Federated Investors, Inc.

Semi-Annual Shareholder Report

April 30, 2014

Share Class	Ticker
A	FMUAX
B	FMNBX
C	FMUCX
F	FMUFX
Institutional	FMUIX

Federated Muni and Stock Advantage Fund

Fund Established 2003

A Portfolio of Federated Income Securities Trust

Dear Valued Shareholder,

I am pleased to present the Semi-Annual Shareholder Report for your fund covering the period from November 1, 2013 through April 30, 2014. This report includes a complete listing of your fund's holdings, performance information and financial statements along with other important fund information.

In addition, our website, FederatedInvestors.com, offers easy access to Federated resources that include timely fund updates, economic and market insights from our investment strategists, and financial planning tools. We invite you to register to take full advantage of its capabilities.

Thank you for investing with Federated. I hope you find this information useful and look forward to keeping you informed.

Sincerely,

J. Christopher Donahue, President

Not FDIC Insured • May Lose Value • No Bank Guarantee

At April 30, 2014, the Fund's sector composition⁷ for its tax-exempt securities was as follows:

Sector Composition	Percentage of Tax-Exempt Securities
Transportation	20.2%
Hospital	13.3%
Special Tax	10.5%
General Obligation—State	10.3%
Education	9.2%
Industrial Development Bond/Pollution Control Revenue	6.9%
Public Power	5.5%
Water and Sewer	5.5%
General Obligation—Local	5.0%
Senior Care	4.5%
Other⁸	9.1%
TOTAL	100.0%

1	See the Fund's Prospectus and Statement of Additional Information for a description of the types of securities in which the Fund invests.
2	Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) or value may indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this Report.
3	Represents less than 0.1%.
4	Cash equivalents include any investments in tax-exempt, variable rate instruments.
5	Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.
6	Sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS.
7	Sector classifications and the assignment of holding to such sectors, are based upon the economic sector and/or revenue source of the underlying obligor, as determined by the Fund's Adviser. For securities that have been enhanced by a third party including bond insurers and banks, sector classifications are based upon the economic sector and/or revenue source of the underlying obligor, as determined by the Fund's Adviser.
8	For purposes of this table, sector classifications constitute 87.4% of the Fund's total investments in tax-exempt securities. Remaining tax-exempt security sectors have been aggregated under the designation “Other.”

Semi-Annual Shareholder Report

Portfolio of Investments

April 30, 2014 (unaudited)

Shares or Principal Amount		Value
	COMMON STOCKS—43.7%
	Consumer Discretionary—2.9%
120,432	Corus Entertainment, Inc., Class B	$2,705,200
214,740	Gannett Co., Inc.	5,834,486
26,700	Garmin Ltd.	1,524,570
77,205	National CineMedia, Inc.	1,172,744
449,580	Regal Entertainment Group	8,452,104
87,126	Six Flags Entertainment Corp.	3,497,237
	TOTAL	23,186,341
	Consumer Staples—5.3%
308,755	Altria Group, Inc.	12,384,163
45,730	Kimberly-Clark Corp.	5,133,193
45,810	Kraft Foods Group, Inc.	2,604,757
66,328	Lorillard, Inc.	3,941,210
62,671	Philip Morris International Inc.	5,353,983
217,240	Reynolds American, Inc.	12,258,853
	TOTAL	41,676,159
	Energy—9.9%
115,244	ARC Resources Ltd.	3,419,309
141,555	Baytex Energy Corp.	5,891,828
229,465	Bonavista Energy Corp.	3,605,115
131,870	BP PLC, ADR	6,675,260
101,380	ConocoPhillips	7,533,548
179,070	Crescent Point Energy Corp.	7,285,006
86,315	ENI S.p.A, ADR	4,457,307
80,200	Kinder Morgan, Inc.	2,619,332
947,953	Pengrowth Energy Corp.	6,157,950
122,215	Royal Dutch Shell PLC, ADR	9,623,209
170,300	Total SA, ADR	12,132,172
82,636	Transocean Ltd.	3,559,133
79,697	Vermilion Energy Inc.	5,302,953
	TOTAL	78,262,122
	Financials—3.9%
75,897	Bank of Montreal	5,232,339
59,640	Mercury General Corp.	2,854,371
46,345	MetLife, Inc.	2,426,161

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	COMMON STOCKS—continued
	Financials—continued
311,670	Old Republic International Corp.	$5,161,255
152,699	Progressive Corp. Ohio	3,702,951
39,930	Royal Bank of Canada, Montreal	2,667,324
249,565	Sun Life Financial Services of Canada	8,445,280
	TOTAL	30,489,681
	Health Care—6.8%
16,010	AbbVie Inc.	833,801
112,505	AstraZeneca Group PLC, ADR	8,893,520
13,000	Bayer AG, ADR	1,809,860
150,905	GlaxoSmithKline PLC, ADR	8,355,610
165,065	Lilly (Eli) & Co.	9,755,341
161,385	Merck & Co., Inc.	9,450,706
279,015	Pfizer, Inc.	8,727,589
102,842	Sanofi ADR	5,532,900
	TOTAL	53,359,327
	Industrials—2.5%
85,940	Deluxe Corp.	4,722,403
363,487	Donnelley (R.R.) & Sons Co.	6,397,371
35,734	Lockheed Martin Corp.	5,865,379
104,290	Pitney Bowes, Inc.	2,794,972
	TOTAL	19,780,125
	IT Services—2.6%
58,420	CA, Inc.	1,760,779
78,616	Cisco Systems, Inc.	1,816,816
197,321	Intel Corp.	5,266,498
26,927	KLA-Tencor Corp.	1,723,059
21,092	Lexmark International, Inc.	906,956
109,286	Microsoft Corp.	4,415,155
82,411	Seagate Technology	4,333,171
	TOTAL	20,222,434
	Materials—1.3%
38,929	International Paper Co.	1,816,038
89,420	LyondellBasell Industries NV - Class A	8,271,350
	TOTAL	10,087,388
	Telecommunication Services—5.8%
241,970	AT&T, Inc.	8,638,329
160,189	BCE, Inc.	7,134,818

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		COMMON STOCKS—continued
		Telecommunication Services—continued
257,540		CenturyLink, Inc.	$8,990,723
334,135		Deutsche Telekom AG-ADR	5,596,761
359,800		Frontier Communications Corp.	2,140,810
275,620		Verizon Communications	12,879,738
		TOTAL	45,381,179
		Utilities—2.7%
106,560		Ameren Corp.	4,401,994
145,341		National Grid PLC, ADR	10,327,932
318,526		Northland Power, Inc.	4,978,192
53,415		PPL Corp.	1,780,856
		TOTAL	21,488,974
		TOTAL COMMON STOCKS (IDENTIFIED COST $269,059,105)	343,933,730
		MUNICIPAL BONDS—49.5%
		Alabama—0.8%
$2,000,000		Alabama State Port Authority, Docks Facilities Revenue Bonds (Series 2010), 5.750%, 10/01/2030	2,265,260
700,000		Alabama State Port Authority, Docks Facilities Revenue Bonds (Series 2010), 6.000%, 10/01/2040	798,518
1,370,000		Montgomery, AL BMC Special Care Facilities Finance Authority, (Health Care Authority for Baptist Health, AL), Revenue Refunding Bonds (Series 2004-C), 5.125%, 11/15/2024	1,377,987
2,000,000		Selma, AL IDB, (International Paper Co.), Revenue Bonds (Series 2011A), 5.375%, 12/01/2035	2,121,220
		TOTAL	6,562,985
		Arizona—0.3%
2,380,000		Salt Verde Financial Corp., AZ, Senior Gas Revenue Bonds (Series 2007), 5.000%, (Citigroup, Inc. GTD), 12/01/2032	2,607,695
		California—6.1%
1,000,000		Alameda Corridor Transportation Authority, CA, Tax-Exempt Senior Lien Revenue Refunding Bonds (Series 2013A), 5.000%, 10/01/2023	1,181,480
2,000,000		Alameda Corridor Transportation Authority, CA, Tax-Exempt Senior Lien Revenue Refunding Bonds (Series 2013A), 5.000%, 10/01/2025	2,303,460
2,000,000	¹	Bay Area Toll Authority, CA, San Francisco Bay Area Toll Bridge Revenue Bonds (Series 2006C-1), 1.02% TOBs (Bay Area Toll Authority, CA), Mandatory Tender 5/1/2023	1,986,720
1,500,000	¹	Bay Area Toll Authority, CA, San Francisco Bay Area Toll Bridge Revenue Bonds (SIFMA Index Rate Bonds Series 2001A), 1.37% TOBs (Bay Area Toll Authority, CA), Mandatory Tender 4/1/2027	1,509,840

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	California—continued
$570,000	California Health Facilities Financing Authority, Health Facility Revenue Bonds (Series 2004I), 4.95% TOBs (Dignity Health (Catholic Healthcare West)), Mandatory Tender 7/1/2014	$574,366
2,000,000	California State, School Facilities UT GO Bonds, 5.000%, 11/01/2031	2,249,360
3,000,000	California State, UT GO Bonds, 5.000%, 11/01/2022	3,409,800
2,500,000	California State, Various Purpose Refunding GO Bonds, 5.000%, 02/01/2038	2,692,725
2,500,000	California State, Various Purpose UT GO Bonds (Series 2013), 5.000%, 10/01/2022	3,011,300
2,000,000	California Statewide Communities Development Authority , (Sutter Health), Refunding Revenue Bonds (Series 2011D), 5.250%, 08/15/2031	2,232,960
3,035,000	Chula Vista, CA Municipal Finance Authority, Special Tax Revenue Refunding Bonds (Series 2013), 5.500%, 09/01/2028	3,442,267
500,000	Corona-Norco Unified School District Community Facilities District No. 98-1, CA, 2013 Special Tax Refunding Bonds, 5.000%, 09/01/2032	531,795
3,000,000	Foothill/Eastern Transportation Corridor Agency, CA, Toll Road Refunding Revenue Bonds (Series 2013A), 5.750%, 01/15/2046	3,185,370
265,000	Irvine, CA Reassessment District No. 13-1, LO Improvement Bonds, 5.000%, 09/02/2021	300,528
665,000	Riverside County, CA Transportation Commission, Toll Revenue Senior Lien Bonds (Series 2013A), 5.750%, 06/01/2044	702,027
2,550,000	San Diego County, CA Water Authority, Water Revenue Refunding Bonds (Series 2013A), 5.000%, 05/01/2024	3,106,869
3,000,000	San Francisco, CA City & County Airport Commission, Second Series Revenue Bonds (Series 2009E), 6.000%, 05/01/2039	3,539,400
2,000,000	San Jose, CA Airport, Airport Revenue Bonds (Series 2011A-2), 5.000%, 03/01/2031	2,123,400
3,000,000	Trustees of the California State University, Systemwide Revenue Bonds (Series 2013A), 5.000%, 11/01/2025	3,581,370
2,500,000	University of California (The Regents of), General Revenue Bonds (Series 2013AI), 5.000%, 05/15/2032	2,825,700
2,000,000	University of California (The Regents of), Limited Project Revenue Bonds (Series 2012G), 5.000%, 05/15/2031	2,244,400
1,545,000	Yucaipa Valley Water District, CA, Water System Revenue COPs (Series 2004A), 5.250%, (National Public Finance Guarantee Corporation INS), 09/01/2023	1,564,807
	TOTAL	48,299,944
	Colorado—1.8%
600,000	Colorado Health Facilities Authority, (Total Longterm Care National Obligated Group), Revenue Bonds (Series 2010A), 6.000%, 11/15/2030	648,030
1,160,000	Colorado State Higher Education Capital Construction Lease Purchase Financing Program, COPs (Series 2008), 5.500%, 11/01/2027	1,328,676

