FEDERATED HIGH INCOME BOND FUND
(formerly, Liberty High Income Bond Fund)
Class A Shares
Class B Shares
Class C Shares
SUPPLEMENT TO THE PROSPECTUS DATED MAY 31, 1996
1. Please delete the first bullet point under the section entitled
``Investment Limitations'' on page 11.
2.Please delete the last bullet point under the section entitled
``Investment Limitations'' on page 11 and replace it with the following:
`` invest more than 15% of its net assets in illiquid securities.''
3.Please delete in its entirety the section entitled ``ELIMINATION OF
CONTINGENT DEFERRED SALES CHARGE'' on page 22 and replace it with the
following:
`ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge will be eliminated with respect
to the following redemptions: (1) redemptions following the death or
disability, as defined in Section 72(m)(7) of the Internal Revenue
Code of 1986, of the last surviving shareholder; (2) redemptions
representing minimum required distributions from an Individual
Retirement Account or other retirement plan to a shareholder who has
attained the age of 70 1/2; (3) involuntary redemptions by the Fund of
Shares in shareholder accounts that do not comply with the minimum
balance requirements; and (4) qualifying redemptions of Class B Shares
under a Systematic Withdrawal Program. To qualify for elimination of
the contingent deferred sales charge through a Systematic Withdrawal
Program, the redemptions of Class B Shares must be from an account:
that is at least 12 months old, has all Fund distributions reinvested
in Fund Shares, and has a value of at least $10,000 when the
Systematic Withdrawal Program is established. Qualifying redemptions
may not exceed 1.00% monthly of the account value as periodically
determined by the Fund. For more information regarding the elimination
of the contingent deferred sales charge through a Systematic
Withdrawal Program contact your financial intermediary or the Fund. No
contingent deferred sales charge will be imposed on redemptions of
Shares held by Directors, employees and sales representatives of the
Fund, the distributor, or affiliates of the Fund or distributor, and
their immediate family members; employees of any financial institution
that sells Shares of the Fund pursuant to a sales agreement with the
distributor; and spouses and children under the age of 21 of the
aforementioned persons. Finally, no contingent deferred sales charge
will be imposed on the redemption of Shares originally purchased
through a bank trust department, an investment adviser registered
under the Investment Advisers Act of 1940 or retirement plans where
the third party administrator has entered into certain arrangements
with Federated Securities Corp. or its affiliates, or any other
financial institution, to the extent that no payments were advanced
for purchases made through such entities. The Fund reserves the right
to discontinue or modify the elimination of the contingent deferred
sales charge. Shareholders will be notified of a discontinuation. Any
Shares purchased prior to the termination of such waiver would have
the contingent deferred sales charge eliminated as provided in the
Fund's prospectus at the time of the purchase of the Shares. If a
shareholder making a redemption qualifies for an elimination of the
contingent deferred sales charge, the shareholder must notify
Federated Securities Corp. or the transfer agent in writing that he is
entitled to such elimination.''
October 1, 1996
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 314195108
Cusip 314195207
Cusip 314195306
G00301-03(10/96)
FEDERATED HIGH INCOME BOND FUND
(formerly, Liberty High Income Bond Fund)
Class A Shares
Class B Shares
Class C Shares
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 31, 1996
1.Please delete in its entirety, the section entitled ``Restricted
Securities''on page 1, and the section entitled ``Purchasing Restricted
Securities''on page 4.
2.Please delete in its entirety the section entitled ``Investing in
Illiquid Securities''on page 5 and replace it with the following:
``RESTRICTED AND ILLIQUID SECURITIES
The Fund 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 Board of Directors to be liquid.
The Trustees may consider the following criteria in determining the
liquidity of certain restricted securities:
the frequency of trades and quotes for the security;
the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace
trades.''
3.Please insert the following new section, on page 15 directly under the
heading `Redeeming Shares'':
``ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amounts that a shareholder may withdraw under a Systematic
Withdrawal Program that qualify for elimination of the Contingent Deferred
Sales Charge may not exceed 12% annually with reference initially to the
value of the Class B Shares upon establishment of the Systematic Withdrawal
Program
and then as calculated at the annual valuation date. Redemptions on a
qualifying Systematic Withdrawal Program can be made
at a rate of 1.00% monthly, 3.00% quarterly, or 6.00% semi-
annually with reference to the applicable account valuation amount.
Amounts that exceed the 12.00% annual limit for redemption, as described,
may be subject to the Contingent Deferred Sales Charge. To the extent
that a shareholder exchanges Shares for Class B Shares of other Federated
Funds, the time for which the exchanged-for Shares are to be held will be
added to the time for which exchanged-from Shares were held for purposes of
satisfying the 12 month holding requirement. However, for purposes of
meeting the $10,000 minimum account value requirement, Class B Share
accounts will not be aggregated.''
October 1, 1996
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 314195108
Cusip 314195207
Cusip 314195306
G00301-04(10/96)
