FEDERATED CORE TRUST/PA, POS AMI, 1999-04-16

FEDERATED CORE TRUST/PA
POS AMI, 1999-04-16

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1940 Act File No.811-08519

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 3 .............................................. X
------ -------

FEDERATED CORE TRUST

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)

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

John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

Copies To:

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

FEDERATED CORE TRUST

Prospective Investor ____________________ Copy # ____________________

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM

HIGH-YIELD BOND PORTFOLIO

April 16, 1999

Investment Adviser
FEDERATED INVESTMENT MANAGEMENT COMPANY

Placement Agent
FEDERATED SECURITIES CORP.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222

Do Not Copy or Circulate

<PAGE>

FEDERATED CORE TRUST

High-Yield Bond Portfolio

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM

April 16, 1999

A Confidential Statement of Additional Information ("SAI") with respect to
High-Yield Bond Portfolio (the "Portfolio") with the same date has been filed
with the Securities and Exchange Commission (the "SEC"), and is incorporated
herein by reference. A copy of the SAI is available without charge by calling
the Portfolio's placement agent at 1-800-341-7400.

Shares of the Portfolio are not deposits or obligations of any bank, are not
endorsed or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.

The securities described herein are offered pursuant to an exemption from the
registration requirements of the Securities Act of 1933 (the "1933 Act"), as
amended, and have not been registered with or approved or disapproved by the SEC
or any other regulatory authority of any jurisdiction, nor has the SEC passed
upon the accuracy or adequacy of this Memorandum. Any representation to the
contrary is a criminal offense.

Shares of the Portfolio are being offered for investment only to investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D of the 1933 Act.

Investors will be required to represent that they meet certain financial
requirements and that they are familiar with and understand the terms, risks and
merits of an investment in the Portfolio.

No resale of shares may be made unless the shares are subsequently registered
under the Securities Act or an exemption from such registration is available.

This Confidential Private Offering Memorandum has been prepared on a
confidential basis solely for the information of the recipient and may not be
reproduced, provided to others or used for any other purpose.

No person has been authorized to make representations or give any information
with respect to the shares, except the information contained herein or in the
Trust's registration statement filed under the Investment Company Act of 1940.

<PAGE>

HIGH-YIELD BOND PORTFOLIO

A Portfolio of Federated Core Trust

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM

Part A
(information required in a prospectus)

April 16, 1999

Please read this Confidential Private Offering Memorandum carefully before
investing and retain it for future reference. It contains important information
about the Portfolio that investors should know before investing.

A copy of a Subscription Agreement and Investor Questionnaire for use in
subscribing to purchase shares of the Portfolio accompanies delivery of this
Memorandum. In order to purchase shares of the Portfolio, a prospective investor
must satisfactorily complete, execute and deliver the Subscription Agreement and
Investor Questionnaire to the Portfolio's Placement Agent.

Items 1,2 3, 5 and 9 of Part A are omitted pursuant to Item B(2)(b)of the
General Instructions to Form N-1A.

Investment Objective, Principal Investment Strategies and Related Risks

Investment Objective
The investment objective of the Portfolio is to seek high current income. While
there is no assurance that the Portfolio will achieve its investment objective,
it endeavors to do so by following the strategies and policies described in this
offering memorandum.

Investment Strategy
The Portfolio provides exposure to the high-yield, lower-rated corporate bond
market. At least 65 percent of the Portfolio's assets are invested in corporate
bonds rated BBB or lower. The Adviser actively manages the Portfolio's portfolio
seeking to realize the potentially higher returns of high-yield bonds (also
known as "junk bonds") compared to returns of high-grade securities by seeking
to minimize default risk and other risks through careful security selection and
diversification.

The Adviser selects securities seeking high yields, low relative credit risk,
and high portfolio diversification. If the issuer of a bond is unable to make
all coupon and principal payments as promised, realized yields will be less than
promised. The securities in which the Portfolio invests have high yields
primarily because of the market's greater uncertainty about the issuer's ability
to make all required interest and principal payments, and therefore about the
returns that will be in fact be realized by the Portfolio.

The Adviser attempts to select bonds for investment by the Portfolio which offer
superior potential returns for the default risks being assumed. The Adviser's
securities selection process consists of a credit-intensive, fundamental
analysis of the issuing firm. The Adviser's analysis focuses on the financial
condition of the issuing firm, together with the issuer's business and product
strength, competitive position, and management expertise. Further, the Adviser
considers current economic, financial market, and industry factors, which may
affect the issuer.

The Adviser attempts to minimize the Portfolio's portfolio credit risk through
diversification. The Adviser selects securities to maintain broad portfolio
diversification both by company and industry.

Securities and Techniques

Fixed Income Securities
The Portfolio invests primarily in lower-rated corporate fixed income
securities. Corporate fixed income securities are debt securities issued by U.S.
or foreign businesses. Notes, bonds, debentures and commercial paper are the
most prevalent types of corporate debt securities. The Portfolio may also
purchase interests in bank loans to companies.

The Portfolio treats preferred stock which is redeemable by the issuer as a
fixed income security. Preferred stocks have the right to receive specified
dividends or distributions before the issuer makes payments on its common stock.
Some preferred stock also participates in dividends and distributions paid on
common stock.

The Portfolio may invest in fixed income securities of issuers based
outside the U.S. The securities of foreign issuers in which the Portfolio
invests are primarily traded in the U.S. and are predominantly denominated in
U.S. dollars.

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time.

A security's yield to maturity will increase or decrease depending upon whether
it costs less (a discount) or more (a premium) than the principal amount.

The credit risks of corporate debt securities vary widely among issuers. In
addition, the credit risk of an issuer's debt securities may vary based on their
priority for repayment. For example, higher-ranking (senior) securities have a
higher priority than lower ranking (subordinated) securities. This means that
the issuer might not make payments on subordinated securities while continuing
to make payments on senior securities. Typically, both senior and subordinated
debt securities have a higher priority than redeemable preferred stock. Most of
the fixed income securities in which the Portfolio invests will be
uncollateralized and subordinated to other debt that a corporation has
outstanding.

Lower rated fixed income securities are securities rated below investment grade
(i.e., BB or lower) by a Nationally Recognized Rating Service. There is no
minimal acceptable rating for a security to be purchased or held by the
Portfolio and the Portfolio may purchase or hold unrated securities and
securities whose issuers are in default.

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

Investment Risks

Credit Risks
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Portfolio will lose money. The high yield bonds in which the Portfolio invests
have a higher default risk than investment grade securities. Low-grade bonds are
almost always uncollateralized and subordinated to other debt that a firm has
outstanding.

Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Portfolio must rely entirely upon the Adviser's credit assessment.

Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline relative to higher quality instruments.

Liquidity Risks
Trading opportunities are more limited for fixed income securities that have not
received any credit ratings, have received ratings below investment grade or are
not widely held. These features may make it more difficult to sell or buy a
security at a favorable price or time. Consequently, the Portfolio may have to
accept a lower price to sell a security, sell other securities to raise cash or
give up an investment opportunity, any of which could have a negative effect on
the Portfolio's performance. Infrequent trading of securities may also lead to
an increase in their price volatility.

Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

Risks Related to the Economy
Like equity securities, the prices of high-yield securities are affected by the
economy, which is keyed to current and anticipated developments in the U.S. and
global economy.