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	Colorado—continued
$2,475,000	Denver (City & County), CO, (Denver, CO City & County Airport Authority), Airport System Revenue Bonds (Series 2013B), 5.000%, 11/15/2043	$2,643,349
1,000,000	Denver, CO Health & Hospital Authority, Revenue Bonds, 6.250%, (United States Treasury PRF 12/1/2014@100), 12/01/2033	1,035,670
2,800,000	E-470 Public Highway Authority, CO, Revenue Bonds (Series 2010C), 5.375%, 09/01/2026	3,037,916
5,000,000	University of Colorado, Tax-Exempt University Enterprise Revenue Bonds (Series 2013A), 5.000%, 06/01/2032	5,629,000
	TOTAL	14,322,641
	Delaware—0.3%
2,000,000	University of Delaware, Revenue Bonds (Series 2013A), 5.000%, 11/01/2022	2,410,840
	District of Columbia—1.2%
2,000,000	District of Columbia Income Tax Revenue, Income Tax Secured Revenue Refunding Bonds (Series 2010A), 5.000%, 12/01/2019	2,369,740
525,000	District of Columbia, (KIPP DC), Revenue Bonds (Series 2013A), 6.000%, 07/01/2048	577,794
5,000,000	District of Columbia, UT GO Bonds (Series 2004A), 5.000%, (United States Treasury PRF 6/1/2015@100), 06/01/2025	5,259,850
1,000,000	Washington Metropolitan Area Transit Authority, Gross Revenue Transit Bonds (Series 2009A), 5.125%, 07/01/2032	1,081,590
	TOTAL	9,288,974
	Florida—2.8%
1,135,000	Atlantic Beach, FL Health Care Facilities, (Fleet Landing Project, FL), Revenue & Refunding Bonds (Series 2013A), 5.000%, 11/15/2019	1,274,264
600,000	East Homestead, FL Community Development District, Special Assessment Revenue Bonds (Series 2005), 5.450%, 05/01/2036	596,274
3,000,000	Florida State Education System, Facilities Revenue Bonds (Series 2005A), 5.000%, (National Public Finance Guarantee Corporation INS), 05/01/2027	3,152,970
665,000	Jacksonville, FL Sales Tax, Refunding Revenue Bonds (Series 2012), 5.000%, 10/01/2021	775,224
1,000,000	Jacksonville, FL Sales Tax, Refunding Revenue Bonds (Series 2012), 5.000%, 10/01/2029	1,086,500
1,250,000	Jacksonville, FL Sales Tax, Refunding Revenue Bonds (Series 2012A), 5.000%, 10/01/2029	1,358,125
1,750,000	Miami Beach, FL Health Facilities Authority, (Mt. Sinai Medical Center, FL), Hospital Revenue Refunding Bonds (Series 2012), 5.000%, 11/15/2029	1,830,395
1,100,000	Miami-Dade County, FL Aviation, Revenue Bonds (Series 2008B), 5.000%, (Assured Guaranty Corp. INS), 10/01/2023	1,253,087

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	Florida—continued
$2,000,000	Miami-Dade County, FL Expressway Authority, Toll System Refunding Revenue Bonds (Series 2013A), 5.000%, 07/01/2027	$2,219,000
1,000,000	Miami-Dade County, FL Expressway Authority, Toll System Refunding Revenue Bonds (Series 2013A), 5.000%, 07/01/2028	1,102,000
1,400,000	Miami-Dade County, FL, (Miami-Dade County, FL Seaport), Seaport Revenue Bonds (Series 2013A), 5.750%, 10/01/2030	1,603,672
1,600,000	Miami-Dade County, FL, (Miami-Dade County, FL Seaport), Seaport Revenue Bonds (Series 2013A), 5.750%, 10/01/2032	1,811,184
200,000	Orlando, FL Urban Community Development District, Capital Improvement Revenue Bonds, 6.000%, 05/01/2020	201,504
335,000	Palm Beach County, FL Health Facilities Authority, (Sinai Residences of Boca Raton), Revenue Bonds (Series 2014A), 7.250%, 06/01/2034	360,021
1,445,000	Tolomato Community Development District, FL, Special Assessment Revenue Bonds (Series 2006), 5.400%, 05/01/2037	1,445,130
1,500,000	Volusia County, FL Education Facility Authority, (Embry-Riddle Aeronautical University, Inc.), Educational Facilities Refunding Revenue Bonds (Series 2005), 5.000%, (Radian Asset Assurance, Inc. INS), 10/15/2025	1,535,760
445,000	Winter Garden Village at Fowler Groves Community Development District, FL, Special Assessment Bonds (Series 2006), 5.650%, 05/01/2037	451,969
	TOTAL	22,057,079
	Georgia—1.6%
5,000,000	Athens-Clarke County, GA Water & Sewerage, Revenue Bonds (Series 2008), 5.625%, 01/01/2028	5,842,950
1,000,000	Atlanta, GA Airport General Revenue, Airport General Revenue Refunding Bonds (Series 2014B), 5.000%, 01/01/2033	1,109,110
3,000,000	Atlanta, GA Water & Wastewater, Revenue Bonds (Series 2009A), 6.250%, 11/01/2034	3,534,180
615,000	Atlanta, GA, (Eastside Tax Allocation District), Tax Allocation Bonds (Series 2005B), 5.600%, 01/01/2030	641,913
1,500,000	DeKalb Private Hospital Authority, GA, (Children's Healthcare of Atlanta, Inc.), RACs (Series 2009), 5.000%, 11/15/2024	1,708,500
	TOTAL	12,836,653
	Guam—0.1%
565,000	Guam Government LO (Section 30), Bonds (Series 2009A), 5.625%, 12/01/2029	614,364
500,000	Guam Power Authority, Revenue Bonds (Series 2012A), 5.000%, 10/01/2034	519,865
	TOTAL	1,134,229

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	Hawaii—0.2%
$1,250,000	Hawaii State Department of Budget & Finance, (Hawaiian Electric Co., Inc.), Special Purpose Revenue Bonds (Series 2009), 6.500%, 07/01/2039	$1,387,163
	Idaho—0.3%
2,000,000	Idaho Health Facilities Authority, (Terraces of Boise), Revenue Bonds (Series 2013A), 7.750%, 10/01/2034	2,025,440
	Illinois—2.8%
1,180,000	Chicago, IL O'Hare International Airport, General Airport Third Lien Revenue Bonds (Series 2005A), 5.250%, (National Public Finance Guarantee Corporation INS), 01/01/2026	1,244,629
1,000,000	Chicago, IL O'Hare International Airport, General Airport Third Lien Revenue Bonds (Series 2011A), 5.750%, 01/01/2039	1,091,710
1,390,000	Chicago, IL, UT GO Bonds (Project Series 2011A), 5.250%, 01/01/2035	1,416,507
415,000	DuPage County, IL, (Naperville Campus LLC), Special Tax Bonds (Series 2006), 5.625%, 03/01/2036	416,370
1,000,000	Illinois Finance Authority, (Friendship Village of Schaumburg), Revenue Bonds (Series 2005A), 5.625%, 02/15/2037	924,200
875,000	Illinois Finance Authority, (Landing at Plymouth Place), Revenue Bonds (Series 2005A), 6.000%, 05/15/2025	878,133
625,000	Illinois Finance Authority, (Landing at Plymouth Place), Revenue Bonds (Series 2005A), 6.000%, 05/15/2037	590,756
1,000,000	Illinois State Toll Highway Authority, Toll Highway Senior Refunding Revenue Bonds (Series 2014A), 5.000%, 12/01/2022	1,197,410
775,000	Illinois State, GO Refunding Bonds (Series February 2010), 5.000%, 01/01/2024	841,332
1,500,000	Illinois State, UT GO Bonds (Series 2013A), 5.000%, 04/01/2035	1,563,510
2,950,000	Illinois State, UT GO Bonds (Series June 2013), 5.500%, 07/01/2038	3,218,066
1,265,000	Illinois State, UT GO Bonds (Series of May 2014), 5.000%, 05/01/2033	1,334,272
1,230,000	Illinois State, UT GO Refunding Bonds (Series May 2012), 5.000%, 08/01/2025	1,354,095
1,500,000	Metropolitan Pier & Exposition Authority, IL, McCormick Place Expansion Project Bonds (Series 2010A), 5.500%, 06/15/2050	1,572,900
2,200,000	Railsplitter Tobacco Settlement Authority, IL, Tobacco Settlement Revenue Bonds (Series 2010), 6.000%, 06/01/2028	2,552,924
2,000,000	University of Illinois, Auxiliary Facilities System Revenue Bonds (Series 2011A), 5.500%, 04/01/2031	2,216,640
	TOTAL	22,413,454
	Indiana—1.7%
2,500,000	Indiana Health & Educational Facility Financing Authority, (Baptist Homes of Indiana), Revenue Bonds (Series 2005), 5.250%, 11/15/2035	2,531,650
2,750,000	Indiana Municipal Power Agency, Power Supply System Revenue Bonds (Series 2013A), 5.250%, 01/01/2034	3,038,200

