FEDERATED
INCOME
TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JULY 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
DISTRIBUTOR
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 314199100
Cusip 314199209
8082203 (9/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Income Trust. The Report covers the six-month period ended July 31, 1995, and
includes the fund's Investment Review, Portfolio of Investments, and Financial
Statements. In addition, Financial Highlights tables have been included for
Institutional Shares and Institutional Service Shares.
During the report period, the fund continued to pursue attractive current
income. Dividends paid by the fund during this period totaled $0.34 per share
for Institutional Shares and $0.33 per share for Institutional Service Shares.
The fund's net asset value began the period at $9.70 and ended the period at
$10.11. Over the six-month period, the total return for Institutional Shares and
Institutional Service Shares was 7.79%* and 7.68%,* respectively. Total net
assets stood at $1.1 billion on the last day of the period.
On the last day of the period, the fund's assets were primarily invested in
mortgage-backed securities. The remainder of fund assets was invested in U.S.
Treasury notes and repurchase agreements. During the period, the Trust
maintained its AAAf rating by Standard & Poor's Ratings Group ("Standard &
Poor's"), the highest available from this independent rating service.**
We appreciate your continued confidence in Federated Income Trust. As always, we
welcome your questions and comments.
Sincerely,
Glen R. Johnson
President
September 15, 1995
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
** Ratings are subject to change.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Federated Income Trust provides shareholders with a professionally managed
portfolio of U.S. Government securities. The Trust is managed for a short to
intermediate average life and is invested primarily in mortgage-backed
securities. Current investment strategy emphasizes a diversified range of
mortgage securities with coupons averaging 7.5%, and a weighted average duration
of 4.2 years. The Trust's total portfolio will have volatility similar to an
intermediate U.S. Treasury.
The bond market performed extremely well during the first half of 1995. In
response to weaker economic data, the market dramatically priced in the reduced
likelihood of further tightening of monetary policy by the Federal Reserve Board
following the interest rate increase on February 1, 1995. The 5-year U.S.
Treasury note yield during the reporting period declined from 7.50% to 6.15%.
Mortgage securities performed well relative to U.S. Treasuries in the first
quarter of 1995, and then underperformed their U.S. Treasury counterparts during
the second quarter. With the U.S. Treasury market rallying during this time
period, spreads on mortgage securities were widening because of an increase in
volatility, heightened prepayment fears, and investor selling of mortgage
securities in an attempt to keep positively convex securities in their
portfolios.
With the Trust's strategy stressing market dislocations as opposed to relying
totally on market fundamentals, it remains committed to a five year average life
profile. The Trust's security composition continues to employ a diverse approach
utilizing collateral and structured mortgage product. Collateral transactions
consisted of down-in-coupon trades to avoid underperformance of negatively
convex securities. The Trust also allocated cash flow to the 10-year area of the
U.S. Treasury market to counter the shortening of mortgage durations.
As of July 31, 1995, total net assets were $1.1 billion and the average 30-day
net yield as calculated under SEC guidelines was 6.66%* for Institutional
Shares, and 6.43%* for Institutional Service Shares based upon the net asset
value of $10.11. The Trust is rated AAAf/aa- for credit quality and risk by
Standard & Poor's,** and will continue to strive to provide monthly income cash
flow and daily liquidity while seeking competitive yields.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
** This rating is obtained after Standard & Poor's evaluates a number of
factors, including credit quality, market price exposure and management. They
monitor the portfolio weekly for developments that could cause changes in
ratings.