Year 2000 Readiness
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Portfolio.

While it is impossible to determine in advance all of the risks to the
Portfolio, the Portfolio could experience interruptions in basic financial and
operational functions. Portfolio shareholders could experience errors or
disruptions in Portfolio share transactions or Portfolio communications.

The Portfolio's service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Portfolio's investments.
To assess the potential effect of the Year 2000 problem, the Adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
the Portfolio may purchase.

The financial impact of these issues for the Portfolio is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Portfolio.

Management Organization and Capital Structure

Investment Adviser
A Board of Directors governs the Trust. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the
Portfolio's assets including buying and selling portfolio securities. The
Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
PA 15222-3779. The Adviser will not receive a fee for its investment advisory
services.

The Adviser and other subsidiaries of Federated advise more than 175 mutual
funds and private accounts, which total over $111 billion in assets as of
December 31, 1998. Federated was established in 1955 and is one of the largest
mutual fund investment managers in the United States with approximately 1,900
employees. Over 4,000 investment professionals make Federated Funds available to
their customers.

Portfolio Manager

Mark E. Durbiano has been the Portfolio's portfolio manager since
inception. He is Vice President of the Trust. Mr. Durbiano joined Federated in
1982 and has been a Senior Portfolio Manager and a Senior Vice President of the
Portfolio's Adviser since 1996. From 1988 through 1995, Mr. Durbiano was a
Portfolio Manager and a Vice President of the Portfolio's Adviser. Mr. Durbiano
is a Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Pittsburgh.

Shareholder Information

Beneficial interests in the Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933 (1933 Act). Investments in the
Portfolio may only be made by investment companies, insurance company separate
accounts, common or commingled trust funds or similar organizations or entities
that are "accredited investors" within the meaning of Regulation D of the 1933
Act. This Confidential Private Offering Memorandum does not constitute an offer
to sell, or the solicitation of an offer to buy, any "security" within the
meaning of the 1933 Act.

Pricing of Portfolio Shares
The net asset value (NAV) of the Portfolio is determined as of the end of
regular trading (normally, 4:00 p.m., Eastern time) each day the NYSE is open.

The NAV per share of the Portfolio is computed by dividing the value of the
Portfolio's assets, less all liabilities, by the total number of shares
outstanding.

Purchase of Portfolio Shares
Shares of the Portfolio may be purchased any day the New York Stock Exchange
(NYSE) is open.

Purchases should be made in accordance with procedures established by the
Transfer Agent.

Purchase orders for Shares of the Portfolio will receive the NAV next determined
after the purchase order is received in proper form by the Portfolio's Transfer
Agent, Federated Shareholder Services Company.

Payment by federal funds must be received by the Trust's custodian, State Street
Bank and Trust Company, by 3:00 p.m. (Eastern time) the next business day
following the receipt of the purchase order.

There is no minimum required initial or subsequent investment amount.

The Portfolio reserves the right to cease accepting investments in the Portfolio
at any time or to reject any investment order.

Redemption of Portfolio Shares
Shares of the Portfolio may be redeemed any day the NYSE is open.

Redemption requests should be made in accordance with procedures established by
the Transfer Agent.

Redemption requests will receive the NAV next determined after the request is
received in proper form by the Transfer Agent.

Redemption proceeds will normally be delivered within one business day after a
request is received in proper form. Payment may be delayed up to seven days:
o to allow a purchase order to clear;
o during periods of market volatility; or
o when a shareholder's trade activity or amount adversely impacts the
Portfolio's ability to manage its assets.

Redemption in Kind
Although the Portfolio intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Portfolio's portfolio securities.

Confirmations and Account Statements
Shareholders will receive confirmation of purchases and redemptions. In
addition, shareholders will receive periodic statements reporting all account
activity including dividends paid. The Trust will not issue share certificates.

Dividends and Distributions
The Portfolio declares dividends daily and pays them monthly to shareholders.
Purchases made by wire begin earning dividends on the day the wire is received.
Purchases made by check begin earning dividends on the business day after the
Portfolio receives the check.
In either case, dividends are earned through the day a redemption request is
received.

Dividends will be automatically reinvested in additional Shares unless the
shareholder has elected cash payments.

Tax Consequences
Portfolio distributions are taxable to the shareholder whether paid in cash or
reinvested in the Portfolio. Dividends are taxable as ordinary income; capital
gains are taxable at different rates depending upon the length of time the
Portfolio holds its assets.

Portfolio distributions are expected to be both dividends and capital gains.
Redemptions are taxable sales.

Distribution Arrangements

Federated Securities Corp., is the Trust's Placement Agent. It receives no
fee for its services.

HIGH-YIELD BOND PORTFOLIO

A Portfolio of Federated Core Trust

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM

Part B
(information required in a statement of additional information)

April 16, 1999

This Part B is not a prospectus, Read this Part B in conjunction with the Part A
for High-Yield Bond Portfolio dated April ___, 1999. Obtain Part A without
charge by calling 1-800-341-7400.

Table of Contents

Portfolio History 1

Investments, Techniques, Risks and Limitations 2

Management of the Trust 6

Investment Advisory and Other Services 9

Brokerage Allocation and Other Practices 10

Capital Stock and Other Securities 11

Shareholder Information 11

Taxation of the Portfolio 12

Financial Statements 12

Appendix 12

Addresses 14

Portfolio History

The Portfolio is a diversified portfolio of Federated Core Trust (the Trust).
The Trust is an open-end, management investment company that was established
under the laws of the Commonwealth of Massachusetts on August 21, 1996. The
Trust may offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities.

<PAGE>

Investments, Techniques, Risks and Limitations

Securities in which the Portfolio Invests

Following is a table that indicates which types of securities are a:
o P= Principal investment of the Portfolio; (shaded in chart)
o A= Acceptable (but not principal) investment of the Portfolio

<S> <C>

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Securities High-Yield Bond
Portfolio
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Fixed Income Securities P
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Corporate Debt Securities P
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Zero Coupon Securities A
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Treasury Securities A
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Agency Securities A
- -------------------------------------------------------------------- -----------------
- -------------------------------------------------------------------- -----------------
Asset Backed Securities A
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- -------------------------------------------------------------------- -----------------
Commercial Paper A
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- -------------------------------------------------------------------- -----------------
Equity Securities A
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Common Stock A
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Preferred Stock P
- -------------------------------------------------------------------- -----------------
- -------------------------------------------------------------------- -----------------
Interests in Other Limited Liability Companies A
- -------------------------------------------------------------------- -----------------
- -------------------------------------------------------------------- -----------------
REIT's A
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Warrants A
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Foreign Securities A
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Depositary Receipts A
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Foreign Government Securities A
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Convertible Securities A
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Special Transactions A
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Repurchase Agreements A
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Reverse Repurchase Agreements A
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When Issued Transactions A
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Securities Lending A
- --------------------------------------------------------------------
- -------------------------------------------------------------------- -----------------
Asset Coverage A
- -------------------------------------------------------------------- -----------------

</TABLE>

<PAGE>

Securities Descriptions and Techniques

In addition to the principal securities listed in Part A, the Portfolio may also
invest in the following:

Fixed Income Securities

The Portfolio invests primarily in lower-rated corporate fixed income
securities. Corporate fixed income securities are debt securities issued by U.S.
or foreign businesses. Notes, bonds, debentures and commercial paper are the
most prevalent types of corporate debt securities. The Portfolio may also
purchase interests in bank loans to companies.