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		Indiana—continued
$1,415,000		Indiana State Finance Authority, (CWA Authority), First Lien Wastewater Utility Revenue Bonds (Series 2011A), 5.000%, 10/01/2021	$1,670,238
1,415,000		Indiana State Finance Authority, (CWA Authority), First Lien Wastewater Utility Revenue Bonds (Series 2012A), 5.000%, 10/01/2029	1,565,330
1,095,000		Indiana State Finance Authority, (Ohio Valley Electric Corp.), Midwestern Disaster Relief Revenue Bonds (Series 2012A), 5.000%, 06/01/2032	1,106,563
2,128,470	^2,3	St. Joseph County, IN Hospital Authority, (Madison Center Obligated Group), Health Facilities Revenue Bonds (Series 2005), 5.375%, 02/15/2034	227,895
2,500,000		Whiting, IN Environmental Facilities, (BP PLC), Revenue Bonds (Series 2009), 5.250%, 01/01/2021	2,972,225
		TOTAL	13,112,101
		Iowa—0.5%
600,300		Iowa Finance Authority, (Deerfield Retirement Community, Inc.), Senior Living Facility Revenue Refunding Bonds (Series 2014A), 2.700%, 11/15/2046	410,335
112,608		Iowa Finance Authority, (Deerfield Retirement Community, Inc.), Senior Living Facility Revenue Refunding Bonds (Series 2014B), 2.000%, 05/15/2056	1
1,500,000		Iowa Finance Authority, (Iowa Fertilizer Co.), Midwestern Disaster Area Revenue Bonds (Series 2013), 5.500%, 12/01/2022	1,524,195
2,000,000		Tobacco Settlement Authority, IA, Tobacco Settlement Asset-Backed Bonds (Series 2005C), 5.375%, 06/01/2038	1,724,620
		TOTAL	3,659,151
		Kansas—0.4%
2,605,000		Kansas State Development Finance Authority, (Adventist Health System/Sunbelt Obligated Group), Hospital Revenue Bonds (Series 2009D), 5.000%, 11/15/2029	2,862,999
		Kentucky—0.8%
2,000,000		Kentucky Public Transportation Infrastructure Authority, First Tier Toll Revenue Bonds (Series 2013), 6.000%, 07/01/2053	2,190,000
1,500,000		Kentucky Turnpike Authority, Economic Development Road Revenue & Revenue Refunding Bonds (Series 2011A), 5.000%, 07/01/2019	1,764,255
2,000,000		Louisville & Jefferson County, KY Metropolitan Government, (Catholic Health Initiatives), Revenue Bonds (Series 2012A), 5.000%, 12/01/2035	2,124,160
		TOTAL	6,078,415
		Louisiana—1.1%
1,000,000		Louisiana Stadium and Expo District, Senior Revenue Refunding Bonds (Series 2013A), 5.000%, 07/01/2030	1,093,750
750,000		Louisiana Stadium and Expo District, Senior Revenue Refunding Bonds (Series 2013A), 5.000%, 07/01/2036	791,137

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		Louisiana—continued
$2,000,000		Louisiana State Citizens Property Insurance Corp., Refunding Revenue Bonds (Series 2012), 5.000%, 06/01/2024	$2,255,540
470,000	¹	St. Charles Parish, LA Gulf Opportunity Zone, Revenue Bonds (Series 2010), 4.00% TOBs (Valero Energy Corp.), Mandatory Tender 06/01/2022	495,117
1,000,000		Tobacco Settlement Financing Corp., LA, Tobacco Settlement Asset Backed Revenue Bonds (Series 2013A), 5.000%, 05/15/2021	1,140,730
2,440,000		Tobacco Settlement Financing Corp., LA, Tobacco Settlement Asset-Backed Refunding Bonds (Series 2013A), 5.250%, 05/15/2033	2,559,755
		TOTAL	8,336,029
		Maine—0.1%
900,000		Maine Health & Higher Educational Facilities Authority, (Maine General Medical Center), Revenue Bonds (Series 2011), 6.750%, 07/01/2041	971,901
		Maryland—0.3%
530,000		Maryland State EDC, (CONSOL Energy, Inc.), Port Facilities Refunding Revenue Bonds (Series 2010), 5.750%, 09/01/2025	567,041
925,000		Maryland State EDC, (Ports America Chesapeake, Inc. ), Revenue Bonds (Series B), 5.750%, 06/01/2035	963,582
500,000		Maryland State IDFA, (Our Lady of Good Counsel High School), EDRBs (Series 2005A), 6.000%, (United States Treasury PRF 5/1/2015@100), 05/01/2035	527,925
		TOTAL	2,058,548
		Massachusetts—0.5%
3,195,000		Massachusetts HEFA, (Northeastern University), Revenue Bonds (Series 2010A), 5.000%, 10/01/2025	3,577,889
		Michigan—1.1%
2,500,000		Michigan State Hospital Finance Authority, (Henry Ford Health System, MI), Refunding Revenue Bonds (Series 2006A), 5.250%, 11/15/2032	2,625,350
1,000,000		Michigan Strategic Fund, (Michigan State), LT Obligation Revenue Bonds (Series 2011), 5.250%, 10/15/2026	1,102,880
1,500,000		Saginaw, MI Hospital Finance Authority, (Covenant Medical Center, Inc.), Hospital Revenue Refunding Bonds (Series 2010H), 5.000%, 07/01/2030	1,554,630
1,000,000		Wayne County, MI Airport Authority, Revenue Bonds (Series 2012A), 5.000%, 12/01/2021	1,123,570
2,000,000		Wayne County, MI Airport Authority, Revenue Bonds (Series 2012A), 5.000%, 12/01/2037	2,080,600
		TOTAL	8,487,030

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		Minnesota—0.6%
$1,000,000		Baytown Township, MN, (St. Croix Preparatory Academy), Lease Revenue Bonds (Series 2008A), 7.000%, 08/01/2038	$1,043,330
3,000,000		Minnesota State, Various Purpose Refunding Revenue UT GO Bonds (Series 2013F), 5.000%, 10/01/2021	3,633,780
		TOTAL	4,677,110
		Missouri—0.5%
1,500,000		Missouri Development Finance Board, (Branson, MO), Infrastructure Facilities Revenue Bonds (Series 2004A), 5.250%, (United States Treasury PRF 6/1/2014@100), 12/01/2019	1,506,570
2,500,000		Missouri State HEFA, (BJC Health System, MO), Health Facilities Revenue Bonds, 5.000%, 01/01/2044	2,711,250
		TOTAL	4,217,820
		Nebraska—0.4%
3,000,000		Central Plains Energy Project, Gas Project Revenue Bonds (Project No. 3) (Series 2012), 5.000%, (Goldman Sachs & Co. GTD), 09/01/2042	3,101,010
		Nevada—0.9%
3,000,000		Clark County, NV Airport System, Subordinate Lien Revenue Refunding Bonds (Series 2014A-2), 5.000%, 07/01/2035	3,258,930
475,000		Clark County, NV, (Summerlin-Mesa SID No. 151), Special Assessment Revenue Bonds (Series 2005), 5.000%, 08/01/2025	424,299
3,000,000		Nevada State, Capital Improvement & Cultural LT GO Bonds (Series 2013D-1), 5.000%, 03/01/2022	3,583,020
		TOTAL	7,266,249
		New Jersey—1.6%
2,000,000	¹	New Jersey EDA, (New Jersey State), School Facilities Construction Refunding SIFMA Index Notes (Series 2013I), 1.670%, 09/01/2027	1,971,240
2,000,000		New Jersey EDA, (NJ Dedicated Cigarette Excise Tax), Cigarette Tax Revenue Refunding Bonds (Series 2012), 5.000%, 06/15/2020	2,288,260
600,000		New Jersey EDA, (NJ Dedicated Cigarette Excise Tax), Cigarette Tax Revenue Refunding Bonds (Series 2012), 5.000%, 06/15/2023	674,478
1,580,000		New Jersey EDA, (NJ Dedicated Cigarette Excise Tax), Revenue Bonds (Series 2004), 5.750%, (United States Treasury PRF 6/15/2014@100), 06/15/2029	1,591,060
2,315,000		New Jersey State EDA , (Rutgers, The State University of New Jersey), GO Lease Revenue Bonds (Series 2013), 5.000%, 06/15/2032	2,615,047
1,000,000		New Jersey State Transportation Trust Fund Authority, (New Jersey State), Transportation Program Bonds (Series 2012AA), 5.000%, 06/15/2022	1,172,130
1,200,000		New Jersey State Transportation Trust Fund Authority, (New Jersey State), Transportation System Bonds (Series 2011A), 6.000%, 06/15/2035	1,425,408

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		New Jersey—continued
$500,000		Rutgers, The State University of New Jersey, GO Refunding Bonds (Series 2013J), 5.000%, 05/01/2021	$592,325
		TOTAL	12,329,948
		New Mexico—0.1%
500,000	^4,5	Jicarilla, NM Apache Nation, Revenue Bonds, 5.500%, 09/01/2023	489,120
		New York—4.7%
2,000,000		Brooklyn Arena Local Development Corporation, NY, Pilot Revenue Bonds (Series 2009), 6.375%, 07/15/2043	2,183,620
2,000,000		Erie County, NY IDA, (Buffalo, NY City School District), School Facility Refunding Revenue Bonds (Series 2011B), 5.000%, 05/01/2020	2,346,500
2,700,000		Hudson Yards Infrastructure Corp. NY, Hudson Yards Senior Revenue Bonds (Series 2012A), 5.750%, 02/15/2047	2,998,269
3,305,000		Metropolitan Transportation Authority, NY, (MTA Transportation Revenue), Revenue Bonds (Series 2013C), 5.000%, 11/15/2042	3,502,143
1,000,000		Metropolitan Transportation Authority, NY, (MTA Transportation Revenue), Transportation Revenue Bonds (Series 2014B), 5.250%, 11/15/2039	1,101,650
4,000,000	¹	New York City, NY IDA, (Yankee Stadium LLC), CPI PILOT Revenue Bonds (Series 2006), (FGIC INS), 1.946%, 03/01/2021	3,769,080
5,000,000		New York City, NY, UT GO Bonds (Series 2009E-1), 5.250%, 10/15/2017	5,745,050
2,500,000		New York Liberty Development Corporation, (4 World Trade Center), Liberty Revenue Bonds (Series 2011), 5.750%, 11/15/2051	2,765,225
5,000,000		New York State Dormitory Authority State Personal Income Tax Revenue, General Purpose Revenue Refunding Bonds (Series 2012A), 5.000%, 12/15/2028	5,690,000
1,250,000		New York State Thruway Authority, (New York State Thruway Authority—General Revenue ), General Revenue Bonds (Series 2012I), 5.000%, 01/01/2037	1,348,063
2,500,000		New York State Thruway Authority, General Revenue Junior Indebtedness Obligations (Series 2013A), 5.000% (New York State Thruway Authority - General Revenue), 05/01/2019	2,894,550
2,000,000		New York State, UT GO Bonds (Series 2011A), 5.000%, 02/15/2020	2,390,300
505,000		Tobacco Settlement Financing Corp., NY, (New York State), Asset-Backed Revenue Bonds (Series 2013B), 5.000% (New York State), 06/01/2022	565,731
		TOTAL	37,300,181
		North Carolina—1.1%
5,000,000		Charlotte-Mecklenburg Hospital Authority, NC, (Carolinas HealthCare System), Health Care Revenue & Refunding Revenue Bonds (Series 2012A), 5.000%, 01/15/2043	5,342,250