FEDERATED INCOME TRUST
PORTFOLIO OF INVESTMENTS
JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- ------------------------------------------------------------------------------ ----------------
<C> <S> <C>
LONG-TERM OBLIGATIONS--96.8%
- ----------------------------------------------------------------------------------------------
(a)FEDERAL HOME LOAN MORTGAGE CORP.--14.1%
------------------------------------------------------------------------------
$ 165,606 11.50%, 12/1/2014 $ 183,354
------------------------------------------------------------------------------
749,869 11.00%, 5/1/2000 793,211
------------------------------------------------------------------------------
479,922 10.50%, 7/1/2000 505,262
------------------------------------------------------------------------------
31,104,847 9.50%, 10/1/2006-12/1/2022 32,633,200
------------------------------------------------------------------------------
4,409,177 9.00%, 4/1/2009-2/1/2013 4,575,844
------------------------------------------------------------------------------
21,453,604 8.00%, 6/1/2001-10/1/2001 22,009,896
------------------------------------------------------------------------------
12,663,013 7.50%, 11/1/1999-7/1/2025 12,814,056
------------------------------------------------------------------------------
1,592,741 7.00%, 10/1/2007 1,575,301
------------------------------------------------------------------------------
50,000,000 6.50%, 7/1/2010 49,031,250
------------------------------------------------------------------------------
29,142,724 5.50%, 5/1/1998-8/1/1998 28,522,858
------------------------------------------------------------------------------ ----------------
Total 152,644,232
------------------------------------------------------------------------------ ----------------
(a)FEDERAL HOME LOAN MORTGAGE CORP. REMIC--8.7%
------------------------------------------------------------------------------
10,000,000 7.00%, Series 1573PJ, 2/15/2023 9,838,100
------------------------------------------------------------------------------
20,000,000 6.90%, Series 1551G, 7/15/2008 19,478,200
------------------------------------------------------------------------------
10,000,000 6.80%, Series 1560PK, 3/15/2023 9,291,200
------------------------------------------------------------------------------
10,000,000 6.60%, Series 1559VH, 12/15/2021 9,585,000
------------------------------------------------------------------------------
8,500,000 6.50%, Series 1526K, 11/15/2021 7,993,910
------------------------------------------------------------------------------
15,000,000 6.50%, Series 1522G, 3/15/2022 14,166,300
------------------------------------------------------------------------------
11,130,000 6.50%, Series 1638G, 9/15/2023 10,417,569
------------------------------------------------------------------------------
14,245,000 6.25%, Series 1731D, 1/15/2021 13,205,400
------------------------------------------------------------------------------ ----------------
Total 93,975,679
------------------------------------------------------------------------------ ----------------
(a)FEDERAL NATIONAL MORTGAGE ASSOCIATION--58.7%
------------------------------------------------------------------------------
26,124,596 10.50%, 12/1/2019-4/1/2022 28,646,926
------------------------------------------------------------------------------
40,366,947 (b)10.00%, 8/1/2019-7/1/2025 43,881,034
------------------------------------------------------------------------------
30,691,751 9.50%, 7/1/2018-5/1/2025 32,216,663
------------------------------------------------------------------------------
</TABLE>
FEDERATED INCOME TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- ------------------------------------------------------------------------------ ----------------
<C> <S> <C>
LONG-TERM OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------------------
(a)FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
------------------------------------------------------------------------------
$ 79,391,282 9.00%, 3/1/2002-2/1/2025 $ 82,821,147
------------------------------------------------------------------------------
82,065,059 8.50%, 7/1/2024-2/1/2025 84,577,071
------------------------------------------------------------------------------
66,704,604 8.00%, 11/1/2024 67,954,648
------------------------------------------------------------------------------
101,826,652 (b)7.50%, 3/1/2010-7/1/2025 101,706,717
------------------------------------------------------------------------------
115,000,000 (b)7.00%, 7/1/2025 112,230,800
------------------------------------------------------------------------------
31,556,786 6.50%, 6/1/2009 30,944,900
------------------------------------------------------------------------------
50,000,000 6.00%, 7/1/2002 48,827,500
------------------------------------------------------------------------------ ----------------
Total 633,807,406
------------------------------------------------------------------------------ ----------------
(a)FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC--10.4%
------------------------------------------------------------------------------
16,400,000 7.00%, Series 1993-77K, 11/25/2022 16,085,284
------------------------------------------------------------------------------
18,000,000 7.00%, Series 1993-133J, 12/25/2022 17,583,660
------------------------------------------------------------------------------
20,000,000 6.50%, Series 1994-36J, 6/25/2023 18,667,200
------------------------------------------------------------------------------
37,204,000 6.50%, Series 1993-187K, 8/25/2022 34,897,724
------------------------------------------------------------------------------
11,393,000 6.50%, Series 1993-55K, 5/25/2008 10,852,288
------------------------------------------------------------------------------
14,637,992 6.00%, Series 1993-229J, 12/25/2008 13,844,611
------------------------------------------------------------------------------ ----------------
Total 111,930,767
------------------------------------------------------------------------------ ----------------
UNITED STATES TREASURY NOTES--4.9%
------------------------------------------------------------------------------
22,500,000 6.375%, 8/15/2002 22,536,900
------------------------------------------------------------------------------
30,000,000 6.75%, 6/30/1999 30,623,100
------------------------------------------------------------------------------ ----------------
Total 53,160,000
------------------------------------------------------------------------------ ----------------
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST, $1,037,280,589) 1,045,518,084
