0000879569 ffisi2:S000009739Member 2012-02-01 2013-01-31 0000879569 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:C000026757Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:C000026758Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:C000026759Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:C000026760Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:C000062222Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member rr:AfterTaxesOnDistributionsMember ffisi2:C000026757Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member rr:AfterTaxesOnDistributionsAndSalesMember ffisi2:C000026757Member 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:BarclaysUsAggregateBondIndexMember 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:BarclaysUsGovernmentCreditIndexMember 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:BlendedIndexMember 2012-02-01 2013-01-31 0000879569 ffisi2:S000009739Member ffisi2:LipperMultiSectorIncomeFundsAverageMember 2012-02-01 2013-01-31 pure iso4217:USD <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleShareholderFeesFederatedStrategicIncomeFund column period compact * ~</div> 2013-01-31 485BPOS FEDERATED FIXED INCOME SECURITIES INC 0000879569 false 2013-01-28 2012-11-30 Federated Strategic Income Fund (the "Fund") RISK/RETURN SUMMARY: INVESTMENT OBJECTIVE The Fund's investment objective is to seek a high level of current income. RISK/RETURN SUMMARY: FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Class A Shares (A), Class B Shares (B), Class C Shares (C), Class F Shares (F) and Institutional Shares (IS) of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000, or $1,000,000, in certain classes (e.g., A class and F class, respectively) of Federated funds. More information about these and other discounts is available from your financial professional and in the "What Do Shares Cost?" section of the Prospectus on page 16. Shareholder Fees (fees paid directly from your investment) 0.045 0 0 0.01 0 0 0.055 0.01 0.01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.0085 0.0085 0.0085 0.0085 0.0085 0 0.0005 0.0075 0.0075 0 0.0047 0.0047 0.0047 0.0047 0.0022 0.0001 0.0001 0.0001 0.0001 0.0001 0.0133 0.0208 0.0208 0.0138 0.0108 -0.0006 -0.0006 -0.0006 -0.0011 -0.0006 0.0127 0.0202 0.0202 0.0127 0.0102 Example This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 for the time periods indicated and then redeem all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that operating expenses are as shown in the table above and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be: 579 761 311 339 110 852 1052 652 633 343 1146 1319 1119 848 595 1979 2219 2410 1741 1317 579 211 211 239 110 852 652 652 533 343 1146 1119 1119 848 595 1979 2219 2410 1317 1741 Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 7% of the average value of its portfolio. 0.07 RISK/RETURN SUMMARY: INVESTMENTS, RISKS and PERFORMANCE What are the Fund's Main Investment Strategies? 0.223 0.0894 0.0318 0.0875 0.0486 -0.1405 0.3314 0.1141 0.0493 0.1063 The Fund allocates the portfolio among three categories of fixed-income securities: domestic investment-grade (including U.S. government, mortgage-backed and corporate), domestic noninvestment-grade corporate (also known as junk bonds) and foreign investment and noninvestment-grade (including corporate and government securities traded in both emerging and developed markets). Based upon historical returns, the Fund's investment adviser ("Adviser") expects the three categories of investments to have different returns and risks under similar market conditions. The Adviser relies on the differences in the expected performance of each category to manage risks by allocating the Fund's portfolio among the three categories. The Adviser seeks to enhance the Fund's performance by allocating more of its portfolio to the category that the Adviser expects to offer the best balance between risk and return. While the Fund's portfolio usually includes securities from all three categories, the Fund limits the amount it may invest in a single category to 50% of its assets. The Fund may also invest in derivative contracts or hybrid instruments (such as, for example, futures contracts, option contracts and swap contracts) to implement its investment strategies as more fully described herein. The Adviser does not target an average maturity for the Fund's portfolio and may invest in bonds of any maturity. Certain of the government securities in which the Fund invests are not backed by the full faith and credit of the U.S. government, such as those issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Bank System. These entities are, however, supported through federal subsidies, loans or other benefits. The Fund may also invest in government securities that are supported by the full faith and credit of the U.S. government, such as those issued by the Government National Mortgage Association ("Ginnie Mae"). Finally, the Fund may invest in a few government securities that have no explicit financial support, but which are regarded as having implied support because the federal government sponsors their activities. Because the Fund refers to fixed-income investments in its name, it will notify shareholders at least 60 days in advance of any change in its investment policies that would enable the Fund to normally invest less than 80% of its assets in fixed-income investments. All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include:<ul><li type = "square">Interest Rate Risk. Prices of fixed-income securities generally fall when interest rates rise. Interest rate changes have a greater effect on the price of fixed-income securities with longer durations. Duration measures the price sensitivity of a fixed-income security to changes in interest rates.</li></ul><ul><li type = "square">Prepayment Risk. When homeowners prepay their mortgages in response to lower interest rates, the Fund will be required to reinvest the proceeds at the lower interest rates available. Also, when interest rates fall, the price of mortgage-backed securities may not rise to as great an extent as that of other fixed-income securities.