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	North Carolina—continued
$2,000,000	North Carolina Medical Care Commission, (Pennybyrn at Maryfield), Healthcare Facilities Revenue Bonds (Series 2005A), 5.650%, 10/01/2025	$2,005,300
1,535,000	North Carolina Municipal Power Agency No. 1, Revenue Bonds (Series 2008C), 5.250%, 01/01/2020	1,722,777
	TOTAL	9,070,327
	Ohio—2.6%
2,850,000	American Municipal Power-Ohio, Inc., (American Municipal Power, Prairie State Energy Campus Project), Revenue Bonds (Series 2008A), 5.000%, 02/15/2016	3,070,191
1,680,000	Buckeye Tobacco Settlement Financing Authority, OH, Tobacco Settlement Asset-Backed Bonds (Series A-2), 6.500%, 06/01/2047	1,478,400
1,000,000	Cleveland, OH Airport System, Revenue Bonds (Series 2012A), 5.000%, 01/01/2031	1,051,270
2,335,000	JobsOhio Beverage System, OH, Statewide Senior Lien Liquor Profits Tax-Exempt Revenue Bonds (Series 2013A), 5.000%, 01/01/2038	2,483,389
1,000,000	Lorain County, OH Port Authority, (United States Steel Corp.), Recovery Zone Facility Revenue Bonds (Series 2010), 6.750%, 12/01/2040	1,045,210
1,000,000	Lucas County, OH, (ProMedica Healthcare Obligated Group), Revenue Bonds (Series 2011A), 6.000%, 11/15/2041	1,141,660
2,060,000	Muskingum County, OH, (Genesis Healthcare Corp.), Hospital Facilities Revenue Bonds (Series 2013), 5.000%, 02/15/2027	1,999,230
2,545,000	Ohio State Air Quality Development Authority, (FirstEnergy Solutions Corp.), Revenue Bonds (Series 2009A), 5.700%, 08/01/2020	2,862,922
1,500,000	Ohio State Turnpike & Infrastructure Commission, Turnpike Junior Lien Revenue Bonds (Series 2013A-1), 5.000%, 02/15/2048	1,590,165
1,200,000	Ohio State Turnpike & Infrastructure Commission, Turnpike Junior Lien Revenue Bonds (Series 2013A-1), 5.250%, 02/15/2030	1,353,804
375,000	Toledo-Lucas County, OH Port Authority, (Crocker Park Public Improvement Project), Special Assessment Revenue Bonds, 5.250%, 12/01/2023	382,091
400,000	Toledo-Lucas County, OH Port Authority, (CSX Corp.), Revenue Bonds, 6.450%, 12/15/2021	495,400
1,500,000	University of Cincinnati, OH, General Receipts Bonds (Series 2013C), 5.000%, 06/01/2039	1,625,865
	TOTAL	20,579,597
	Oklahoma—0.1%
1,000,000	Tulsa, OK Industrial Authority, (Montereau, Inc.), Senior Living Community Revenue Bonds (Series 2010A), 7.250%, 11/01/2045	1,079,970

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		Pennsylvania—2.5%
$1,300,000		Allegheny County, PA IDA, (United States Steel Corp.), Environmental Improvement Refunding Revenue Bonds (Series 2005), 5.500%, 11/01/2016	$1,361,789
2,785,000		Allentown, PA Neighborhood Improvement Zone Development Authority, Tax Revenue Bonds (Series 2012A), 5.000%, 05/01/2042	2,788,649
1,000,000		Chester County, PA IDA, (Collegium Charter School), Revenue Bonds (Series 2012A), 5.250%, 10/15/2032	951,190
1,250,000		Commonwealth Financing Authority of PA, (Commonwealth of Pennsylvania), Revenue Bonds (Series 2013A-2), 5.000%, 06/01/2030	1,358,075
2,120,000		Montgomery County, PA Higher Education & Health Authority Hospital, (Dickinson College), Revenue Bonds (Series 2006FF1), 5.000%, (CIFG Assurance NA INS), 05/01/2028	2,270,520
1,000,000		Northampton County, PA General Purpose Authority, (St. Luke's Hospital of Bethlehem), Hospital Revenue Bonds (Series 2008A), 5.250%, 08/15/2024	1,070,050
2,500,000		Northampton County, PA General Purpose Authority, (St. Luke's Hospital of Bethlehem), Hospital Revenue Bonds (Series 2008A), 5.500%, 08/15/2035	2,594,425
2,140,000	¹	Pennsylvania State Turnpike Commission, Variable Rate Turnpike Revenue Bonds (Series 2013B), 1.390%, 12/01/2020	2,169,639
500,000		Philadelphia Authority for Industrial Development, (PresbyHomes Germantown/Morrisville), Senior Living Revenue Bonds (Series 2005A), 5.625%, 07/01/2035	497,815
1,110,000		Philadelphia, PA Hospitals & Higher Education Facilities Authority, (Temple University Health System Obligated Group), Hospital Revenue Bonds (Series 2012A), 5.625%, 07/01/2042	1,060,894
3,000,000		Philadelphia, PA Water & Wastewater System, Refunding Revenue Bonds (Series 2012), 5.000%, 11/01/2027	3,396,810
		TOTAL	19,519,856
		Puerto Rico—0.4%
1,165,000		Commonwealth of Puerto Rico, GO Bonds (Series 2014A), 8.000%, 07/01/2035	1,077,648
3,000,000		Puerto Rico Electric Power Authority, Power Revenue Bonds (Series 2013A), 7.000%, 07/01/2033	1,970,520
		TOTAL	3,048,168
		South Carolina—0.2%
1,390,000		Lancaster County, SC, (Sun City Carolina Lakes Improvement District), Assessment Revenue Bonds (Series 2006), 5.450%, 12/01/2037	1,383,078
		South Dakota—0.1%
1,000,000		Educational Enhancement Funding Corp., SD, Tobacco Settlement Revenue Bonds (Series 2013B), 5.000%, 06/01/2023	1,130,490

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	MUNICIPAL BONDS—continued
	Tennessee—1.1%
$5,000,000	Rutherford County, TN Health and Educational Facilities Board, (Ascension Health Alliance Senior Credit Group), Revenue Bonds (Series 2012C), 5.000%, 11/15/2047	$5,319,300
1,280,000	Tennessee Energy Acquisition Corp., Gas Revenue Bonds (Series 2006A), 5.250%, (Goldman Sachs & Co. GTD), 09/01/2023	1,464,704
2,000,000	Tennessee State School Board Authority, Higher Educational Facilities Second Program Bonds (Series 2013A), 5.000%, 11/01/2029	2,301,480
	TOTAL	9,085,484
	Texas—4.3%
2,065,000	Bexar County, HFDC, (Army Retirement Residence Foundation), Refunding Revenue Bonds (Series 2007), 5.000%, 07/01/2033	2,070,844
2,000,000	Central Texas Regional Mobility Authority, Senior Lien Revenue Bonds (Series 2011), 6.250%, 01/01/2046	2,188,740
1,080,000	Clifton Higher Education Finance Corporation, TX, (Idea Public Schools), 6.000%, 08/15/2033	1,223,759
500,000	Clifton Higher Education Finance Corporation, TX, (Idea Public Schools ), Education Revenue Bonds (Series 2012), 5.000%, 08/15/2042	511,890
1,000,000	Dallas, TX Waterworks & Sewer System, Revenue Refunding Bonds (Series 2013), 5.000%, 10/01/2031	1,145,360
1,355,000	Dallas-Fort Worth, TX International Airport, Joint Revenue Refunding & Improvement Bonds (Series 2012C), 5.000%, 11/01/2020	1,591,136
2,000,000	Dallas-Fort Worth, TX International Airport, Joint Revenue Refunding Bonds (Series 2012B), 5.000%, 11/01/2035	2,119,400
1,000,000	Decatur, TX Hospital Authority, (Wise Regional Health System), Hospital Revenue Bonds (Series 2004A), 7.125%, 09/01/2034	1,008,860
2,500,000	Grand Parkway Transportation Corp., TX, Subordinate Tier Toll Revenue Bonds (Series 2013B), 5.250%, (Toll Equity Loan Agreement Supported) 10/01/2051	2,690,300
3,570,000	Harris County, TX Cultural Education Facilities Finance Corp., (Methodist Hospital, Harris County, TX), Revenue Bonds (Series 2008B), 5.250%, 12/01/2016	3,986,048
265,000	Houston, TX Higher Education Finance Corp., (Cosmos Foundation, Inc. ), Education Revenue Bonds (Series 2011A), 6.875%, 05/15/2041	313,132
1,965,000	Leander, TX ISD, UT GO Refunding Bonds (Series 2013A), 5.000%, (PSFG GTD), 08/15/2031	2,266,038
2,600,000	Lower Colorado River Authority, TX, (LCRA Transmission Services Corp.), Transmission Contract Refunding Revenue Bonds (Series 2013), 5.000%, 05/15/2024	2,986,438
1,665,000	North Texas Tollway Authority, System First Tier Revenue Refunding Bonds (Series 2011B), 5.000%, 01/01/2038	1,741,690
835,000	Red River, TX HFDC, (MRC The Crossings), Retirement Facility Revenue Bonds (Series 2014A), 7.500%, 11/15/2034	846,481