------------------------------------------------------------------------------ ----------------
(C) REPURCHASE AGREEMENTS--35.3%
- ----------------------------------------------------------------------------------------------
2,400,000 J.P. Morgan Securities, Inc., 5.84%, dated 7/31/1995,
due 8/1/1995 2,400,000
------------------------------------------------------------------------------
60,000,000 Swiss Bank Corp., 5.82%, dated 7/31/1995,
due 8/1/1995 60,000,000
------------------------------------------------------------------------------
</TABLE>
FEDERATED INCOME TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- ------------------------------------------------------------------------------ ----------------
<C> <S> <C>
(C) REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
$ 180,000,000 (d)First Boston Corp., 5.76%, dated 7/17/1995,
due 8/14/1995 $ 180,000,000
------------------------------------------------------------------------------
38,500,000 (d)First Boston Corp., 5.76%, dated 7/24/1995,
due 8/14/1995 38,500,000
------------------------------------------------------------------------------
50,000,000 (d)Goldman Sachs Group, 5.755%, dated 7/25/1995,
due 8/17/1995 50,000,000
------------------------------------------------------------------------------
50,000,000 (d)Goldman Sachs Group, 5.755%, dated 7/25/1995,
due 8/23/1995 50,000,000
------------------------------------------------------------------------------ ----------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 380,900,000
------------------------------------------------------------------------------ ----------------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,418,180,589) (E) $ 1,426,418,084
------------------------------------------------------------------------------ ----------------
</TABLE>
(a) Because of monthly principal payments, the average life of the Federal Home
Loan Mortgage Corp. securities and Federal National Mortgage Association
securities approximates 1-10 years.
(b) Includes securities with a market value of $219,077,900 subject to Dollar
Roll transactions.
(c) The repurchase agreements are fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in a
joint account with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(e) The cost of investments for federal tax purposes amounts to $1,418,180,589.
The net unrealized appreciation of investments on a federal tax basis
amounts to $8,237,495 which is comprised of $15,519,003 appreciation and
$7,281,508 depreciation at July 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($1,079,751,415) at
July 31, 1995.
The following accronym is used in this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $1,418,180,589) $ 1,426,418,084
- -----------------------------------------------------------------------------------------------
Cash 9,690
- -----------------------------------------------------------------------------------------------
Income receivable 6,949,518
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 367,786
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 1,433,745,078
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for dollar roll transactions $ 219,940,296
- -------------------------------------------------------------------------------
Payable for investments purchased 128,341,840
- -------------------------------------------------------------------------------
Income distribution payable 4,595,481
- -------------------------------------------------------------------------------
Payable for shares redeemed 1,002,867
- -------------------------------------------------------------------------------
Accrued expenses 113,179
- ------------------------------------------------------------------------------- --------------
Total liabilities 353,993,663
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 106,761,406 shares outstanding $ 1,079,751,415
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
Paid in capital $ 1,238,923,214
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 8,237,495
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (167,597,064)
- -----------------------------------------------------------------------------------------------
Undistributed net investment income 187,770
- ----------------------------------------------------------------------------------------------- ----------------
Total Net Assets $ 1,079,751,415
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($1,034,270,576 / 102,264,426 shares outstanding) $10.11
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($45,480,839 / 4,496,980 shares outstanding) $10.11
- ----------------------------------------------------------------------------------------------- ----------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
FEDERATED INCOME TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense $4,472,151) $ 42,101,586
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,252,250
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 426,238
- --------------------------------------------------------------------------------------
Custodian fees 127,644
- --------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 118,987
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 10,919
- --------------------------------------------------------------------------------------
Auditing fees 10,732
- --------------------------------------------------------------------------------------
Legal fees 10,622
- --------------------------------------------------------------------------------------
Portfolio accounting fees 77,434
- --------------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 54,645
- --------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 1,353,011
- --------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 54,645
- --------------------------------------------------------------------------------------
Share registration costs 16,427
- --------------------------------------------------------------------------------------
Printing and postage 16,384
- --------------------------------------------------------------------------------------
Insurance premiums 11,942
- --------------------------------------------------------------------------------------
Taxes 26,150
- --------------------------------------------------------------------------------------
Miscellaneous 11,663
- -------------------------------------------------------------------------------------- -----------
Total expenses 4,579,693
- --------------------------------------------------------------------------------------
Deduct:
- -------------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares $ 51,689
- -------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 1,190,639