</li></ul><ul><li type = "square">Call Risk. An issuer may redeem a fixed-income security before maturity (a call) at a price below its current market price.</li></ul><ul><li type = "square">Credit Risk. It is possible that interest or principal on securities will not be paid when due. Noninvestment-grade securities generally have a higher default risk than investment-grade securities. Such non-payments or default may reduce the value of the Fund's portfolio holdings, its share price and its performance.</li></ul><ul><li type = "square">Risk Associated with Noninvestment-Grade Securities. The Fund may invest a portion of its assets in securities rated below investment grade which may be subject to greater interest rate, credit and liquidity risks than investment-grade securities.</li></ul><ul><li type = "square">Risk Related to the Economy. Low-grade corporate bond returns are sensitive to changes in the economy. The value of the Fund's portfolio may decline in tandem with a drop in the overall value of the stock market based on negative developments in the U.S. and global economies.</li></ul><ul><li type = "square">Currency Risk. Exchange rates for currencies fluctuate daily. Accordingly, the Fund may experience increased volatility with respect to the value of its Shares and its returns as a result of its exposure to foreign currencies through direct holding of such currencies or holding of non-U.S. dollar denominated securities.</li></ul><ul><li type = "square">Eurozone Related Risk. A number of countries in the European Union (EU) have experienced, and may continue to experience, severe economic and financial difficulties. Additional EU member countries may also fall subject to such difficulties. These events could negatively affect the value and liquidity of the Fund's investments in euro-denominated securities and derivatives contracts, securities of issuers located in the EU or with significant exposure to EU issuers or countries.</li></ul><ul><li type = "square">Risk of Foreign Investing. Because the Fund invests in securities issued by foreign companies, the Fund's Share price may be more affected by foreign economic and political conditions, taxation policies and accounting and auditing standards than would otherwise be the case.</li></ul><ul><li type = "square">Risk of Investing in Emerging Market Countries. Securities issued or traded in emerging markets generally entail greater risks than securities issued or traded in developed markets. Emerging market economies may also experience more severe downturns (with corresponding currency devaluations) than developed economies.</li></ul><ul><li type = "square">Liquidity Risk. The fixed-income securities in which the Fund invests may be less readily marketable and may be subject to greater fluctuation in price than other securities. Liquidity risk also refers to the possibility that the Fund may not be able to sell a security or close out a derivative contract when it wants to. If this happens, the Fund could incur losses.</li></ul><ul><li type = "square">Leverage Risk. Leverage risk is created when an investment exposes the Fund to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain.</li></ul><ul><li type = "square">Risk of Investing in Derivative Contracts and Hybrid Instruments. Derivative contracts and hybrid instruments involve risks different from, or possibly greater than, risks associated with investing directly in securities and other traditional investments. Specific risk issues related to the use of such contracts and instruments include valuation and tax issues, increased potential for losses and/or costs to the Fund and a potential reduction in gains to the Fund. Each of these issues is described in greater detail in this Prospectus. Derivative contracts and hybrid instruments may also involve other risks described in this Prospectus or the Fund's Statement of Additional Information (SAI), such as interest rate, credit, currency, liquidity and leverage risks.</li></ul><ul><li type = "square">Risk of Loss after Redemption. The Fund may also invest in trade finance loan instruments primarily by investing in other investment companies (which are not available for general investment by the public) that owns those instruments and that are advised by an affiliate of the Adviser and is structured as an extended payment fund (EPF). In the EPF, the Fund, as shareholder, will bear the risk of investment loss during the period between when shares of such EPF are presented to the transfer agent of the EPF for redemption and when the net asset value of the EPF is determined for payment of the redeemed EPF shares (the "Redemption Pricing Date").</li></ul><ul><li type = "square">Technology Risk. Proprietary and third-party data and systems are utilized to support decision making for the Fund. Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance.</li></ul>The Shares offered by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. What are the Main Risks of Investing in the Fund? Performance: Bar Chart and Table Risk/Return Bar Chart The bar chart and performance table below reflect historical performance data for the Fund and are intended to help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the variability of the Fund's A class total returns on a calendar year-by-year basis. The Average Annual Total Return table shows returns averaged over the stated periods, and includes comparative performance information. The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results. Updated performance information for the Fund is available under the "Products" section at FederatedInvestors.com or by calling 1-800-341-7400. The total returns shown in the bar chart do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower. Within the periods shown in the bar chart, the Fund's A class highest quarterly return was 12.80% (quarter ended June 30, 2009). Its lowest quarterly return was (9.81)% (quarter ended December 31, 2008). The total returns shown in the bar chart