Semi-Annual Shareholder Report

Shares or Principal Amount			Value
		MUNICIPAL BONDS—continued
		Texas—continued
$2,000,000		Tarrant County, TX Cultural Education Facilities Finance Corp., (Air Force Village), Retirement Facility Revenue Bonds (Series 2007), 5.125%, 05/15/2037	$1,948,500
2,965,000		Texas Municipal Gas Acquisition & Supply Corp. I, Gas Supply Senior Lien Revenue Bonds (Series 2006A), 5.250%, (Bank of America Corp. GTD), 12/15/2026	3,364,118
1,930,000		Texas State Department of Housing & Community Affairs, Residential Mortgage Revenue Bonds (Series 2009A), 5.300%, 07/01/2034	2,026,481
		TOTAL	34,029,215
		Virginia—1.0%
2,035,000		Route 460 Funding Corporation of Virginia, Toll Road Senior Lien Revenue Bonds (Series 2012), 5.000%, 07/01/2052	2,054,251
4,485,000		Tobacco Settlement Financing Corp., VA, Revenue Bonds, 5.625%, (United States Treasury PRF 6/1/2015@100), 06/01/2037	4,751,050
1,170,000		Virginia Peninsula Port Authority, (Brinks Co. (The)), Coal Terminal Revenue Refunding Bonds (Series 2003), 6.000%, 04/01/2033	1,171,510
		TOTAL	7,976,811
		Washington—1.5%
4,000,000		Port of Seattle, WA, LT GO Refunding Bonds (Series 2013A), 5.000%, 11/01/2021	4,833,120
3,650,000		Port of Tacoma, WA, LT GO Bonds (Series 2008A), 5.000%, (Assured Guaranty Municipal Corp. INS), 12/01/2030	4,029,600
615,000		Tobacco Settlement Authority, WA, Tobacco Settlement Revenue Refunding Bonds (Series 2013), 5.250%, 06/01/2031	649,680
2,000,000	^4,5	Washington State Housing Finance Commission, (Rockwood Retirement Communities), Nonprofit Housing Revenue & Refunding Revenue Bonds (Series 2014A), 7.375%, 01/01/2044	2,059,560
		TOTAL	11,571,960
		West Virginia—0.1%
1,000,000		Ohio County, WV County Commission, (Fort Henry Centre Tax Increment Financing District No. 1), Tax Increment Revenue Bonds (Series 2005A), 5.625%, 06/01/2034	1,011,650
		Wisconsin—0.7%
4,665,000		Wisconsin State General Fund Appropriation, (Wisconsin State), Revenue Bonds (Series 2009A), 5.750%, 05/01/2033	5,511,838
		Wyoming—0.2%
1,250,000		Laramie County, WY, (Cheyenne Regional Medical Center), Hospital Revenue Bonds (Series 2012), 5.000%, 05/01/2037	1,307,813
		TOTAL MUNICIPAL BONDS (IDENTIFIED COST $376,739,030)	390,178,855

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	SHORT-TERM MUNICIPALS—5.4%⁶
	Florida—0.2%
$1,500,000	Pinellas County, FL Health Facility Authority, (Series 2009A-1) Daily VRDNs (Baycare Health System) , (U.S. Bank, N.A. LOC), 0.090%, 5/1/2014	$1,500,000
	Louisiana—1.1%
8,800,000	Louisiana Public Facilities Authority, (Series 2007A) Daily VRDNs (Air Products & Chemicals, Inc.), 0.100%, 5/1/2014	8,800,000
	Michigan—0.5%
2,000,000	Michigan Higher Education Facilities Authority, (Series 2006) Weekly VRDNs (Albion College) , (JPMorgan Chase Bank, N.A. LOC), 0.130%, 5/1/2014	2,000,000
1,350,000	Michigan Strategic Fund, (Series 2010) Weekly VRDNs (CS Facilities LLC), (Fifth Third Bank, Cincinnati LOC), 0.220%, 5/1/2014	1,350,000
	TOTAL	3,350,000
	New York—0.9%
2,000,000	New York City, NY Municipal Water Finance Authority, Second General Resolution (Fiscal 2007 Series C-C1) Daily VRDNs, (Bank of Nova Scotia, Toronto LIQ), 0.070%, 5/1/2014	2,000,000
1,150,000	New York City, NY TFA , (Fiscal 1998 Series C) Daily VRDNs, (Morgan Stanley Bank, N.A. LOC), 0.100%, 5/1/2014	1,150,000
2,500,000	New York City, NY, (Fiscal 1994 Series C) Daily VRDNs, (JPMorgan Chase Bank, N.A. LOC), 0.090%, 5/1/2014	2,500,000
1,500,000	New York City, NY, (Fiscal 2012 Series G-6) Daily VRDNs, (Mizuho Bank Ltd. LOC), 0.090%, 5/1/2014	1,500,000
	TOTAL	7,150,000
	Ohio—0.3%
2,500,000	Allen County, OH, (Series 2010C) Daily VRDNs (Catholic Healthcare Partners) , (Union Bank, N.A. LOC), 0.070%, 5/1/2014	2,500,000
	Oklahoma—0.3%
2,000,000	Oklahoma State Turnpike Authority, (Series 2006F) Daily VRDNs, (JPMorgan Chase Bank, N.A. LIQ), 0.080%, 5/1/2014	2,000,000
	Pennsylvania—0.8%
600,000	Luzerne County, PA, (Series A of 2006) Weekly VRDNs, (Assured Guaranty Municipal Corp. INS, JPMorgan Chase Bank, N.A. LIQ), 0.650%, 5/1/2014	600,000
5,750,000	Philadelphia, PA Hospitals & Higher Education Facilities Authority, (Series 2002-A) Daily VRDNs (Children's Hospital of Philadelphia), (JPMorgan Chase Bank, N.A. LIQ), 0.090%, 5/1/2014	5,750,000
	TOTAL	6,350,000
	Texas—1.0%
8,000,000	Gulf Coast, TX IDA, (Series 2012) Daily VRDNs (Exxon Mobil Corp.), 0.070%, 5/1/2014	8,000,000

Semi-Annual Shareholder Report

Shares or Principal Amount		Value
	SHORT-TERM MUNICIPALS—continued⁶
	Utah—0.3%
$2,500,000	Murray City, UT, (Series 2003C) Daily VRDNs (IHC Health Services, Inc.), 0.070%, 5/1/2014	$2,500,000
	TOTAL SHORT-TERM MUNICIPALS—5.4% (AT AMORTIZED COST)	42,150,000
	TOTAL INVESTMENTS—98.6% (IDENTIFIED COST $687,948,135)⁷	776,262,585
	OTHER ASSETS AND LIABILITIES - NET—1.4%⁸	11,402,381
	TOTAL NET ASSETS—100%	$787,664,966

At April 30, 2014, the Fund had the following outstanding futures contracts:

Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Depreciation
²United States Treasury Short Futures	300	$37,326,563	June 2014	$(156,311)

Unrealized Depreciation on Futures Contracts is included in “Other Assets and
Liabilities—Net.”

At April 30, 2014, the Fund held no securities that are subject to the federal alternative minimum tax (AMT).

1	Floating rate notes with current rate and maturity or tender date shown.
2	Non-income-producing security.
3	Security in default.
4	Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At April 30, 2014, these restricted securities amounted to $2,548,680, which represented 0.3% of total net assets.
5	Denotes a restricted security that may be resold without restriction to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the “Trustees”). At April 30, 2014, these liquid restricted securities amounted to $2,548,680, which represented 0.3% of total net assets.
6	Current rate and next reset date shown for Variable Rate Demand Notes.
7	The cost of investments for federal tax purposes amounts to $687,742,285.
8	Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at April 30, 2014.

Semi-Annual Shareholder Report

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1—quoted prices in active markets for identical securities, including investments companies with daily net asset values, if applicable.

Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Also includes securities valued at amortized cost.

Level 3—significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments).

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of April 30, 2014, in valuing the Fund's assets carried at fair value:

Valuation Inputs
	Level 1— Quoted Prices and Investments in Investment Companies	Level 2— Other Significant Observable Inputs	Level 3— Significant Unobservable Inputs	Total
Equity Securities:
Common Stock
Domestic	$190,015,661	$—	$—	$190,015,661
International	153,918,069	—	—	153,918,069
Debt Securities:
Municipal Bonds	—	390,178,855	—	390,178,855
Short-Term Municipals	—	42,150,000	—	42,150,000
TOTAL SECURITIES	$343,933,730	$432,328,855	$—	$776,262,585
OTHER FINANCIAL INSTRUMENTS*	$(156,311)	$—	$—	$(156,311)

*	Other financial instruments include futures contracts.

Semi-Annual Shareholder Report

The following acronyms are used throughout this portfolio:

ADR	—American Depositary Receipt
COPs	—Certificates of Participation
EDA	—Economic Development Authority
EDC	—Economic Development Corporation
EDRBs	—Economic Development Revenue Bonds
FGIC	—Financial Guaranty Insurance Company
GO	—General Obligation
GTD	—Guaranteed
HEFA	—Health and Education Facilities Authority
HFDC	—Health Facility Development Corporation
IDA	—Industrial Development Authority
IDB	—Industrial Development Bond
IDFA	—Industrial Development Finance Authority
INS	—Insured
ISD	—Independent School District
LIQ	—Liquidity Agreement
LO	—Limited Obligation
LOC	—Letter of Credit
LT	—Limited Tax
PRF	—Pre-refunded
PSFG	—Public School Fund Guarantee
RACs	—Revenue Anticipation Certificates
SID	—Special Improvement District
SIFMA	—Securities Industry and Financial Markets Association
TFA	—Transitional Finance Authority
TOBs	—Tender Option Bonds
UT	—Unlimited Tax
VRDNs	—Variable Rate Demand Notes

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Financial Highlights–Class A Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 4/30/2014	Year Ended October 31,
	Six Months Ended (unaudited) 4/30/2014	2013	2012	2011	2010	2009
Net Asset Value, Beginning of Period	$12.17	$11.69	$10.75	$10.52	$9.95	$9.46
Income From Investment Operations:
Net investment income	0.25	0.43	0.42	0.42	0.34	0.34
Net realized and unrealized gain (loss) on investments, futures contracts, written options and foreign currency transactions	0.49	0.48	0.94	0.24	0.56	0.49
TOTAL FROM INVESTMENT OPERATIONS	0.74	0.91	1.36	0.66	0.90	0.83
Less Distributions:
Distributions from net investment income	(0.25)	(0.43)	(0.42)	(0.43)	(0.33)	(0.34)
Net Asset Value, End of Period	$12.66	$12.17	$11.69	$10.75	$10.52	$9.95
Total Return¹	6.18%	7.92%	12.87%	6.46%	9.19%	9.07%
Ratios to Average Net Assets:
Net expenses	1.00%²	1.00%	1.00%	1.00%³	1.00%³	1.00%³
Net investment income	4.18%²	3.60%	3.73%	4.01%	3.23%	3.60%
Expense waiver/reimbursement⁴	0.19%²	0.36%	0.46%	0.48%	0.45%	0.47%
Supplemental Data:
Net assets, end of period (000 omitted)	$443,058	$376,204	$303,053	$267,566	$348,191	$384,555
Portfolio turnover	8%	28%	24%	34%	72%	80%