The Portfolio may invest in fixed income securities of issuers based
outside the U.S. The securities of foreign issuers in which the Portfolio
invests are traded in the U.S. and are denominated in U.S. dollars.

A security's current yield measures the annual income earned on a security as a
percentage of its price. A security's yield to maturity will increase or
decrease depending upon whether it costs less (a discount) or more (a premium)
than the principal amount.

Lower rated fixed income securities are securities rated below investment grade
by a Nationally Recognized Rating Service. Noninvestment grade fixed income
securities are rated BB or below by a Rating Service. There is no minimal
acceptable rating for a security to be purchased or held by the Portfolio and
the Portfolio may purchase or hold unrated securities and securities whose
issuers are in default.

Zero coupon securities are discount securities which pay interest or
principal only at final maturity, unlike debt securities that provide
periodic payments of interest (referred to as a coupon payment). A zero
coupon step-up security converts to a coupon security before final
maturity. The difference between the purchase price and amount paid at
maturity represents interest on the zero coupon security.

Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risk.

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a "GSE"). Some
GSEs are supported by the full, faith and credit of the United States.
Other GSEs receive support through federal subsidies, loans or other
benefits. A few GSEs have no explicit financial support, but are regarded
as having implied support because the federal government sponsors their
activities. Investors regard agency securities as having low credit risk,
but not as low as Treasury securities.

The Portfolio treats mortgage backed securities guaranteed by GSEs as
agency securities. Although a GSE guarantee protects against credit risk,
it does not reduce the market and prepayment risks of these mortgage backed
securities.

Asset Backed Securities are payable from pools of obligations other than
mortgages. Almost any type of fixed income assets (including other fixed
income securities) may be used to create an asset backed security. However,
most asset backed securities involve consumer or commercial debts with
maturities of less than ten years. Asset backed securities may take the
form of commercial paper or notes, in addition to pass through
certificates. Asset backed securities may also resemble some types of CMOs,
such as Floaters, Inverse Floaters, IOs and POs.

Historically, borrowers are more likely to refinance their mortgage than
any other type of consumer debt or short term commercial debt. In addition,
some asset backed securities use prepayments to buy addition assets, rather
than paying off the securities. Therefore, although asset backed securities
may have some prepayment risks, they generally do not present the same
degree of risk as mortgage backed securities.

Commercial paper is an issuer's draft or note with a maturity of less than
nine months. Companies typically issue commercial paper to Portfolio
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper.
Commercial paper may default if the issuer cannot continue to obtain
liquidity in this fashion. The short maturity of commercial paper reduces
both the market and credit risk as compared to other debt securities of the
same issuer.

<PAGE>

Equity Securities

Equity securities represent a share of the issuer's earnings and assets, after
the issuer pays its liabilities. Generally, issuers have discretion as to the
payment of any dividends or distributions. As a result, investors cannot predict
the income they will receive from equity securities. However, equity securities
offer greater potential for appreciation than many other types of securities,
because their value increases directly with the value of the issuer's business.
The following describes the types of equity securities in which the Portfolio
invests.

Common Stocks are the most prevalent type of equity security. Common
stockholders receive the residual value of the issuer's earnings and assets
after the issuer pays its creditors and any preferred stockholders. As a
result, changes in an issuer's earnings directly influence the value of its
common stock.

Interests In Other Limited Liability Companies. Corporations typically
issue stocks. Other types of entities may issue securities comparable to
common or preferred stocks. These entities include limited partnerships,
limited liability companies, business trusts and companies organized
outside the United States.

REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax
if they limit their operations and distribute most of their income. Such
tax requirements limit a REIT's ability to respond to changes in the
commercial real estate market.

Warrants give the Portfolio the option to buy the issuer's stock or other
equity securities at a specified price. The Portfolio may buy the
designated shares by paying the exercise price before the warrant expires.
Warrants may become worthless if the price of the stock does not rise above
the exercise price by the expiration date.

Rights are the same as warrants, except they are typically issued to
existing stockholders.

Foreign Securities

Foreign Securities are securities of issuers based outside the U.S. The
Portfolio invests in foreign securities which are traded in the U.S. and are
denominated in U.S. dollars. In addition to the risks normally associated with
U.S. securities of the same type, Foreign Securities are subject to Risks of
Foreign Investing.

Depositary Receipts represent interests in underlying securities issued by
a foreign company, but traded in another market than the underlying
security. The foreign securities underlying American Depositary Receipts
(ADRs) are traded in the U.S. ADRs provide a way to buy shares of
foreign-based companies in the U.S. rather than in overseas markets. ADRs
are also traded in U.S. dollars, eliminating the need for foreign exchange
transactions. The foreign securities underlying European Depositary
Receipts (EDRs), Global Depositary Receipts (GDRs), and International
Depositary Receipts (IDRs), are traded globally or outside the U.S.
Depositary Receipts involve many of the same risks of investing directly in
foreign securities.

Foreign Government Securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations
of supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.

Foreign government securities also include fixed income securities of
"quasi-governmental agencies" which are either issued by entities that are
owned by a national, state or equivalent government or are obligations of a
political unit that are not backed by the national government's full faith
and credit and general taxing powers. Further, foreign government
securities include mortgage- related securities issued or guaranteed by
national, state or provincial governmental instrumentalities, including
quasi-governmental agencies.

Convertible securities are fixed income securities that the Portfolio has the
option to exchange for equity securities at a specified conversion price. The
option allows the Portfolio to realize additional returns if the market price of
the equity securities exceeds the conversion price. For example, the Portfolio
may hold fixed income securities that are convertible into shares of common
stock at a conversion price of $10 per share. If the market value of the shares
of common stock reached $12, the Portfolio could realize an additional $2 per
share by converting its fixed income securities.

Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit the
Portfolio to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment. The Portfolio treats
convertible securities as fixed income securities for purposes of its investment
policies and limitations.

Special Transactions

Repurchase Agreements are transactions in which a Portfolio buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting an agreed upon interest rate effective for the period the
Portfolio owns the security subject to repurchase. The agreed upon interest
rate is unrelated to the interest rate on the underlying security. The
Portfolio will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Adviser to be creditworthy

The Portfolio's custodian or subcustodian is required to take possession of
the securities subject to repurchase agreements.. The Adviser or
subcustodian will monitor the value of the underlying security each day to
ensure that the value of the security always equals or exceeds the
repurchase price.

Repurchase Agreements are subject to the Credit Risk that the original
seller will not repurchase the securities from the Portfolio, which could
result in the Portfolio receiving less than the purchase price on any sale
of securities.

Reverse Repurchase Agreements are repurchase agreements in which the
Portfolio is the seller (rather than the buyer) of the securities, and
agrees to repurchase them at an agreed upon time and price. A reverse
repurchase agreement may be viewed as a type of borrowing by the Portfolio.
Reverse Repurchase Agreements are subject to Credit Risk. In addition,
Reverse Repurchase Agreements create Leverage Risk because the Portfolio
must repurchase the underlying security at a higher price, regardless of
the market value of the security at the time of repurchase.

