
	507,262		8.000%, 5/1/2030		538,651
	258,319		8.500%, 5/1/2030		275,755
	100,560		9.000%, 2/1/2025 - 5/1/2025		109,074

			TOTAL		73,839,628

			Federal National Mortgage Association--23.1%
	6,000,000	¹	6.000%, 8/1/2017		6,120,000
	14,175,575		6.000%, 5/1/2014 - 5/1/2031		14,456,639
	5,500,000		6.000%, 5/15/2008 - 1/18/2012		5,633,335
	8,000,000	¹	6.000%, 8/1/2032		7,975,040
	3,000,000	¹	6.500%, 8/1/2032		3,107,820
	22,466,495		6.500%, 11/1/2014 - 4/1/2032		23,089,566
	4,000,000	¹	6.500%, 8/1/2032		4,076,240
	15,131,702		7.000%, 3/1/2015 - 4/1/2032		15,731,637
	7,237,373		7.500%, 5/1/2015 - 2/1/2032		7,610,120
	567,620		8.000%, 7/1/2030		602,920

			TOTAL		88,403,317

Principal Amount				Value
			LONG-TERM U.S. GOVERNMENT OBLIGATIONS--continued
			Government National Mortgage Association--21.4%
$	4,494,164		6.000%, 4/15/2032 - 6/15/2032	$	4,489,653
	19,252,580		6.500%, 12/15/2023 - 5/15/2032		19,673,927
	2,000,000	¹	6.500%, 8/1/2032		2,040,000
	27,055,753		7.000%, 7/15/2029 - 2/15/2032		28,175,670
	10,000,000	¹	7.000%, 8/1/2032		10,381,200
	2,643,989		7.500%, 10/15/2026 - 3/20/2030		2,788,519
	11,500,000	¹	7.500%, 8/1/2032		12,136,065
	1,540,580		8.000%, 12/15/2029 - 4/15/2030		1,639,764
	93,284		8.500%, 6/15/2027		100,163
	261,416		9.500%, 11/15/2016		289,272

			TOTAL		81,714,233

			TOTAL LONG-TERM U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST $238,588,253)		243,957,178

			U.S. TREASURY OBLIGATIONS--22.1%
	2,500,000		United States Treasury Bonds, 6.000%, 2/15/2026		2,601,450
	3,700,000		United States Treasury Bonds, 6.125%, 11/15/2027		3,914,341
	1,000,000		United States Treasury Bonds, 6.250%, 8/15/2023		1,071,210
	3,050,000		United States Treasury Bonds, 7.625%, 2/15/2025		3,805,852
	1,000,000		United States Treasury Bonds, 8.000%, 11/15/2021		1,279,230
	4,075,000		United States Treasury Bonds, 9.250%, 2/15/2016		5,600,639
	2,500,000		United States Treasury Bonds, 11.250%, 2/15/2015		3,887,700
	4,000,000		United States Treasury Notes, 3.000%, 1/31/2004		4,030,400
	14,446,390		United States Treasury Notes, 3.500%, 1/15/2011		14,950,714
	6,500,000		United States Treasury Notes, 3.625%, 3/31/2004		6,605,300
	3,177,000		United States Treasury Notes, 4.250%, 5/31/2003 - 11/15/2003		3,251,735
	2,000,000		United States Treasury Notes, 4.875%, 2/15/2012		2,008,600
	7,000,000		United States Treasury Notes, 5.000%, 2/15/2011		7,121,800
	1,500,000		United States Treasury Notes, 5.250%, 5/15/2004		1,568,475
	5,076,000		United States Treasury Notes, 5.625%, 5/15/2008		5,421,016
	5,800,000		United States Treasury Notes, 5.750%, 11/15/2005		6,192,660
	10,500,000		United States Treasury Notes, 5.875%, 11/15/2004		11,164,756

			TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $83,051,559)		84,475,878

			REPURCHASE AGREEMENTS--18.1%³
	24,000,000	⁴	Credit Suisse First Boston Corp., 1.770%, dated 6/11/2002, due 7/15/2002		24,000,000
	9,000,000	^2,4	Goldman Sachs & Co., 1.770%, dated 6/12/2002, due 7/18/2002		9,000,000
	21,500,000	^2,4	Goldman Sachs & Co., 1.770%, dated 6/19/2002, due 7/22/2002		21,500,000
	14,839,000		Warburg Dillon Reed LLC, 1.970%, dated 6/28/2002, due 7/1/2002		14,839,000

			TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST)		69,339,000

			TOTAL INVESTMENTS (IDENTIFIED COST $433,791,247)⁵	$	442,212,409

1 All or a portion of these securities are subject to dollar roll transactions.

2 Securities held as collateral for dollar roll transactions.

3 The repurchase agreements are fully collateralized by U.S. government and/or agency obligations based on market prices at the date of the portfolio. The investments in the repurchase agreements are through participation in joint accounts with other Federated funds.