1	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
2	Computed on an annualized basis.
3	The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratio is 1.00%, 1.00% and 0.98% for the years ended October 31, 2011, 2010 and 2009, respectively, after taking into account these expense reductions.
4	This expense decrease is reflected in both the net expense and net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Financial Highlights–Class B Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 4/30/2014	Year Ended October 31,
	Six Months Ended (unaudited) 4/30/2014	2013	2012	2011	2010	2009
Net Asset Value, Beginning of Period	$12.17	$11.68	$10.75	$10.51	$9.94	$9.46
Income From Investment Operations:
Net Investment Income	0.22	0.36	0.34	0.34	0.26	0.27
Net realized and unrealized gain (loss) on investments, futures contracts, written options and foreign currency transactions	0.48	0.47	0.92	0.25	0.56	0.48
TOTAL FROM INVESTMENT OPERATIONS	0.70	0.83	1.26	0.59	0.82	0.75
Less Distributions:
Distributions from net investment income	(0.21)	(0.34)	(0.33)	(0.35)	(0.25)	(0.27)
Net Asset Value, End of Period	$12.66	$12.17	$11.68	$10.75	$10.51	$9.94
Total Return¹	5.79%	7.21%	11.93%	5.76%	8.37%	8.14%
Ratios to Average Net Assets:
Net expenses	1.75%²	1.75%	1.75%	1.75%³	1.75%³	1.75%³
Net investment income	3.41%²	2.91%	2.99%	3.25%	2.48%	2.85%
Expense waiver/reimbursement⁴	0.19%²	0.36%	0.46%	0.48%	0.45%	0.47%
Supplemental Data:
Net assets, end of period (000 omitted)	$26,348	$28,332	$34,930	$43,675	$50,781	$55,826
Portfolio turnover	8%	28%	24%	34%	72%	80%

1	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
2	Computed on an annualized basis.
3	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratios are 1.75%, 1.75% and 1.73% for the years ended October 31, 2011, 2010 and 2009, respectively, after taking into account these expense reductions.
4	This expense decrease is reflected in both the net expense and net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Financial Highlights–Class C Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 4/30/2014	Year Ended October 31,
	Six Months Ended (unaudited) 4/30/2014	2013	2012	2011	2010	2009
Net Asset Value, Beginning of Period	$12.16	$11.68	$10.75	$10.51	$9.94	$9.46
Income From Investment Operations:
Net investment income	0.21	0.34	0.34	0.34	0.26	0.27
Net realized and unrealized gain (loss) on investments, futures contracts, written options and foreign currency transactions	0.49	0.48	0.93	0.25	0.56	0.48
TOTAL FROM INVESTMENT OPERATIONS	0.70	0.82	1.27	0.59	0.82	0.75
Less Distributions:
Distributions from net investment income	(0.21)	(0.34)	(0.34)	(0.35)	(0.25)	(0.27)
Net Asset Value, End of Period	$12.65	$12.16	$11.68	$10.75	$10.51	$9.94
Total Return¹	5.79%	7.13%	11.94%	5.76%	8.37%	8.15%
Ratios to Average Net Assets:
Net Expenses	1.75%²	1.75%	1.75%	1.75%³	1.75%³	1.75%³
Net investment income	3.42%²	2.84%	2.98%	3.25%	2.48%	2.86%
Expense waiver/reimbursement⁴	0.19%²	0.36%	0.46%	0.48%	0.45%	0.47%
Supplemental Data:
Net assets, end of period (000 omitted)	$168,473	$140,706	$105,994	$86,120	$101,822	$113,830
Portfolio turnover	8%	28%	24%	34%	72%	80%

1	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
2	Computed on an annualized basis.
3	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratios are 1.75%, 1.75% and 1.73% for the years ended October 31, 2011, 2010 and 2009, respectively, after taking into account these expense reductions.
4	This expense decrease is reflected in both the net expense and net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Financial Highlights–Class F Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 4/30/2014	Year Ended October 31,
	Six Months Ended (unaudited) 4/30/2014	2013	2012	2011	2010	2009
Net Asset Value, Beginning of Period	$12.17	$11.69	$10.75	$10.52	$9.95	$9.46
Income From Investment Operations:
Net investment income	0.25	0.44	0.43	0.42	0.33	0.35
Net realized and unrealized gain (loss) on investments, futures contracts, written options and foreign currency transactions	0.49	0.47	0.93	0.24	0.57	0.49
TOTAL FROM INVESTMENT OPERATIONS	0.74	0.91	1.36	0.66	0.90	0.84
Less Distributions:
Distributions from net investment income	(0.25)	(0.43)	(0.42)	(0.43)	(0.33)	(0.35)
Net Asset Value, End of Period	$12.66	$12.17	$11.69	$10.75	$10.52	$9.95
Total Return¹	6.18%	7.92%	12.87%	6.45%	9.21%	9.20%
Ratios to Average Net Assets:
Net expenses	1.00%²	1.00%	1.00%	1.00%³	0.99%³	0.89%³
Net investment income	4.17%²	3.53%	3.71%	4.00%	3.24%	3.70%
Expense waiver/reimbursement⁴	0.19%²	0.35%	0.46%	0.48%	0.45%	0.47%
Supplemental Data:
Net assets, end of period (000 omitted)	$90,088	$69,497	$36,638	$18,876	$18,299	$16,032
Portfolio turnover	8%	28%	24%	34%	72%	80%

1	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
2	Computed on an annual basis.
3	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratios are 1.00%, 0.99% and 0.87% for the years ended October 31, 2011, 2010 and 2009, respectively, after taking into account these expense reductions.
4	This expense decrease is reflected in both the net expense and net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Financial Highlights–Institutional Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited) 4/30/2014	Year Ended October 31,		Period Ended 10/31/2011¹
	Six Months Ended (unaudited) 4/30/2014	2013	2012	Period Ended 10/31/2011¹
Net Asset Value, Beginning of Period	$12.17	$11.68	$10.75	$10.29
Income From Investment Operations:
Net investment income	0.27	0.46	0.44	0.34
Net realized and unrealized gain (loss) on investments, futures contracts and foreign currency transactions	0.49	0.49	0.94	0.48
TOTAL FROM INVESTMENT OPERATIONS	0.76	0.95	1.38	0.82
Less Distributions:
Distributions from net investment income	(0.27)	(0.46)	(0.45)	(0.36)
Net Asset Value, End of Period	$12.66	$12.17	$11.68	$10.75
Total Return²	6.31%	8.28%	13.05%	8.05%
Ratios to Average Net Assets:
Net expenses	0.75%³	0.75%	0.75%	0.75%^3,4
Net investment income	4.41%³	3.77%	3.90%	4.14%³
Expense waiver/reimbursement⁵	0.19%³	0.35%	0.46%	0.51%³
Supplemental Data:
Net assets, end of period (000 omitted)	$59,698	$42,031	$20,514	$3,149
Portfolio turnover	8%	28%	24%	34%⁶

1	Reflects operations for the period from December 29, 2010 (date of initial investment) to October 31, 2011.
2	Based on net asset value.
3	Computed on an annualized basis.
4	The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratio was 0.75% for the period ended October 31, 2011, after taking into account this expense reduction.
5	This expense decrease is reflected in both the net expense and net investment income ratios shown above.
6	Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the fiscal year ended October 31, 2011.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Statement of Assets and Liabilities

April 30, 2014 (unaudited)

Assets:
Total investment in securities, at value (identified cost $687,948,135)		$776,262,585
Cash denominated in foreign currencies (identified cost $1,315,617)		1,315,617
Restricted cash (Note 2)		390,001
Income receivable		6,724,952
Receivable for investments sold		6,300,994
Receivable for shares sold		3,681,332
TOTAL ASSETS		794,675,481
Liabilities:
Bank overdraft	$1,199,347
Payable for investments purchased	4,848,590
Payable for shares redeemed	349,103
Payable for shareholder services fee (Note 5)	229,220
Payable for daily variation margin	126,562
Payable for distribution services fee (Note 5)	116,818
Accrued expenses (Note 5)	140,875
TOTAL LIABILITIES		7,010,515
Net assets for 62,215,152 shares outstanding		$787,664,966
Net Assets Consists of:
Paid-in capital		$750,926,554
Net unrealized appreciation of investments, futures contracts and translation of assets and liabilities in foreign currency		87,894,480
Accumulated net realized loss on investments and futures contracts		(51,914,291)
Undistributed net investment income		758,223
TOTAL NET ASSETS		$787,664,966

Semi-Annual Shareholder Report

Statement of Assets and Liabilities–continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class A Shares:
Net asset value per share ($443,058,254 ÷ 34,989,806 shares outstanding), no par value, unlimited shares authorized		$12.66
Offering price per share (100/94.50 of $12.66)		$13.40
Redemption proceeds per share		$12.66
Class B Shares:
Net asset value per share ($26,348,395 ÷ 2,081,721 shares outstanding), no par value, unlimited shares authorized		$12.66
Offering price per share		$12.66
Redemption proceeds per share (94.50/100 of $12.66)		$11.96
Class C Shares:
Net asset value per share ($168,472,598 ÷ 13,313,420 shares outstanding), no par value, unlimited shares authorized		$12.65
Offering price per share		$12.65
Redemption proceeds per share (99.00/100 of $12.65)		$12.52
Class F Shares:
Net asset value per share ($90,087,691 ÷ 7,114,498 shares outstanding), no par value, unlimited shares authorized		$12.66
Offering price per share (100/99.00 of $12.66)		$12.79
Redemption proceeds per share (99.00/100 of $12.66)		$12.53
Institutional Shares:
Net asset value per share ($59,698,028 ÷ 4,715,707 shares outstanding), no par value, unlimited shares authorized		$12.66
Offering price per share		$12.66
Redemption proceeds per share		$12.66

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Statement of Operations

Six Months Ended April 30, 2014 (unaudited)