do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower. The Fund's IS class commenced operations on January 28, 2008. For the period prior to the commencement of operations of the IS class, the performance information shown below is for the A class. The performance of the A class has not been adjusted to reflect the expenses applicable to the IS class since the IS class has a lower expense ratio than the expense ratio of the A class. The performance of the A class has been adjusted to reflect the absence of sales charges and adjusted to remove any voluntary waiver of Fund expenses related to the A class that may have occurred during the period prior to the commencement of operations of the IS class. In addition to Return Before Taxes, Return After Taxes is shown for the Fund's A class to illustrate the effect of federal taxes on Fund returns. After-tax returns are shown only for the A class and after-tax returns for the B, C, F and IS classes will differ from those shown above for the A class. Actual after-tax returns depend on each investor's personal tax situation, and are likely to differ from those shown. After-tax returns are calculated using a standard set of assumptions. The stated returns assume the highest historical federal income and capital gains tax rates. These after-tax returns do not reflect the effect of any applicable state and local taxes. After-tax returns are not relevant to investors holding Shares through tax-deferred programs, such as a 401(k) plan, an Individual Retirement Account or other tax-advantaged investment plan. (For the Period Ended December 31, 2012) The stated returns assume the highest historical federal income and capital gains tax rates. These after-tax returns do not reflect the effect of any applicable state and local taxes. The bar chart shows the variability of the Fund's A class total returns on a calendar year-by-year basis. The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000, or $1,000,000, in certain classes (e.g., A class and F class, respectively) of Federated funds. All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The Shares offered by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. 1-800-341-7400 FederatedInvestors.com 100000 1000000 Average Annual Total Return Table 0.0559 0.0368 0.0359 0.0431 0.0893 0.0847 0.1082 0.0422 0.0482 0.1153 0.1121 0.0717 0.0485 0.0471 0.0705 0.0735 0.0792 0.0834 0.0595 0.0606 0.0873 0.0702 0.0828 0.0593 0.0572 0.0813 0.0797 0.0866 0.0887 0.0518 0.0525 0.0908 0.0739 highest quarterly return 2009-06-30 0.128 lowest quarterly return -0.0981 2008-12-31 <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAnnualFundOperatingExpensesFederatedStrategicIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleExpenseExampleTransposedFederatedStrategicIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleExpenseExampleNoRedemptionTransposedFederatedStrategicIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAnnualTotalReturnsFederatedStrategicIncomeFundBarChart column period compact * ~</div> <div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAverageAnnualTotalReturnsTransposedFederatedStrategicIncomeFund column period compact * ~</div> 2013-01-28 up to but not including the later of (the "Termination Date"): (a) February 1, 2014; or (b) the date of the Fund's next effective Prospectus. February 1, 2014 Federated Strategic Income Fund - A Class After-tax returns are not relevant to investors holding Shares through tax-deferred programs, such as a 401(k) plan, an Individual Retirement Account or other tax-advantaged investment plan. After-tax returns are shown only for the A class and after-tax returns for the B, C, F and IS classes will differ from those shown above for the A class. The Fund's investment adviser has elected to change the Fund's broad-based securities market index to the "Barclays U.S. Aggregate Bond Index" (BAB) from the "Barclays U.S. Government/Credit Index" (BGCI). The BAB is better aligned with the Fund's sector allocations. The BAB covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. The Adviser and its affiliates have voluntarily agreed to waive their fees and/or reimburse expenses so that the total annual fund operating expenses (excluding Acquired Fund Fees and Expenses and expenses allocated from affiliated partnerships) paid by the Fund's A, B, C, F and IS classes (after the voluntary waivers and/or reimbursements) will not exceed 1.26%, 2.01%, 2.01%, 1.26% and 1.01%, (the "Fee Limit"), respectively, up to but not including the later of (the "Termination Date"): (a) February 1, 2014; or (b) the date of the Fund's next effective Prospectus. While the Adviser and its affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Fund's Board of Directors. The Fund's investment adviser has elected to change the Fund's broad-based securities market index to the "Barclays U.S. Aggregate Bond Index" (BAB) from the "Barclays U.S. Government/Credit Index" (BGCI). The BAB is better aligned with the Fund's sector allocations. The BAB covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. Barclays Capital changed the name of the BGCI Index from " Barclays Capital U.S. Government/Credit Index" to "Barclays U.S. Government/Credit Index." The Barclays U.S. Government/Credit Index is a broad based market Index. Barclays changed the name of the BEMB, BYH2%ICI and the BMB from "Barclays Capital Emerging Market Bond Index" to "Barclays Emerging Market Bond Index," "Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index" to "Barclays U.S. Corporate High Yield 2% Issuer Capped Index" and the "Barclays Capital Mortgage-Backed Securities Index" to " Barclays Mortgage-Backed Securities Index." The Blended Index is a blend of indexes comprised of 25% Barclays Emerging Market Bond Index/40% Barclays U.S. Corporate High Yield 2% Issuer Capped Index/25% Barclays Mortgage-Backed Securities Index/10% JPMorgan Non-Dollar. Lipper figures represent the average of the total returns reported by all mutual funds designated by Lipper, Inc. as falling into the respective category indicated. They do not reflect sales charges.