When Issued Transactions are arrangements in which the Portfolio purchases
securities for a set price, with payment and delivery scheduled for a
future time. During the period between purchase and settlement, no payment
is made by the Portfolio to the issuer and no interest accrues to the
Portfolio. The Portfolio records the transaction when it agrees to purchase
the securities and reflects their value in determining the price of its
shares. Settlement dates may be a month or more after entering into these
transactions, and the market values of the securities purchased may vary
from the purchase prices. Therefore, when issued transactions create Market
Risk for the Portfolio. When issued transactions also involve Credit Risk
in the event of a counterparty default.

Securities Lending. The Portfolio may lend portfolio securities to firms
that the Adviser has determined are creditworthy. In return, it will
receive either cash or liquid securities as collateral from the borrower.
The Portfolio will reinvest cash collateral in securities that qualify as
an otherwise acceptable investment for the Portfolio. However, the
Portfolio must pay interest to the borrower for the use of any cash
collateral. If the market value of the loaned securities increases, the
borrower must furnish additional collateral. While portfolio securities are
on loan, the borrower pays the Portfolio the equivalent of any dividends or
interest received on them. Loans are subject to termination at the option
of the Portfolio or the borrower. The Portfolio will not have the right to
vote on securities while they are being lent, but it will terminate a loan
in anticipation of any important vote. The Portfolio may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker.

Securities lending activities are subject to Market Risk and Credit Risk.

<PAGE>

Asset Coverage. In order to secure its obligations in connection with
when-issued, and delayed-delivery transactions, the Portfolio will "cover"
such transactions, as required under applicable interpretations of the SEC,
either by owning the underlying securities; entering into an offsetting
transaction; or segregating, earmarking, or depositing into an escrow
account readily marketable securities in an amount at all times equal to or
exceeding the Portfolio's commitment with respect to these instruments or
contracts. As a result, use of these instruments will impede the
Portfolio's ability to freely trade the assets being used to cover them,
which could result in harm to the Portfolio.

INVESTMENT RISKS

There are many factors which may effect an investment in the Portfolio. The
Portfolio's principal risks are described in Part A. Risk factors of the
acceptable investments listed above are as follows.

Fixed Income Risks

Credit Risk
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Portfolio will lose money.

Risks of Foreign Investing
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors.

Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Portfolio and its Adviser from obtaining information concerning
foreign companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.

Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Portfolio's
investments.

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

Bond Market Risks
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall. Interest rate changes have a greater effect on the
price of fixed income securities with longer durations. Duration measures the
price sensitivity of a fixed income security to changes in interest rates.

<PAGE>

Equity Risks

Stock Market Risks
The value of equity securities in the Portfolio's portfolio will go up and down.
These fluctuations could be a sustained trend or a drastic movement. The
Portfolio's portfolio will reflect changes in prices of individual portfolio
stocks or general changes in stock valuations. Consequently, the Portfolio's
share price may decline and you could lose money.

INVESTMENT LIMITATIONS

Selling Short and Buying on Margin
The Portfolio will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for clearance
of purchases and sales of portfolio securities.

Issuing Senior Securities and Borrowing Money
The Portfolio will not issue senior securities except that the Portfolio may
borrow money directly or through reverse repurchase agreements as a temporary,
extraordinary, or emergency measure to facilitate management of the portfolio by
enabling the Portfolio to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous, and then
only in amounts not in excess of one-third of the value of its total assets;
provided that, while borrowings and reverse repurchase agreements outstanding
exceed 5% of the Portfolio's total assets, any such borrowings will be repaid
before additional investments are made. The Portfolio will not borrow money or
engage in reverse repurchase agreements for investment leverage purposes.

Pledging Assets
The Portfolio will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge or
hypothecate assets having a market value not exceeding the lesser of the dollar
amounts borrowed or 15% of the value of its total assets at the time of
borrowing.

Concentration of Investments
The Portfolio will not purchase securities if, as a result of such purchase, 25%
or more of its total assets would be invested in any one industry. However, the
Portfolio may at any time invest 25% or more of its assets in cash or cash items
and securities issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities.

Investing in Commodities
The Portfolio will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

Investing in Real Estate
The Portfolio will not purchase or sell real estate, although it may invest in
securities of companies whose business involves the purchase or sale of real
estate or in securities secured by real estate or interests in real estate.

Lending Cash or Securities
The Portfolio will not lend any of its assets, except portfolio securities up to
one-third of its total assets. This shall not prevent the Portfolio from
purchasing or holding corporate or U.S. government bonds, debentures, notes,
certificates of indebtedness or other debt securities of an issuer, entering
into repurchase agreements, or engaging in other transactions which are
permitted by the Portfolio's investment objective and policies or the Trust's
Declaration of Trust.

Underwriting
The Portfolio will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with its investment objective, policies,
and limitations.

Diversification of Investments
With respect to 75% of its total assets, the Portfolio will not purchase the
securities of any one issuer (other than cash, cash items, or securities issued
and/or guaranteed by the U.S. government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities) if, as a result, more
than 5% of its total assets would be invested in the securities of that issuer.
Also, the Portfolio will not purchase more than 10% of any class of the
outstanding voting securities of any one issuer. For these purposes, the
Portfolio considers common stock and all preferred stock of an issuer each as a
single class, regardless of priorities, series, designations, or other
differences.

The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act. The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.

Restricted and Illiquid Securities
The Portfolio will not invest more than 15% of its total assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice and certain restricted securities not determined by
the Trustees to be liquid.

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value of total or net assets will not result in a violation
of such restriction.

Management of the Trust

Board of Trustees, Management Information, Compensation
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and other notable positions held,
total compensation received as a Trustee from the Trust for its most recent
fiscal year, and the total compensation received from the Federated Fund Complex
for the most recent calendar year. The Trust is comprised of two portfolios and
the Federated Fund Complex is comprised of 54 investment companies, whose
investment advisers are affiliated with the Portfolio's Adviser.

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.

<PAGE>

Name Total
Birth Date Aggregate Compensation From
Address Principal Occupations Compensation Trust and Fund
Position With Trust for Past Five Years From Trust Complex
John F. Donahue*+ Chief Executive Officer and Director or Trustee of $0 $0 for the Trust
Birth Date: July 28, 1924 the Federated Fund Complex; Chairman and Director, and 54 other
Federated Investors Tower Federated Investors, Inc.; Chairman and Trustee, investment
1001 Liberty Avenue Federated Investment Management Company; Chairman and companies in the
Pittsburgh, PA Director, Federated Investment Counseling, and Fund Complex
CHAIRMAN AND TRUSTEE Federated Global Investment Management Corp.;
Chairman, Passport Research, Ltd.
Thomas G. Bigley Director or Trustee of the Federated Fund Complex; $321.89 $113,860.22 for the
Birth Date: February 3, 1934 Director, Member of Executive Committee, Children's Trust/ and 54 other
15 Old Timber Trail Hospital of Pittsburgh; formerly: Senior Partner, investment
Pittsburgh, PA Ernst & Young LLP; Director, MED 3000 Group, Inc.; companies in the
TRUSTEE Director, Member of Executive Committee, University Fund Complex
of Pittsburgh.