Investment Income:
Interest			$7,842,774
Dividends (net of foreign tax withheld of $310,879)			10,247,380
TOTAL INCOME			18,090,154
Expenses:
Investment adviser fee (Note 5)		$2,619,298
Administrative fee (Note 5)		272,756
Custodian fees		18,278
Transfer agent fee		208,086
Directors'/Trustees' fees (Note 5)		1,804
Auditing fees		13,731
Legal fees		5,379
Distribution services fee (Note 5)		660,231
Shareholder services fee (Note 5)		812,626
Account administration fee (Note 2)		649
Portfolio accounting fees		78,584
Share registration costs		39,587
Printing and postage		27,184
Miscellaneous (Note 5)		6,058
TOTAL EXPENSES		4,764,251
Waiver and Reimbursement (Note 5):
Waiver of investment adviser fee	$(654,334)
Reimbursement of shareholder services fee	(150)
TOTAL WAIVER AND REIMBURSEMENT		(654,484)
Net expenses			4,109,767
Net investment income			13,980,387
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts and Foreign Currency Transactions:
Net realized gain on investments and foreign currency transactions			1,554,277
Net realized loss on futures contracts			(359,966)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency			28,125,008
Net change in unrealized depreciation of futures contracts			179,341
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions			29,498,660
Change in net assets resulting from operations			$43,479,047

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Statement of Changes in Net Assets

	Six Months Ended (unaudited) 4/30/2014	Year End 10/31/2013
Increase (Decrease) in Net Assets
Operations:
Net investment income	$13,980,387	$19,665,741
Net realized gain on investments, futures contracts and foreign currency transactions	1,194,311	11,486,429
Net change in unrealized appreciation/depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency	28,304,349	11,734,138
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS	43,479,047	42,886,308
Distributions to Shareholders:
Distributions from net investment income
Class A Shares	(8,269,879)	(12,065,928)
Class B Shares	(450,873)	(903,791)
Class C Shares	(2,540,402)	(3,458,700)
Class F Shares	(1,586,261)	(1,860,737)
Institutional Shares	(1,049,386)	(1,171,745)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS	(13,896,801)	(19,460,901)
Share Transactions:
Proceeds from sale of shares	141,670,890	230,603,987
Net asset value of shares issued to shareholders in payment of distributions declared	12,824,275	17,718,564
Cost of shares redeemed	(53,183,142)	(116,107,306)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS	101,312,023	132,215,245
Change in net assets	130,894,269	155,640,652
Net Assets:
Beginning of period	656,770,697	501,130,045
End of period (including undistributed net investment income of $758,223 and $674,637, respectively)	$787,664,966	$656,770,697

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

Notes to Financial Statements

April 30, 2014 (unaudited)

1. ORGANIZATION

Federated Income Securities Trust (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 nine portfolios. The financial statements included herein are only those of Federated Muni and Stock Advantage Fund (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. Each portfolio pays its own expenses. The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide tax-advantaged income with a secondary objective of capital appreciation.

2. 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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

■	Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
■	Fixed-income securities and repurchase agreements acquired with remaining maturities of 60 days or less are valued at their amortized cost (adjusted for the accretion of any discount or amortization of any premium) unless the issuer's creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment's fair value, in which case it would be valued in the same manner as a longer-term security.
■	Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
■	Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
■	Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.
■	Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs.
■	For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered such as: the purchase price of the security, information obtained by contacting the issuer, analysis of the issuer's financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded and public trading in similar securities of the issuer or comparable issuers.

Semi-Annual Shareholder Report

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, or if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund's valuation policies and procedures, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Equity Management Company of Pennsylvania (“Adviser”) and certain of the Adviser's affiliated companies to determine fair value of securities and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services' policies, procedures and valuation methods (including key inputs and assumptions), transactional back-testing, comparisons of evaluations of different pricing services and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.

Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

Semi-Annual Shareholder Report

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

■	With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;
■	Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
■	Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income are declared and paid monthly. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class B Shares, Class C Shares and Class F Shares may bear account administration fees, distribution services fees and shareholder services fees unique to those classes.

For the six months ended April 30, 2014, account administration fees for the Fund were as follows:

	Account Administration Fees Incurred
Class A Shares	$398
Class C Shares	75
Class F Shares	176
TOTAL	$649

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.

Semi-Annual Shareholder Report

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted using the effective-interest-rate method.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the six months ended April 30, 2014, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of April 30, 2014, tax years 2010 through 2013 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Futures Contracts

The Fund purchases and sells financial futures contracts to manage duration and yield curve risk. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities which is shown as Restricted cash in the Statement of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in a “variation margin” account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures are exchange traded and the exchange's clearing house, as counterparty to all exchange traded futures, guarantees the futures against default.

Futures contracts outstanding at year end are listed after the Fund's Portfolio of Investments.

The average notional value of futures contracts held by the Fund throughout the period was $24,218,080. This is based on amounts held as of each month-end throughout the six-month fiscal period.

Semi-Annual Shareholder Report

Foreign Exchange Contracts

The Fund may enter into foreign exchange contracts to manage currency risk and market risk. 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 into 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 exchange contracts 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 April 30, 2014, the Fund had no outstanding 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 (FCs) 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 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.

Option Contracts

The Fund buys or sells put and call options to manage currency risk, duration risk and market risk. The seller (writer) of an option receives a payment or premium, from the buyer, which the writer keeps regardless of whether the buyer exercises the option. When the Fund writes a put or call option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. Premiums received from writing options which expire are treated as realized gains. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the underlying reference instrument. When the Fund purchases a put or call option, an amount equal to the premium paid is recorded as an increase to the cost of the investment and subsequently marked to market to reflect the current value of the option purchased. Premiums paid for purchasing options which expire are treated as realized losses. Premiums received/paid for writing/purchasing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying reference instrument to determine the realized gain or loss. The risk associated with purchasing put and call options is limited to the premium paid. Options can trade on securities or commodities exchanges. In this case, the exchange sets all the terms of the contract except for the price. Most exchanges require investors to maintain margin accounts through their brokers to cover their potential obligations to the exchange. This protects investors against potential defaults by the counterparty.

Semi-Annual Shareholder Report

During the six months ended April 30, 2014, the Fund had no outstanding written or purchased options contracts.

Restricted Securities

The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security 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 such restricted securities may be resold in the secondary market in transactions exempt from registration. 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, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.

Additional Disclosure Related to Derivative Instruments

Fair Value of Derivative Instruments
	Liability
	Statement of Assets and Liabilities Location	Fair Value
Derivatives not accounted for as hedging instruments under ASC Topic 815
Interest rate contracts	Payable for daily variation margin	$(156,311)*

*	Includes cumulative depreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day's variation margin is reported within the Statement of Assets and Liabilities.

The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2014

Amount of Realized Gain or (Loss) on Derivatives Recognized in Income
	Futures
Interest rate contracts	$(359,966)

Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income
	Futures
Interest rate contracts	$179,341

Other

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.

Semi-Annual Shareholder Report

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

	Six Months Ended April 30, 2014		Year Ended October 31, 2013
Class A Shares:	Shares	Amount	Shares	Amount
Shares sold	5,777,282	$70,827,511	9,762,880	$116,196,091
Shares issued to shareholders in payment of distributions declared	645,175	7,902,396	969,856	11,467,935
Shares redeemed	(2,339,481)	(28,642,745)	(5,759,440)	(68,311,495)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	4,082,976	$50,087,162	4,973,296	$59,352,531

	Six Months Ended April 30, 2014		Year Ended October 31, 2013
Class B Shares:	Shares	Amount	Shares	Amount
Shares sold	131,040	$1,601,489	415,723	$4,951,944
Shares issued to shareholders in payment of distributions declared	33,837	413,924	69,838	824,192
Shares redeemed	(411,789)	(5,033,133)	(1,147,352)	(13,585,857)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(246,912)	$(3,017,720)	(661,791)	$(7,809,721)

	Six Months Ended April 30, 2014			Year Ended October 31, 2013
Class C Shares:	Shares	Amount		Shares	Amount
Shares sold	2,443,452		$29,998,513	3,957,787	$47,143,910
Shares issued to shareholders in payment of distributions declared	171,222		2,095,839	232,533	2,746,915
Shares redeemed	(867,881)		(10,637,655)	(1,699,054)	(20,165,002)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	1,746,793		$21,456,697	2,491,266	$29,725,823

	Six Months Ended April 30, 2014		Year Ended October 31, 2013
Class F Shares:	Shares	Amount	Shares	Amount
Shares sold	1,598,784	$19,642,665	2,786,865	$33,166,689
Shares issued to shareholders in payment of distributions declared	128,260	1,571,388	155,779	1,843,305
Shares redeemed	(321,992)	(3,939,195)	(368,555)	(4,367,984)
NET CHANGE RESULTING FROM CLASS F SHARE TRANSACTIONS	1,405,052	$17,274,858	2,574,089	$30,642,010

Semi-Annual Shareholder Report

	Six Months Ended April 30, 2014		Year Ended October 31, 2013
Institutional Shares:	Shares	Amount	Shares	Amount
Shares sold	1,596,084	$19,600,712	2,445,443	$29,145,353
Shares issued to shareholders in payment of distributions declared	68,618	840,728	70,618	836,217
Shares redeemed	(402,981)	(4,930,414)	(818,093)	(9,676,968)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,261,721	$15,511,026	1,697,968	$20,304,602
NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS	8,249,630	$101,312,023	11,074,828	$132,215,245

4. FEDERAL TAX INFORMATION

At April 30, 2014, the cost of investments for federal tax purposes was $687,742,285. The net unrealized appreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from: (a) the translation from FCs to U.S dollars of assets and liabilities other than investments in securities; and (b) futures contracts was $88,520,300. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $97,959,125 and net unrealized depreciation from investments for those securities having an excess of cost over value of $9,438,825.

At October 31, 2013, the Fund had a capital loss carryforward of $52,596,117 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, a net capital loss incurred in taxable years beginning on or before December 22, 2010, is characterized as short-term and may be carried forward for a maximum of eight tax years (“Carryforward Limit”), whereas a net capital loss incurred in taxable years beginning after December 22, 2010, retains its character as either short-term or long-term, does not expire and is required to be utilized prior to the losses which have a Carryforward Limit.

The following schedule summarizes the Fund's capital loss carryforwards and expiration years:

Expiration Year	Short-Term	Long-Term	Total
2017	$ 52,596,117	—	$ 52,596,117

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. For the six months ended April 30, 2014, the Adviser waived $654,334 of its fee.

Semi-Annual Shareholder Report

Certain of the Fund's assets are managed by Federated Investment Management Company (the “Sub-Adviser”). Under the terms of a sub-advisory agreement between the Adviser and the Sub-Adviser, the Sub-Adviser receives an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the six months ended April 30, 2014, the Sub-Adviser earned a fee of $478,205.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below, plus certain out-of-pocket expenses:

Administrative Fee	Average Daily Net Assets of the Investment Complex
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the six months ended April 30, 2014, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.