- -------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Service Shares 2,945 1,245,273
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 3,334,420
- --------------------------------------------------------------------------------------------------- ------------
Net investment income 38,767,166
- --------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------
Net realized gain (loss) on investments 5,001,867
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 42,948,977
- --------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 47,950,844
- --------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 86,718,010
- --------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JULY 31, 1995 YEAR ENDED
(UNAUDITED) JANUARY 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 38,767,166 $ 101,091,909
- --------------------------------------------------------------------------
Net realized gain (loss) on investments ($5,001,867 net gain, and
$99,607,019 net loss, respectively, as computed for federal income tax
purposes) 5,001,867 (95,924,544)
- --------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments 42,948,977 (31,137,636)
- -------------------------------------------------------------------------- ---------------- -------------------
Change in assets resulting from operations 86,718,010 (25,970,271)
- -------------------------------------------------------------------------- ---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------------
Institutional Shares (37,138,995) (97,779,181)
- --------------------------------------------------------------------------
Institutional Service Shares (1,440,401) (3,389,985)
- -------------------------------------------------------------------------- ---------------- -------------------
Change in net assets resulting from distributions
to shareholders (38,579,396) (101,169,166)
- --------------------------------------------------------------------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of Shares 68,588,395 262,132,109
- --------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 9,251,569 21,662,288
- --------------------------------------------------------------------------
Cost of Shares redeemed (206,632,049) (790,673,872)
- -------------------------------------------------------------------------- ---------------- -------------------
Change in net assets resulting from share transactions (128,792,085) (506,879,475)
- -------------------------------------------------------------------------- ---------------- -------------------
Change in net assets (80,653,471) (634,018,912)
- --------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 1,160,404,886 1,794,423,798
- -------------------------------------------------------------------------- ---------------- -------------------
End of period (including undistributed net investment income of $187,770
and $0, respectively) $ 1,079,751,415 $ 1,160,404,886
- -------------------------------------------------------------------------- ---------------- -------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------------------------------------------------------------------
Investment income received $ 54,987,861
- -------------------------------------------------------------------------------------------------
Payment of operating expenses (3,319,373)
- -------------------------------------------------------------------------------------------------
Proceeds from sales and maturities of investments 1,040,415,702
- -------------------------------------------------------------------------------------------------
Purchases of investments (773,055,473)
- -------------------------------------------------------------------------------------------------
Net purchases of short-term investments (193,625,000)
- ------------------------------------------------------------------------------------------------- ---------------
Cash used by operating activities 125,403,717
- ------------------------------------------------------------------------------------------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------------------------
Net proceeds from share activity (140,124,067)
- -------------------------------------------------------------------------------------------------
Increase on payable for dollar roll transactions 45,045,181
- -------------------------------------------------------------------------------------------------
Distributions paid (30,317,533)
- ------------------------------------------------------------------------------------------------- ---------------
Cash used by financing activities (125,396,419)
- ------------------------------------------------------------------------------------------------- ---------------
Increase in cash 7,298
- ------------------------------------------------------------------------------------------------- ---------------
Cash at beginning of period 2,392
- ------------------------------------------------------------------------------------------------- ---------------
Cash at end of period $ 9,690
- ------------------------------------------------------------------------------------------------- ---------------
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO CASH USED BY OPERATING ACTIVITIES:
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 86,718,010
- -------------------------------------------------------------------------------------------------
Net increase in investments (138,234,350)
- -------------------------------------------------------------------------------------------------
Decrease in income receivable 2,261,348
- -------------------------------------------------------------------------------------------------
Decrease in receivable for investments sold 92,520,050
- -------------------------------------------------------------------------------------------------
Increase in payable for investments purchased 82,123,612
- -------------------------------------------------------------------------------------------------
Increase in accrued expenses 15,047
- ------------------------------------------------------------------------------------------------- ---------------
Cash used by operating activities $ 125,403,717
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JULY 31, 1995 YEAR ENDED JANUARY 31,
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.70 $ 10.50 $ 10.73 $ 10.66 $ 10.42 $ 10.18 $ 10.05 $ 10.43 $ 10.74
- --------------------------
INCOME FROM INVESTMENT
OPERATIONS
- --------------------------
Net investment income 0.34 0.70 0.77 0.80 0.89 0.93 0.94 0.95 0.99
- --------------------------
Net realized and
unrealized gain (loss) on