John T. Conroy, Jr. Director or Trustee of the Federated Fund Complex; $354.14 $125,264.48 for the
Birth Date: June 23, 1937 President, Investment Properties Corporation; Senior Trust and 54 other
Wood/IPC Commercial Dept. Vice President, John R. Wood and Associates, Inc., investment
John R. Wood Associates, Inc. Realtors; Partner or Trustee in private real estate companies in the
Realtors ventures in Southwest Florida; formerly: President, Fund Complex
3255 Tamiami Trail North Naples Property Management, Inc. and Northgate
Naples, FL Village Development Corporation.
TRUSTEE
Nicholas Constantakis Director or Trustee of the Federated Fund Complex; $0 $47,958.02 for the
Birth Date: September 3, 1939 formerly: Partner, Andersen Worldwide SC. Trust and 29 other
175 Woodshire Drive investment
Pittsburgh, PA companies in the
TRUSTEE Fund Complex
William J. Copeland Director or Trustee of the Federated Fund Complex; $354.14 $125,264.48 for the
Birth Date: July 4, 1918 Director and Member of the Executive Committee, Trust and 54 other
One PNC Plaza-23rd Floor Michael Baker, Inc.; formerly: Vice Chairman and investment
Pittsburgh, PA Director, PNC Bank, N.A., and PNC Bank Corp.; companies
TRUSTEE Director, Ryan Homes, Inc. in the Fund Complex

Previous Positions: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic Light Opera.
John F. Cunningham++ Director or Trustee of some of the Federated Funds; $0 $0 for the Trust
Birth Date: March 5, 1943 Chairman, President and Chief Executive Officer, and 26 other
353 El Brillo Way Cunningham & Co., Inc. ; Trustee Associate, Boston investment
Palm Beach, FL College; Director, EMC Corporation; formerly: companies in the
TRUSTEE Director, Redgate Communications. Fund Complex

Previous Positions: Chairman of the Board and Chief
Executive Officer, Computer Consoles, Inc.; President
and Chief Operating Officer, Wang Laboratories;
Director, First National Bank of Boston; Director,
Apollo Computer, Inc.

Lawrence D. Ellis, M.D.* Director or Trustee of the Federated Fund Complex; $321.89 $113,860.22 for the
Birth Date: October 11, 1932 Professor of Medicine, University of Pittsburgh; Trust and 54 other
3471 Fifth Avenue Medical Director, University of Pittsburgh Medical investment
Suite 1111 Center - Downtown; Hematologist, Oncologist, and companies in the
Pittsburgh, PA Internist, University of Pittsburgh Medical Center; Fund Complex
TRUSTEE Member, National Board of Trustees, Leukemia Society
of America.
Peter E. Madden Director or Trustee of the Federated Fund Complex; $321.89 $113,860.22 for the
Birth Date: March 16, 1942 formerly: Representative, Commonwealth of Trust and 54 other
One Royal Palm Way Massachusetts General Court; President, State Street investment
100 Royal Palm Way Bank and Trust Company and State Street Corporation. companies in the
Palm Beach, FL Fund Complex
TRUSTEE Previous Positions: Director, VISA USA and VISA
International; Chairman and Director, Massachusetts
Bankers Association; Director, Depository Trust
Corporation.
Charles F. Mansfield, Jr.++ Director or Trustee of some of the Federated Funds; $0 $0 for the Trust
Birth Date: April 10, 1945 Management Consultant. and 26 other
80 South Road investment
Westhampton Beach, NY TRUSTEE Previous Positions: Chief Executive Officer, PBTC companies in the
International Bank; Chief Financial Officer of Retail Fund Complex
Banking Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice President,
Citibank; Assistant Professor of Banking and Finance,
Frank G. Zarb School of Business, Hofstra University.

John E. Murray, Jr., J.D., Director or Trustee of the Federated Fund Complex; $321.89 $113,860.22 for the
S.J.D. President, Law Professor, Duquesne University; Trust and 54 other
Birth Date: December 20, 1932 Consulting Partner, Mollica & Murray. investment
President, Duquesne University companies in the
Pittsburgh, PA Previous Positions: Dean and Professor of Law, Fund Complex
TRUSTEE University of Pittsburgh School of Law; Dean and
Professor of Law, Villanova University School of Law.
Marjorie P. Smuts Director or Trustee of the Federated Fund Complex; $321.89 $113,860.22 for the
Birth Date: June 21, 1935 Public Relations/Marketing/Conference Planning. Trust and 54 other
4905 Bayard Street investment
Pittsburgh, PA Previous Positions: National Spokesperson, Aluminum companies in the
TRUSTEE Company of America; business owner. Fund Complex
John S. Walsh++ Director or Trustee of some of the Federated Funds; $0 $0 for the Trust
Birth Date: November 28, 1957 President and Director, Heat Wagon, Inc.; President and
2007 Sherwood Drive and Director, Manufacturers Products, Inc.; 23 other investment
Valparaiso, IN President, Portable Heater Parts, a division of companies in the
TRUSTEE Manufacturers Products, Inc.; Director, Walsh & Fund Complex
Kelly, Inc.; formerly: Vice President, Walsh & Kelly,
Inc.

J. Christopher Donahue+ President or Executive Vice President of the $0 $0 for the Trust and
Birth Date: April 11, 1949 Federated Fund Complex; Director or Trustee of some 16 other investment
Federated Investors Tower of the Funds in the Federated Fund Complex; President companies in the
1001 Liberty Avenue and Director, Federated Investors, Inc.; President Fund Complex
Pittsburgh, PA and Trustee, Federated Investment Management Company;
PRESIDENT President and Director, Federated Investment
Counseling and Federated Global Investment
Management Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.

<PAGE>

Edward C. Gonzales Trustee or Director of some of the Funds in the $0 $0 for the Trust and
Birth Date: October 22, 1930 Federated Fund Complex; President, Executive Vice 1 other investment
Federated Investors Tower President and Treasurer of some of the Funds in the companies
1001 Liberty Avenue Federated Fund Complex; Vice Chairman, Federated in the Fund Complex
Pittsburgh, PA Investors, Inc.; Vice President, Federated Investment
EXECUTIVE VICE PRESIDENT Management Company and Federated Investment
Counseling, Federated Global Investment Management
Corp. and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company
John W. McGonigle Executive Vice President and Secretary of the $0 $0 for the Trust and
Birth Date: October 26, 1938 Federated Fund Complex; Executive Vice President, 54 other investment
Federated Investors Tower Secretary, and Director, Federated Investors, Inc.; companies in the
1001 Liberty Avenue Trustee, Federated Investment Management Company; Fund Complex
Pittsburgh, PA Director, Federated Investment Counseling and
EXECUTIVE VICE PRESIDENT AND Federated Global Investment Management Corp.;
SECRETARY Director, Federated Services Company; Director,
Federated Securities Corp.
Richard J. Thomas Treasurer of the Federated Fund Complex; Vice $0 $0 for the Trust and
Birth Date: June 17, 1954 President - Funds Financial Services Division, 54 other investment
Federated Investors Tower Federated Investors, Inc.; Formerly: various companies in the
1001 Liberty Avenue management positions within Funds Financial Services Fund Complex
Pittsburgh, PA Division of Federated Investors, Inc.
TREASURER
Richard B. Fisher President or Vice President of some of the Funds in $0 $0 for the Trust and
Birth Date: May 17, 1923 the Federated Fund Complex; Director or Trustee of 6 other investment
Federated Investors Tower some of the Funds in the Federated Fund Complex; companies in the
1001 Liberty Avenue Executive Vice President, Federated Investors, Inc.; Fund Complex
Pittsburgh, PA Chairman and Director, Federated Securities Corp.
VICE PRESIDENT
Mark E. Durbiano Mark E. Durbiano has been the Trust's portfolio $0 $0 for the Trust and
Birth Date: September 21, 1959 manager since inception. He is Vice President of the no other investment
Federated Investors Tower Trust. Mr. Durbiano joined Federated in 1982 and has companies in the
1001 Liberty Avenue been a Senior Portfolio Manager and a Senior Vice Fund Complex
Pittsburgh, PA President of the Trust's Adviser since 1996. From
VICE PRESIDENT 1988 through 1995, Mr. Durbiano was a Portfolio
Manager and a Vice President of the Trust's Adviser.
Mr. Durbiano is a Chartered Financial Analyst and
received his M.B.A. in Finance from the University of
Pittsburgh.