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 daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class B Shares	0.75%
Class C Shares	0.75%

Semi-Annual Shareholder Report

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the six months ended April 30, 2014, distribution services fees for the Fund were as follows:

	Distribution Service Fees Incurred
Class B Shares	$100,158
Class C Shares	560,073
TOTAL	$660,231

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended April 30, 2014, FSC retained $227,057 of fees paid by the Fund. For the six months ended April 30, 2014, the Fund's Class A Shares did not incur a distribution services fee; however, it may begin to incur this fee upon approval of the Trustees.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended April 30, 2014, FSC retained $121,362 in sales charges from the sale of Class A Shares. FSC also retained $63,732 of CDSC relating to redemptions of Class A Shares, $9,193 relating to redemptions of Class B Shares, $9,766 relating to redemptions of Class C Shares and $17,560 relating to redemptions of Class F Shares.

Shareholder Services Fee

The Fund may pay fees (“Service Fees”) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares, Class C Shares and Class F Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for Service Fees. For the six months ended April 30, 2014, Service Fees for the Fund were as follows:

	Service Fees Incurred	Service Fees Reimbursed
Class A Shares	$497,502	$—
Class B Shares	33,386	—
Class C Shares	186,616	—
Class F Shares	95,122	(150)
TOTAL	$812,626	$(150)

For the six months ended April 30, 2014, FSSC received $23,144 of Service Fees paid by the Fund.

Semi-Annual Shareholder Report

Expense Limitation

The Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their respective fees and/or reimburse expenses so that the total annual fund operating expenses (as shown in the financial highlights, excluding extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund's Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares (after the voluntary waivers and reimbursements) will not exceed 1.00%, 1.75%, 1.75%, 1.00% and 0.75% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) January 1, 2015; or (b) the date of the Fund's next effective Prospectus. While the Adviser and its applicable 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 Trustees.

Interfund Transactions

During the six months ended April 30, 2014, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Act and amounted to $140,500,000 and $132,350,000, respectively.

General

Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Directors'/Trustees' fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. Such expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.

6. Investment TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended April 30, 2014, were as follows:

Purchases	$ 127,579,018
Sales	$ 52,173,881

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate offered to the Fund by PNC Bank at the time of the borrowing. As of April 30, 2014, there were no outstanding loans. During the six months ended April 30, 2014, the Fund did not utilize the LOC.

Semi-Annual Shareholder Report

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of April 30, 2014, there were no outstanding loans. During the six months ended April 30, 2014, the program was not utilized.

9. SUBSEQUENT EVENTS

Effective June 30, 2014, the Adviser has agreed to contractually reduce the management fee from 0.75% to 0.65%. There is no change to the Expense Limitations as presented in Note 5 of this Semi-Annual Report under the heading Expense Limitation.

Management has evaluated subsequent events through the date the financial statements were issued and determined that no additional events have occurred that require disclosure.

Semi-Annual Shareholder Report

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2013 to April 30, 2014.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Semi-Annual Shareholder Report

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 11/1/2013	Ending Account Value 4/30/2014	Expenses Paid During Period¹
Actual:
Class A Shares	$1,000	$1,061.80	$5.11
Class B Shares	$1,000	$1,057.90	$8.93
Class C Shares	$1,000	$1,058.80	$8.93
Class F Shares	$1,000	$1,061.80	$5.11
Institutional Shares	$1,000	$1,063.10	$3.84
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,019.84	$5.01
Class B Shares	$1,000	$1,016.12	$8.75
Class C Shares	$1,000	$1,016.12	$8.75
Class F Shares	$1,000	$1,019.84	$5.01
Institutional Shares	$1,000	$1,021.08	$3.76

1	Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.00%
Class B Shares	1.75%
Class C Shares	1.75%
Class F Shares	1.00%
Institutional Shares	0.75%

Semi-Annual Shareholder Report

Evaluation and Approval of Advisory Contract–May 2013

federated muni and stock advantage fund (the “Fund”)

Following a review and recommendation of approval by the Fund's independent trustees, the Fund's Board reviewed and approved at its May 2013 meetings the Fund's investment advisory and subadvisory contracts for an additional one-year term. The Board's decision regarding these contracts reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated Funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below (the “Evaluation”). The Board considered that Evaluation, along with other information, in deciding to approve the advisory and subadvisory contracts.

The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser to a fund and its shareholders, including the performance and expenses of the fund and of comparable funds; the Adviser's cost of providing the services, including the profitability to the Adviser of providing advisory services to a fund; the extent to which the Adviser may realize “economies of scale” as a fund grows larger and, if such economies exist, whether they have been shared with a fund and its shareholders or the family of funds; any “fall-out financial benefits” that accrue to the Adviser because of its relationship with a fund (including research services received from brokers that execute fund trades and any fees paid to affiliates of the Adviser for services rendered to a fund); comparative fee structures, including a comparison of fees paid to the Adviser with those paid by similar funds; and the extent to which the Board members are fully informed about all facts the Board deems relevant to its consideration of the Adviser's services and fees. Consistent with these judicial decisions, the Board also considered management fees charged to institutional and other clients of the Adviser and subadviser for what might be viewed as like services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory and subadvisory contracts to the extent it considered them to be appropriate and relevant, as discussed further below.

Semi-Annual Shareholder Report

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, and in connection with its May meetings, the Board requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's Evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional substantial information in connection with the May meeting at which the Board's formal review of the advisory and subadvisory contracts occurred. At this May meeting, senior management of the Adviser also met with the independent trustees and their counsel to discuss the materials presented and any other matters thought relevant by the Adviser or the trustees. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory and subadvisory contracts included review of the Senior Officer's Evaluation, accompanying data and additional information covering such matters as: the Adviser's and subadviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or “peer group” funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders; the entrepreneurial risk assumed by the Adviser in sponsoring the funds; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated

Semi-Annual Shareholder Report

funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

While mindful that courts have cautioned against giving such comparisons too much weight, the Board has found the use of comparisons of the Fund's fees and expenses to other mutual funds with comparable investment programs to be relevant. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because it is believed that they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a relevant indicator of what consumers have found to be reasonable in the precise marketplace in which the Fund competes.

It was noted in the materials for the Board meeting that, for the period covered by the Evaluation, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser, noting that the overall expense structure of the Fund, after waivers and expense reimbursements, was below the median of the relevant peer group, and was satisfied that the overall expense structure of the Fund remained competitive. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

By contrast, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; different portfolio management techniques made necessary by different cash flows; and the time spent by portfolio managers and their teams, funds financial services, legal, compliance and risk management in reviewing securities pricing, addressing different administrative responsibilities, addressing different degrees of risk associated with management and a variety of different costs. The Senior Officer did not consider these fee schedules to be determinative in judging the appropriateness of mutual fund advisory fees.

The Fund's ability to deliver competitive performance when compared to its peer group was also deemed to be relevant by the Board as a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory and subadvisory contracts.

Semi-Annual Shareholder Report

The Senior Officer reviewed information compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are relevant, though not conclusive, in judging the reasonableness of proposed fees.

For the periods covered by the Evaluation, the Fund's performance for the three-year period was at the median of the relevant peer group, and the Fund's performance fell below the median of the relevant peer group for the one-year and five-year period. The Board discussed the Fund's performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

The Board also received financial information about Federated, including information regarding the compensation and benefits Federated derived from its relationships with the Federated funds. This information covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The information also detailed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate. Moreover, the Board receives regular reporting as to the institution, adjustment or elimination of these voluntary waivers. In this regard, the Senior Officer proposed, and the Board approved, a reduction in the contractual advisory fee of 25 basis points. This change more closely aligned the contractual fee with the net fee actually charged after the imposition of applicable voluntary waivers and was believed by both the Senior Officer and the Board to improve the market competitiveness of the Fund.

Federated furnished information, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in arbitrarily allocating costs continues to cause the Senior Officer to question the precision of the process and to conclude that such reports may be unreliable, since a single change in an allocation estimate can dramatically alter the resulting estimate of cost and/or profitability of a fund. The allocation information was considered in the analysis by the Board but was determined to be of limited use.

Semi-Annual Shareholder Report

The Board and the Senior Officer also reviewed information compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive. The Board agreed with this assessment.

The Senior Officer's Evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated family of funds, such as personnel and processes for the portfolio management, shareholder services, compliance, internal audit, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund family as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's Evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size.

The Senior Officer noted that, subject to the comments and recommendations made within his Evaluation, his observations and the information accompanying the Evaluation supported a finding by the Board that the management fees for each of the funds were reasonable. Under these circumstances, other than the reduction in the contractual (or gross) advisory fee noted above, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory and subadvisory contracts.

Semi-Annual Shareholder Report

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that many shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund. The Board concluded that, in light of the factors discussed above, including the nature, quality and scope of the services provided to the Fund by the Adviser and its affiliates, continuation of the advisory contract was appropriate.

The Board based its decision to approve the advisory and subadvisory contracts on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Semi-Annual Shareholder Report

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at www.Federatedinvestors.com/FundInformation. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information via the link to the Fund and share class name at www.Federatedinvestors.com/FundInformation.

Semi-Annual Shareholder Report

Mutual funds 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 mutual funds 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 Shareholder 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: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Semi-Annual Shareholder Report

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.

(b) Not Applicable; Fund had no divestments during the reporting period covered since the previous Form N-CSR filing.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the Act) during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

(a)(2) Certifications of Principal Executive Officer and Principal Financial Officer.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Portfolio of Investments Summary Tables	1
Portfolio of Investments	3
Financial Highlights	22
Statement of Assets and Liabilities	27
Statement of Operations	29
Statement of Changes in Net Assets	30
Notes to Financial Statements	31
Shareholder Expense Example	43
Evaluation and Approval of Advisory Contract	45
Voting Proxies on Fund Portfolio Securities	51
Quarterly Portfolio Schedule	51

Security Type	Percentage of Total Net Assets
Tax-Exempt, Fixed Income Securities	49.5%
Equity Securities	43.7%
Derivative Contracts^2,3	(0.0)%
Cash Equivalents⁴	5.4%
Other Assets and Liabilities—Net⁵	1.4%
TOTAL	100.0%

Sector Composition	Percentage of Equity Securities
Energy	22.8%
Health Care	15.5%
Telecommunication Services	13.2%
Consumer Staples	10.6%
Financials	8.9%
Information Technology	7.4%
Consumer Discretionary	6.7%
Utilities	6.2%
Industrials	5.8%
Materials	2.9%
TOTAL	100.0%