investments 0.41 (0.80) (0.23) 0.07 0.24 0.24 0.13 (0.38) (0.31)
- -------------------------- ------ --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.75 (0.10) 0.54 0.87 1.13 1.17 1.07 0.57 0.68
- --------------------------
LESS DISTRIBUTIONS
- --------------------------
Distributions from net
investment income (0.34) (0.70) (0.77) (0.80) (0.89) (0.93) (0.94) (0.95) (0.99)
- --------------------------
Distributions from net
realized gain on
investment transactions -- -- -- -- -- -- -- -- --
- -------------------------- ------ --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (0.34) (0.70) (0.77) (0.80) (0.89) (0.93) (0.94) (0.95) (0.99)
- -------------------------- ------ --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 10.11 $ 9.70 $ 10.50 $ 10.73 $ 10.66 $ 10.42 $ 10.18 $ 10.05 $ 10.43
- -------------------------- ------ --------- --------- --------- --------- --------- --------- --------- ---------
Total return (a) 7.79% (0.86%) 5.22% 8.51% 11.27% 12.01% 11.04% 5.75%
6.79%
- --------------------------
RATIOS TO AVERAGE NET
ASSETS
- --------------------------
Expenses 0.58%(b) 0.56% 0.51% 0.51% 0.50% 0.50% 0.53% 0.52%
0.50%
- --------------------------
Net investment income 6.89%(b) 6.99% 7.28% 7.53% 8.41% 9.06% 9.23% 9.33%
9.49%
- --------------------------
Expense waiver/
reimbursement (c) 0.22%(b) -- -- -- -- -- -- -- --
- --------------------------
SUPPLEMENTAL DATA
- --------------------------
Net assets, end of period
(000 omitted) $1,034,271 $1,119,976 $1,727,247 $1,548,858 $1,231,978 $892,255 $1,023,886 $1,196,585 $1,376,895
- --------------------------
Portfolio turnover 76 % 217% 178% 52% 51% 36% 45% 77% 92%
- --------------------------
<CAPTION>
<S> <C>
1987
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.87
- --------------------------
INCOME FROM INVESTMENT
OPERATIONS
- --------------------------
Net investment income 1.03
- --------------------------
Net realized and
unrealized gain (loss) on
investments (0.05)
- -------------------------- ---------
Total from investment
operations 0.98
- --------------------------
LESS DISTRIBUTIONS
- --------------------------
Distributions from net
investment income (1.04)
- --------------------------
Distributions from net
realized gain on
investment transactions (0.07)
- -------------------------- ---------
TOTAL DISTRIBUTIONS (1.11)
- -------------------------- ---------
NET ASSET VALUE, END OF
PERIOD $ 10.74
- -------------------------- ---------
Total return (a) 9.52%
- --------------------------
RATIOS TO AVERAGE NET
ASSETS
- --------------------------
Expenses 0.54%
- --------------------------
Net investment income 9.47%
- --------------------------
Expense waiver/
reimbursement (c) --
- --------------------------
SUPPLEMENTAL DATA
- --------------------------
Net assets, end of period
(000 omitted) $1,169,155
- --------------------------
Portfolio turnover 146%
- --------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) Computed on an annualized basis.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JULY 31,
1995 YEAR ENDED JANUARY 31,
(UNAUDITED) 1995 1994 1993(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.70 $ 10.50 $ 10.73 $ 10.64
- -------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------
Net investment income 0.33 0.68 0.75 0.51
- -------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 0.41 (0.80) (0.23) 0.09
- ------------------------------------------------------------------- -------------- --------- --------- -----------
Total from investment operations 0.74 (0.12) 0.52 0.60
- -------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------
Distributions from net investment income (0.33) (0.68) (0.75) (0.51)
- ------------------------------------------------------------------- -------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.11 $ 9.70 $ 10.50 $ 10.73
- ------------------------------------------------------------------- -------------- --------- --------- -----------
Total return (b) 7.68% (1.08%) 4.96% 4.80%
- -------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------
Expenses 0.80%(c) 0.78% 0.76% 0.76%(c)
- -------------------------------------------------------------------
Net investment income 6.67%(c) 6.75% 7.03% 7.16%(c)
- -------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.25%(c) 0.22% -- --
- -------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------
Net assets, end of period (000 omitted) $45,481 $40,428 $67,176 $53,981
- -------------------------------------------------------------------
Portfolio turnover 76 % 217% 178% 52 %
- -------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 31, 1992 (date of initial public
offering) to January 31, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Federated Income Trust, (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The Trust provides two classes of shares, Institutional
Shares and Institutional Services Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Trust to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase transaction.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees. Risks may arise
from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Trust could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary. At January 31,
1995, the Trust, for federal tax purposes, had a capital loss carryforward
of $159,119,254, which will reduce the Trust's taxable income arising from
future net realized gain on investments, if any,
FEDERATED INCOME TRUST
- --------------------------------------------------------------------------------
to the extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve
the Trust of any liability for federal tax. Pursuant to the Code, such
capital loss carryforward will expire in 1996 ($14,398,108), 1997
($26,760,646), 1998 ($16,389,825), 1999 ($1,962,942) and 2003
($99,607,733). Additionally, net capital losses of $13,358,619 attributable
to security transactions incurred after October 31, 1994 are treated as
arising on February 1, 1995, the first day of the Trust's next taxable
year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DOLLAR ROLL TRANSACTIONS--The Trust enters into dollar roll transactions,
with respect to mortgage securities issued by Government National Mortgage
Association, Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, in which the Trust loans mortgage securities to
financial institutions and simultaneously agrees to accept substantially
similar (same type, coupon and maturity) securities at a later date at an
agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Trust will use the
proceeds generated from the transactions to invest in short-term
investments, which may enhance the Trust's current yield and total return.