J. Thomas Madden Chief Investment Officer of this Fund and various $0 $0 for the Trust and
Birth Date: October 22, 1945 other Funds in the Federated Fund Complex; Executive 12 other investment
Federated Investors Tower Vice President, Federated Investment Counseling, companies in the
1001 Liberty Avenue Federated Global Investment Management Corp., Fund Complex
Pittsburgh, PA Federated Investment Management Company and Passport
CHIEF INVESTMENT OFFICER Research, Ltd.; Vice President, Federated Investors,
Inc.; formerly: Executive Vice President and
Senior Vice President, Federated Investment
Counseling Institutional Portfolio Management
Services Division; Senior Vice President,
Federated Investment Management Company and
Passport Research, Ltd.
- ------------------------------- -- ------------------------------------------------------- -- ---------------- ------------------
</TABLE>

+ Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.

++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees on January 1, 1999. They did not earn any fees for serving the Fund
Complex since these fees are reported as of the end of the last calendar year.
They did not receive any fees as of the fiscal year end of the Trust.

As of February 1, 1999 the Portfolio's Board and Officers as a group owned less
than 1% of the Portfolio's outstanding Shares.

Investment Advisory and Other Services

Investment Adviser

The Adviser conducts investment research and makes investment decisions for
the Portfolio. The Adviser is a wholly-owned subsidiary of Federated Investors,
Inc. (Federated).

The Adviser shall not be liable to the Trust or any Portfolio shareholder for
any losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.

The Adviser will provide investment advisory services at no fee.

Principal Underwriter
The Portfolio's placement agent is Federated Securities Corp., located at
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

Administrator
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Portfolio. Federated Services Company
provides these services at the following annual rate of the average daily net
assets of all Federated Funds as specified below:

Maximum Average Aggregate Daily Net Assets
Administrative Fee of the Federated Funds
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Portfolio's portfolio investments for a fee based
on Portfolio assets plus out-of-pocket expenses.

Federated Services Company will voluntarily waive all or a portion of the
administrative fee paid by the Portfolio. Federated Services Company may
terminate this voluntary waiver at any time.

<PAGE>

Custodian
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Portfolio.

Transfer Agent and Dividend Disbursing Agent
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Portfolio pays the transfer agent a fee based on the size, type and
number of accounts and transactions made by shareholders.

Independent Auditor
Ernst & Young LLP is the independent auditor for the Portfolio.

Brokerage Allocation and Other Practices

Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the
Portfolio and other funds distributed by the Distributor and its affiliates. The
Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Portfolio's Board.

Research Services
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting those brokers who offer brokerage and
research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.

Investment decisions for the Portfolio are made independently from those of
other accounts managed by the Adviser. When the Portfolio and one or more of
those accounts invests in, or disposes of, the same security, available
investments or opportunities for sales will be allocated among the Portfolio and
the account(s) in a manner believed by the Adviser to be equitable. While the
coordination and ability to participate in volume transactions may benefit the
Portfolio, it is possible that this procedure could adversely impact the price
paid or received and/or the position obtained or disposed of by the Portfolio.

Capital Stock and Other Securities

Capital Stock
Holders of the Portfolio's shares of beneficial interest will have equal rights
to participate in distributions made by the Portfolio, equal rights to the
Portfolio's assets upon dissolution and equal voting rights; the Portfolio does
not allow cumulative voting. Investors will have no preemptive or other right to
subscribe to any additional shares of beneficial interest or other securities
issued by the Trust. Shares may be redeemed at any time at NAV with no charge.

Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.

In the unlikely event a shareholder is held personally liable for the Trust
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.

<PAGE>

Shareholder Information

Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act.

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

Market values of the Portfolio's portfolio securities are determined as follows:

for bonds and other fixed income securities, at the last sale price on
a national securities exchange, if available, otherwise, as determined by an
independent pricing service;

for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and

for all other securities, at fair value as determined in good faith by the
Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

The Portfolio values futures contracts and options at their market values
established by the exchanges on which they are traded at the close of trading on
such exchanges. The Board may determine in good faith that another method of
valuing such investments is necessary to appraise their fair market value.

Redemption in Kind
Although the Portfolio intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Portfolio's portfolio securities.

Because the Portfolio has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, the Portfolio is obligated to pay Share
redemptions to any one shareholder in cash only up to the lesser of $250,000 or
1% of the net assets represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Portfolio's Board determines that payment should be in kind. In such
a case, the Portfolio will pay all or a portion of the remainder of the
redemption in portfolio securities, valued in the same way as the Portfolio
determines its NAV. The portfolio securities will be selected in a manner that
the Portfolio's Board deems fair and equitable and, to the extent available,
such securities will be readily marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

Taxation of the Portfolio

The Portfolio intends to meet requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will pay federal
income tax.

Financial Statements

Investors of record will receive annual reports audited by the Portfolio's
independent auditor and unaudited semi-annual reports.

<PAGE>

Appendix

Standard and Poor's Long-Term Debt Rating Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B-rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC-debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

Moody's Investors Service, Inc. Long-Term Bond Rating Definitions
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. AA--Bonds which are rated AA are
judged to be of high quality by all standards. Together with the AAA group, they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in AAA securities. A--Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future. BAA--Bonds which are rated BAA are considered
as medium grade obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. BA--Bonds which are BA are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class. B--Bonds which are rated B
generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. CAA--Bonds which are rated CAA are of
poor standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. CA--Bonds which are rated CA
represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. C--Bonds which are rated C
are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Fitch IBCA, Inc. Long-Term Debt Rating Definitions AAA--Bonds considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability to
pay interest and repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+. A--Bonds considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings. BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings. BB--Bonds
are considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements. B--Bonds are considered
highly speculative. While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment. CC--Bonds are minimally protected. Default in
payment of interest and/or principal seems probable over time. C--Bonds are
imminent default in payment of interest or principal.

<PAGE>

Addresses

High-Yield Bond Portfolio

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Placement Agent
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 15222-3779

Investment Adviser
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

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

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

Independent Public Accountants
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072

Cusip 31409N101
(4/99)

PART C. OTHER INFORMATION.