4 Although final maturity falls beyond seven days, a liquidity feature is included in each transaction to permit termination of the repurchase agreement within seven days.

5 The cost of investments for federal tax purposes amounts to $433,791,247. The net unrealized appreciation of investments on a federal tax basis amounts to $8,421,162 which is comprised of $8,547,032 appreciation and $125,870 depreciation at June 30, 2002.

Note: The categories of investments are shown as a percentage of net assets ($382,237,729) at June 30, 2002.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

June 30, 2002 (unaudited)

Assets:
Investments in repurchase agreements	$	69,339,000
Investments in securities		372,873,409

Total investments in securities, at value (identified cost $433,791,247)			$	442,212,409
Cash				242
Income receivable				2,755,634

TOTAL ASSETS				444,968,285

Liabilities:
Payable for investments purchased		7,183,771
Payable for dollar roll transactions		55,524,525
Accrued expenses		22,260

TOTAL LIABILITIES				62,730,556

Net assets for 33,474,780 shares outstanding			$	382,237,729

Net Assets Consist of:
Paid in capital			$	366,530,284
Net unrealized appreciation of investments				8,421,162
Accumulated net realized loss on investments				(899,310	)
Undistributed net investment income				8,185,593

TOTAL NET ASSETS			$	382,237,729

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$382,237,729 ÷ 33,474,780 shares outstanding				$11.42

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended June 30, 2002 (unaudited)

Investment Income:
Interest (net of dollar roll expense of $363,192)			$	9,378,495

Expenses:
Investment adviser fee	$	989,211
Administrative personnel and services fee		123,981
Custodian fees		12,285
Transfer and dividend disbursing agent fees and expenses		6,584
Directors'/Trustees' fees		1,069
Auditing fees		6,006
Legal fees		1,979
Portfolio accounting fees		41,679
Printing and postage		9,402
Insurance premiums		575
Miscellaneous		579

TOTAL EXPENSES				1,193,350

Net investment income				8,185,145

Realized and Unrealized Gain on Investments:
Net realized gain on investments				297,012
Net change in unrealized appreciation of investments				4,500,224

Net realized and unrealized gain on investments				4,797,236

Change in net assets resulting from operations			$	12,982,381

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 6/30/2002			Year Ended 12/31/2001
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	8,185,145		$	12,791,192
Net realized gain on investments		297,012			1,357,107
Net change in unrealized appreciation of investments		4,500,224			435,116

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		12,982,381			14,583,415

Distributions to Shareholders:
Distributions from net investment income		(12,790,532	)		(8,293,822	)

Share Transactions:
Proceeds from sale of shares		149,529,186			230,195,840
Net asset value of shares issued to shareholders in payment of distributions declared		12,790,532			8,293,819
Cost of shares redeemed		(80,678,259	)		(103,953,873	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		81,641,459			134,535,786

Change in net assets		81,833,308			140,825,379

Net Assets:
Beginning of period		300,404,421			159,579,042

End of period (including undistributed net investment income of $8,185,593 and $12,790,980, respectively)	$	382,237,729		$	300,404,421

See Notes which are an integral part of the Financial Statements

Statement of Cash Flows

For the Six Months Ended June 30, 2002 (unaudited)

Increase (Decrease) in Cash
Cash Flows From Operating Activities:
Change in net assets resulting from operations	$	12,982,381

Adjustments to Reconcile Change in Net Assets Resulting From Operations to Net Cash Used in Operating Activities:
Purchases of investment securities		(491,986,809	)
Paydown on investment securities		30,715,365
Realized loss on paydowns		88,347
Proceeds from sales of investment securities		381,727,171
Net purchases of short-term investment securities		(21,892,000	)
Increase in income receivable		(642,609	)
Decrease in accrued expenses		(33,828	)
Decrease in payable for investments purchased		(4,077,015	)
Net realized gain on investments		(297,012	)
Net amortization/accretion of premium/discount		256,770
Net unrealized appreciation on investments		(4,500,224	)