STATEMENT OF CASH FLOWS--Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in
the Trust's Statement of Cash Flows. The cash amount shown in the Statement
of Cash Flows is the amount reported as cash in the Trust's Statement of
Assets and Liabilities and represents cash on hand in its custodian bank
account and does not include any short-term investments at July 31, 1995.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Trust shares were as follows:
FEDERATED INCOME TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JULY 31, 1995 JANUARY 31, 1995
SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
- -------------------------------------------------
Shares sold 5,938,140 $ 59,222,650 24,209,157 $ 243,458,344
- -------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 815,137 8,154,978 1,982,271 19,612,008
- -------------------------------------------------
Shares redeemed (19,937,417) (199,417,336) (75,184,676) (747,629,375)
- ------------------------------------------------- ------------- --------------- ------------- ---------------
Net change resulting from Institutional
Shares transactions (13,184,140) ($ 132,039,708) (48,993,248) ($ 484,559,023)
- ------------------------------------------------- ------------- --------------- ------------- ---------------
<CAPTION>
Six Months Ended Year Ended
July 31, 1995 January 31, 1995
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES
- -------------------------------------------------
Shares sold 944,732 $ 9,365,745 1,862,669 $ 18,673,765
- -------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 109,526 1,096,591 207,419 2,050,280
- -------------------------------------------------
Shares redeemed (724,724) (7,214,713) (4,297,801) (43,044,497)
- ------------------------------------------------- ------------- --------------- ------------- ---------------
Net change resulting from Institutional
Service Shares transactions 329,534 $ 3,247,623 (2,227,713) ($ 22,320,452)
- ------------------------------------------------- ------------- --------------- ------------- ---------------
Net change resulting from Trust
shares transactions (12,854,606) ($ 128,792,085) (51,220,961) ($ 506,879,475)
- ------------------------------------------------- ------------- --------------- ------------- ---------------
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to .40 of 1% of the Trust's average daily net assets.
The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The FAS fee is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
FEDERATED INCOME TRUST
- --------------------------------------------------------------------------------
DISTRIBUTION SERVICES--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Trust will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Trust to finance activities
intended to result in the sale of the Trust's Institutional Service Shares.
The Plan provides that the Trust may incur distribution expenses up to .25
of 1% of the average daily net assets of the Institutional Service Shares,
annually, to compensate FSC. The distributor may voluntarily choose to
waive a portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS up to .25 of 1% of average daily net assets of the Trust for the
period. This fee is to obtain certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent
for the Trust. This fee is based on the size, type, and number of accounts
and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting
records for which it receives a fee. The fee is based on the level of the
Trust's average daily net assets for the period plus, out-of-pocket
expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Trustees or Directors of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended July 31, 1995, were as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------
PURCHASES-- $ 845,317,918
- ------------------------------------------------------------------------------------------------ ----------------
SALES-- $ 1,040,386,385
- ------------------------------------------------------------------------------------------------ ----------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Glen R. Johnson Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts David M. Taylor
Treasurer
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other government agency. Investment in mutual funds
involves risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Trust's prospectus which
contains facts concerning its objective and policies, management fees, expenses
and other information.