Item 23. Exhibits:

(a) Conformed copy of of Declaration of Trust of the Registrant; 1
(b) Copy of By-Laws of the Registrant; 1
(c) Not applicable;
(d) Conformed copy of Investment Advisory Contract of the Registrant; 2
(e) Conformed copy of Placement Agent Agreement; 2
(f) Not applicable;
(g) Conformed copy of Custodian Agreement of the Registrant;1
(h) Conformed copy of Agreement for Fund Accounting Services,
Administrative Services, Shareholder Transfer
Agency Services and Custody Services Procurement ; 2
(i) Not applicable;
(j) Not applicable;
(k) Not applicable;
(l) Form of Written Assurances from Initial Shareholders; 2
(m) Not applicable;
(n) Not applicable;
(o) Not applicable;
(p) (i) Conformed Copy of Power of Attorney; 1
(ii) Conformed Copy of Limited Power of Attorney +
- --------------------------------
+ Exhibits have been filed electronically.

1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 30, 1997 (File No. 811-08519).

2. Response is incorporated by reference to Registrant's Amendment No. 1 on
Form N-1A filed (File No. 811-08519).

Item 24. Persons Controlled by or Under Common Control with Registrant

None

Item 25. Indemnification:

Indemnification is provided to Officers and Trustees of the
Registrant pursuant to Section 2 of Article XII of
Registrant's Declaration of Trust. The Investment Advisory
Contract between the Registrant and Federated Research Corp.
("Adviser") provides that, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the obligations or duties under the Investment
Advisory Contract on the part of Adviser, Adviser shall not be
liable to the Registrant or to any shareholder for any act or
omission in the course of or connected in any way with
rendering services or for any losses that may be sustained in
the purchase, holding, or sale of any security. Registrant's
Trustees and Officers are covered by an Investment Trust
Errors and Omissions Policy.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, Officers,
and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by Trustees),
Officers, or controlling persons of the Registrant in
connection with the successful defense of any act, suit, or
proceeding) is asserted by such Trustees, Officers, or
controlling persons in connection with the shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issues.

Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940
for Trustees, Officers, and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of
Trust or otherwise, the Registrant is aware of the position of
the Securities and Exchange Commission as set forth in
Investment Company Act Release No. IC-11330. Therefore, the
Registrant undertakes that in addition to complying with the
applicable provisions of the Declaration of Trust or
otherwise, in the absence of a final decision on the merits by
a court or other body before which the proceeding was brought,
that an indemnification payment will not be made unless in the
absence of such a decision, a reasonable determination based
upon factual review has been made (i) by a majority vote of a
quorum of non-party Trustees who are not interested persons of
the Registrant or (ii) by independent legal counsel in a
written opinion that the indemnitee was not liable for an act
of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties. The Registrant further
undertakes that advancement of expenses incurred in the
defense of a proceeding (upon undertaking for repayment unless
it is ultimately determined that indemnification is
appropriate) against an Officer, Trustee, or controlling
person of the Registrant will not be made absent the
fulfillment of at least one of the following conditions: (i)
the indemnitee provides security for his undertaking; (ii) the
Registrant is insured against losses arising by reason of any
lawful advances; or (iii) a majority of a quorum of
disinterested non-party Trustees or independent legal counsel
in a written opinion makes a factual determination that there
is reason to believe the indemnitee will be entitled to
indemnification.

Item 26. Business and Other Connections of Investment Adviser:

(a) For a description of the other business of the investment adviser,
see the section entitled "Management Organizaton and Capital
Structure"in Part A. The affiliations with the Registrant of four
of the Trustees and one of the Officers of the investment adviser
are included in Part B of this Registration Statement under
"Management of the Trust" The remaining Trustee of the investment
adviser, his position with the investment adviser, and, in
parentheses, his principal occupation is: Mark D. Olson (Partner,
Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown,
Delaware 19947.

<PAGE>

The remaining Officers of the investment adviser are:

Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden

Senior Vice Presidents: Joseph M. Balestrino
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski

Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
David A. Briggs
Micheal W. Casey
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
Keith J. Sabol
Frank Semack
Aash M. Shah
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Marc Halperin
Assistant Vice Presidents: Nancy J. Belz
Robert E. Cauley
Lee R. Cunningham, II
B. Anthony Delserone, Jr.
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
John Sheehy
Michael W. Sirianni
Leonardo A. Vila
Lori A. Wolff
Gary Farwell

Secretary: Stephen A. Keen

Treasurer: Thomas R. Donahue

Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. Newcamp

Assistant Treasurer: Richard B. Fisher

The business address of each of the Officers of the investment
adviser is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the
investment companies in the Federated Fund Complex described in
Part B of this Registration Statement.

Item 27. Principal Underwriters:

(a)......Federated Securities Corp. the Placement Agent for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:

Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable
Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated
Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance Series;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia Funds;
Independence One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds; Tax-Free
Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal FundsTrust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust; Investment Series
Trust; Star Funds; Targeted Duration Trust; The Virtus Funds; Trust for
Financial Institutions;

Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, President
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas R. Donahue Director, Assistant Secretary Treasurer
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

</TABLE>

<PAGE>

Item 28. Location of Accounts and Records:

All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:

Registrant Federated Investors Tower
1001 Liberty Avenu
Pittsburgh, PA 1522-3779
(Notices should be sent to the Agent of Service at above address)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Federated Shareholder Federated Investors Tower
Services Company Pittsburgh, PA 15222-3779
("Transfer Agent and Dividend
Disbursing Agent")

Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Federated Investment Management Co. Federated Investors Tower
("Adviser") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779

State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
</TABLE>

Item 29. Management Services:

Not applicable.

Item 30. Undertakings:

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Federated Core Trust, has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and Commonwealth of Pennsylvania, on the 16th day of April 1999.

FEDERATED CORE TRUST

BY: /s/ Anthony R. Bosch
Anthony R. Bosch, Assistant Secretary
Attorney in Fact for John F. Donahue
April 16, 1999

Exhibit 19(ii) under Item N-1A
Exhibit 24 under Item 601/Reg. S-K

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, dated as of December 30, 1997, that
Federated Core Trust, a business trust duly organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), does hereby nominate, constitute
and appoint Federated Research Corp., a Maryland corporation duly organized
under the laws of the State of Maryland (the "Adviser"), to act hereunder as the
true and lawful agent and attorney-in-fact of the Trust, acting on behalf of
each of the series portfolios for which the Adviser acts as investment adviser
shown on Schedule 1 attached hereto and incorporated by reference herein (each
such series portfolio being hereinafter referred to as a "Fund" and collectively
as the "Funds"), for the specific purpose of executing and delivering all such
agreements, instruments, contracts, assignments, bond powers, stock powers,
transfer instructions, receipts, waivers, consents and other documents, and
performing all such acts, as the Adviser may deem necessary or reasonably
desirable, related to the acquisition, disposition and/or reinvestment of the
funds and assets of a Fund of the Trust in accordance with Adviser's supervision
of the investment, sale and reinvestment of the funds and assets of each Fund
pursuant to the authority granted to the Adviser as investment adviser of each
Fund under that certain investment advisory contract dated December 30, 1997, by
and between the Adviser and the Trust (such investment advisory contract, as may
be amended, supplemented or otherwise modified from time to time is hereinafter
referred to as the "Investment Advisory Contract").