NET CASH USED IN OPERATING ACTIVITIES		(97,659,463	)

Cash Flows From Financing Activities:
Cash received from dollar roll transactions, net		27,812,984
Proceeds from sale of shares		151,566,606
Payment for shares redeemed		(81,720,845	)

NET CASH PROVIDED BY FINANCING ACTIVITIES	$	97,658,745

NET CHANGE IN CASH	$	(718	)

Cash:
Beginning of the period		960

End of the period		$242

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)		Year Ended December 31,
	6/30/2002		2001		2000		1999		1998		1997
Net Asset Value, Beginning of Period	$11.43		$11.11		$10.56		$11.15		$10.54		$10.09
Income From Investment Operations:
Net investment income	0.28	¹	0.60	¹	0.60		0.51		0.44		0.58
Net realized and unrealized gain (loss) on investments	0.15		0.16		0.51		(0.57	)	0.36		0.26

TOTAL FROM INVESTMENT OPERATIONS	0.43		0.76		1.11		(0.06	)	0.80		0.84

Less Distributions:
Distributions from net investment income	(0.44	)	(0.44	)	(0.56	)	(0.44	)	(0.18	)	(0.39	)
Distributions from net realized gain on investments	--		--		--		(0.09	)	(0.01	)	--

TOTAL DISTRIBUTIONS	(0.44	)	(0.44	)	(0.56	)	(0.53	)	(0.19	)	(0.39	)

Net Asset Value, End of Period	$11.42		$11.43		$11.11		$10.56		$11.15		$10.54

Total Return²	3.95	%	7.03	%	10.97	%	(0.60	)%	7.66	%	8.58	%


Ratios to Average Net Assets:

Expenses	0.72	%³	0.74	%	0.84	%	0.84	%	0.85	%	0.80	%

Net investment income	4.96	%³	5.39	%	5.99	%	5.47	%	5.44	%	5.98	%

Expense waiver/reimbursement⁴	--		--		--		0.00	%⁵	0.08	%	0.45	%

Supplemental Data:

Net assets, end of period (000 omitted)	$382,238		$300,404		$159,579		$133,738		$111,350		$63,099

Portfolio turnover	48	%	76	%	74	%	84	%	99	%	73	%

1 Per share information is based on average shares outstanding.

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

3 Computed on an annualized basis.

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

5 Less than 0.01%

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

June 30, 2002 (unaudited)

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Fund For U.S. Government Securities II (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide current income.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

U.S. government securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Statement of Cash Flows

Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount reported as cash in the Statement of Assets and Liabilities and represents cash on hand in the Fund's custodian bank account and does not include any short-term investments at June 30, 2002.

Repurchase Agreements

Investment Income, Expenses and Distributions

Federal Taxes

At December 31, 2001, the Fund for federal tax purposes, had a capital loss carryforward of $2,197,464, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2008.

When-Issued and Delayed Delivery Transactions

Dollar Roll Transactions

The Fund enters into dollar roll transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage securities to financial institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. Dollar roll transactions involve "to be announced" securities and are treated as short-term financing arrangements which will not exceed 12 months. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund's current yield and total return.

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

	Six Months Ended 6/30/2002		Year Ended 12/31/2001
Shares sold	13,142,297		20,447,496
Shares issued to shareholders in payment of distributions declared	1,161,719		755,357
Shares redeemed	(7,119,202	)	(9,275,064	)

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	7,184,814		11,927,789

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to the 0.60% of the Fund's average daily net assets.

Administrative Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

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

General

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

Investment Transactions

Purchases and sales of investments, excluding long-term U.S. government securities and short-term securities (and in-kind contributions), for the six months ended June 30, 2002, were as follows:

Purchases		$ 0

Sales		$2,692,029

Purchases and sales of long-term U.S. government securities for the six months ended June 30, 2002, were as follows:

Purchases		$231,883,294

Sales		$153,706,695

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager
Federated Fund for U.S. Government Securities II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor

Cusip 313916207

G00433-01 (8/02)