The Adviser shall exercise or omit to exercise the powers and
authorities granted herein in each case as the Adviser in its sole and absolute
discretion deems desirable or appropriate under existing circumstances. The
Trust hereby ratifies and confirms as good and effectual, at law or in equity,
all that the Adviser, and its officers and employees, may do by virtue hereof.
However, despite the above provisions, nothing herein shall be construed as
imposing a duty on the Adviser to act or assume responsibility for any matters
referred to above or other matters even though the Adviser may have power or
authority hereunder to do so. Nothing in this Limited Power of Attorney shall be
construed (i) to be an amendment or modifications of, or supplement to, the
Investment Advisory Contract, (ii) to amend, modify, limit or denigrate any
duties, obligations or liabilities of the Adviser under the terms of the
Investment Advisory Contract or (iii) exonerate, relieve or release the Adviser
any losses, obligations, penalties, actions, judgments and suits and other
costs, expenses and disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Adviser (x) under the terms of
the Investment Advisory Contract or (y) at law, or in equity, for the
performance of its duties as the investment adviser of any of the Funds.

The Trust hereby agrees to indemnify and save harmless the Adviser and
its trustees, officers and employees (each of the foregoing an "Indemnified
Party" and collectively the "Indemnified Parties") against and from any and all
losses, obligations, penalties, actions, judgments and suits and other costs,
expenses and disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against an Indemnified Party, other than as a
consequence of gross negligence or willful misconduct on the part of an
Indemnified Party, arising out of or in connection with this Limited Power of
Attorney or any other agreement, instrument or document executed in connection
with the exercise of the authority granted to the Adviser herein to act on
behalf of the Trust, including without limitation the reasonable costs, expenses
and disbursements in connection with defending such Indemnified Party against
any claim or liability related to the exercise or performance of any of the
Adviser's powers or duties under this Limited Power of Attorney or any of the
other agreements, instruments or documents executed in connection with the
exercise of the authority granted to the Adviser herein to act on behalf of the
Trust, or the taking of any action under or in connection with any of the
foregoing. The obligations of the Trust under this paragraph shall survive the
termination of this Limited Power of Attorney with respect to actions taken by
the Adviser on behalf of the Trust during the term of this Limited Power of
Attorney. No Fund shall have any joint or several obligation with any other Fund
to reimburse or indemnify an Indemnified Party for any action, event, matter or
occurrence performed or omitted by or on behalf of the Adviser in its capacity
as agent or attorney-in-fact of Trust acting on behalf of any other Fund
hereunder.

Any person, partnership, corporation or other legal entity dealing with
the Adviser in its capacity as attorney-in-fact hereunder for the Trust is
hereby expressly put on notice that the Adviser is acting solely in the capacity
as an agent of the Trust and that any such person, partnership, corporation or
other legal entity must look solely to the Trust in question for enforcement of
any claim against the Trust, as the Adviser assumes no personal liability
whatsoever for obligations of the Trust entered into by the Adviser in its
capacity as attorney-in-fact for the Trust.

Each person, partnership, corporation or other legal entity which deals
with a Fund of the Trust through the Adviser in its capacity as agent and
attorney-in-fact of the Trust, is hereby expressly put on notice (i) that all
persons or entities dealing with the Trust must look solely to the assets of the
Fund of the Trust on whose behalf the Adviser is acting pursuant to its powers
hereunder for enforcement of any claim against the Trust, as the Trustees,
officers and/or agents of such Trust, the shareholders of the various classes of
shares of the Trust and the other Funds of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of such Fund of the
Trust, and (ii) that the rights, liabilities and obligations of any one Fund are
separate and distinct from those of any other Fund of the Trust.

The execution of this Limited Power of Attorney by the Trust acting on
behalf of the several Funds shall not be deemed to evidence the existence of any
express or implied joint undertaking or appointment by and among any or all of
the Funds. Liability for or recourse under or upon any undertaking of the
Adviser pursuant to the power or authority granted to the Adviser under this
Limited Power of Attorney under any rule of law, statute or constitution or by
the enforcement of any assessment or penalty or by legal or equitable
proceedings or otherwise shall be limited only to the assets of the Fund of the
Trust on whose behalf the Adviser was acting pursuant to the authority granted
hereunder.

The Trust hereby agrees that no person, partnership, corporation or
other legal entity dealing with the Adviser shall be bound to inquire into the
Adviser's power and authority hereunder and any such person, partnership,
corporation or other legal entity shall be fully protected in relying on such
power or authority unless such person, partnership, corporation or other legal
entity has received prior written notice from the Trust that this Limited Power
of Attorney has been revoked. This Limited Power of Attorney shall be revoked
and terminated automatically upon the cancellation or termination of the
Investment Advisory Contract between the Trust and the Adviser. Except as
provided in the immediately preceding sentence, the powers and authorities
herein granted may be revoked or terminated by the Trust at any time provided
that no such revocation or termination shall be effective until the Adviser has
received actual notice of such revocation or termination in writing from the
Trust.

This Limited Power of Attorney constitutes the entire agreement between
the Trust and the Adviser, may be changed only by a writing signed by both of
them, and shall bind and benefit their respective successors and assigns;
provided, however, the Adviser shall have no power or authority hereunder to
appoint a successor or substitute attorney in fact for the Trust.

This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflicts of laws. If any provision hereof, or any power or
authority conferred upon the Adviser herein, would be invalid or unexercisable
under applicable law, then such provision, power or authority shall be deemed
modified to the extent necessary to render it valid or exercisable while most
nearly preserving its original intent, and no provision hereof, or power or
authority conferred upon the Adviser herein, shall be affected by the invalidity
or the non-exercisability of another provision hereof, or of another power or
authority conferred herein.

This Limited Power of Attorney may be executed in as many identical
counterparts as may be convenient and by the different parties hereto on
separate counterparts. This Limited Power of Attorney shall become binding on
the Trust when the Trust shall have executed at least one counterpart and the
Adviser shall have accepted its appointment by executing this Limited Power of
Attorney. Immediately after the execution of a counterpart original of this
Limited Power of Attorney and solely for the convenience of the parties hereto,
the Trust and the Adviser will execute sufficient counterparts so that the
Adviser shall have a counterpart executed by it and the Trust, and the Trust
shall have a counterpart executed by the Trust and the Adviser. Each counterpart
shall be deemed an original and all such taken together shall constitute but one
and the same instrument, and it shall not be necessary in making proof of this
Limited Power of Attorney to produce or account for more than one such
counterpart.

IN WITNESS WHEREOF, the Trust has caused this Limited Power of Attorney
to be executed by its duly authorized officer as of the date first written
above.

Federated Core Trust

By: /s/ John W. McGonigle
Title: Executive Vice President

Accepted and agreed to this
30th day of December, 1997

Federated Research Corp.

By: /s/ J. Christopher Donahue
Title: President

<PAGE>

Schedule 1
to Limited Power of Attorney
dated as of December 30, 1997
by Federated Core Trust
(the Trust "), acting on
behalf of each of the series portfolios
listed below, and appointing
Federated Research Corp.
the attorney-in-fact of the
Trust

List of Series Portfolios

High-Yield Bond Portfolio