FEDERATED INCOME TRUST, 485BPOS, 1998-03-26

FEDERATED INCOME TRUST
485BPOS, 1998-03-26

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1933 Act File No. 2-75366
1940 Act File No. 811-3352

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
----

Pre-Effective Amendment No. ............................

Post-Effective Amendment No. 28......................... X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 23........................................ X

FEDERATED INCOME 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,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
x on March 31, 1998, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph
(a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copies to:

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

<PAGE>

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of FEDERATED INCOME TRUST
consists of one investment portfolio with two classes of shares: (1)
Institutional Shares and (2) Institutional Service Shares, and is comprised of
the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page....................(1,2) Cover Page.
Item 2. Synopsis......................(1,2) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1,2) Financial Highlights;
(1,2) Performance Information.
Item 4. General Description of
Registrant....................(1,2) General Information; (1,2) Investment Information;
(1,2) Investment Objective; (1,2)
Investment Policies; (1,2)Investment Limitations.
Item 5. Management of the Fund........(1,2) Trust Information; (1,2) Management of the Trust;
(1,2) Distribution of Institutional
Shares/Institutional Service Shares; (1) Shareholder Services;
(2) Distribution Plan and
Shareholder Services; (1,2) Administration of the Fund;

Item 6. Capital Stock and Other
Securities....................(1,2) Dividends; (1,2) Capital Gains; (1,2) Shareholder Information;
(1,2) Voting Rights; (1,2)
Tax Information; (1,2) Federal Income Tax; (1,2) State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered.......................(1,2) Investing in the Institutional Shares/Institutional Service Shares;
Share Purchases; (1,2)
Minimum Investment Required; (1,2) What Shares Cost; (1,2) Exchanging
Securities for Institutional
Shares/Institutional Service Shares; (1,2) Confirmations and Account
Statements; (1,2) Net Asset Value.
Item 8. Redemption or Repurchase......(1,2) Redeeming Institutional Shares/Institutional Service Shares;
(1,2) Telephone Redemption;
(1,2) Written Requests; (1,2) Accounts With Low Balances.
Item 9. Pending Legal Proceedings.....None.

<PAGE>

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

Item 10. Cover Page....................(1,2) Cover Page.
Item 11. Table of Contents.............(1,2) Table of Contents.
Item 12. General Information and
History.......................(1,2) General Information About the Trust.
Item 13. Investment Objectives and
Policies......................(1,2) Investment Objective and Policies; (1,2) Investment
Limitations
Item 14. Management of the Fund (1,2) Federated Income Trust Management; (1,2) Trustees
Compensation.
Item 15. Control Persons and Principal
Holders of Securities (1,2) Trust Ownership.
Item 16. Investment Advisory and Other
Services (1,2) Investment Advisory Services.
Item 17. Brokerage Allocation (1,2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered...(1,2)
Purchasing Shares; (1,2) Exchanging
Securities for Trust Shares; (1,2)
Determining Net Asset Value; (1,2)
Redeeming Shares.
Item 20. Tax Status....................(1,2) Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data..........................(1,2) Total Return; (1,2) Yield; (1,2) Performance Comparisons.
Item 23. Financial Statements..........(Filed in Part A)
</TABLE>

FEDERATED INCOME TRUST

Institutional Shares

PROSPECTUS

The Institutional Shares of Federated Income Trust (the "Trust") offered by this
prospectus represent interests in a diversified portfolio of securities. The
Trust is a no-load, open-end, diversified management investment company (a
mutual fund). The investment objective of the Trust is to provide current
income. The Trust pursues this investment objective by investing in U.S.
government securities. As of the date of this prospectus, it is anticipated that
the Trust will invest primarily in securities of U.S. government agencies or
instrumentalities, such as the Federal Home Loan Mortgage Corporation.
Institutional Shares are sold at net asset value.

THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Trust. Keep this prospectus for future
reference. The Trust has also filed a Statement of Additional Information
dated March 31, 1998, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Statement of
Additional Information, or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information, or make inquiries about the Trust, contact the Trust
at the address listed in the back of this prospectus. This Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Trust is maintained electronically with the
SEC at Internet Website (http://www.sec.gov). THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated March 31, 1998 TABLE OF CONTENTS
Summary of Trust Expenses 1
Financial Highlights--Institutional Shares 2
General Information 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Investment Limitations 5
Portfolio Turnover 5
Trust Information 5
Management of the Trust 5
Distribution of Institutional Shares 6
Supplemental Payments to Financial Institutions 6
Administration of the Trust 7
Administrative Services 7
Net Asset Value 7
Investing in Institutional Shares 7
Share Purchases 7
Minimum Investment Required 7
What Shares Cost 7
Exchanging Securities for Trust Shares 8
Confirmations and Account Statements 8
Dividends 8
Capital Gains 8
Redeeming Institutional Shares 8
Telephone Redemption 8
Written Requests 8
Accounts with Low Balances 9
Shareholder Information 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 9
Performance Information 10
Other Classes of Shares 10
Financial Highlights--Institutional Service Shares 11
Financial Statements 12
Independent Auditors' Report Inside Back Cover

SUMMARY OF TRUST EXPENSES

INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee 0.40%
12b-1 Fee None
Total Other Expenses 0.19%
Shareholder Services Fee (after waiver)(1) 0.04%
Total Operating Expenses (after waiver)(2) 0.59%
</TABLE>

(1) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole discretion.
The maximum shareholder services fee is 0.25%.

(2) The total operating expenses are estimated to be 0.80% absent the voluntary
waiver of a portion of the shareholder services fee. The total operating
expenses were 0.58% for the fiscal year ended January 31, 1998 and would have
been 0.80% absent the voluntary waiver of a portion of the shareholder services
fee.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Institutional Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Trust Information" and "Investing in
Institutional Shares." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.

EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<S> <C>
1 Year $ 6
3 Years $19
5 Years $33
10 Years $74
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on the inside back cover.

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $10.15 $10.39 $ 9.70 $10.50 $10.73 $10.66 $10.42 $10.18 $10.05 $10.43
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.66 0.68 0.67 0.70 0.77 0.80 0.89 0.93 0.94 0.95
Net realized and 0.24 (0.24) 0.69 (0.80) (0.23) 0.07 0.24 0.24 0.13 (0.38)
unrealized gain (loss)
on investments
Total from investment 0.90 0.44 1.36 (0.10) 0.54 0.87 1.13 1.17 1.07 0.57
operations
LESS DISTRIBUTIONS
Distributions from net (0.67) (0.68) (0.67) (0.70) (0.77) (0.80) (0.89) (0.93) (0.94) (0.95)
investment income
Distributions in -- -- (0.00) -- -- -- -- -- -- --
excess of net realized
gain on investments
Total distributions (0.67) (0.68) (0.67) (0.70) (0.77) (0.80) (0.89) (0.93) (0.94) (0.95)
NET ASSET VALUE, END OF $10.38 $10.15 $10.39 $ 9.70 $10.50 $10.73 $10.66 $10.42 $10.18 $10.05
PERIOD
TOTAL RETURN(A) 9.20% 4.44% 14.44% (0.86)% 5.22% 8.51% 11.27% 12.01% 11.04% 5.75%
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.58% 0.58% 0.58% 0.56% 0.51% 0.51% 0.50% 0.50% 0.53% 0.52%
Net investment income 6.50% 6.70% 6.67% 6.99% 7.28% 7.53% 8.41% 9.06% 9.23% 9.33%
Expense 0.22% 0.22% 0.22% -- -- -- -- -- -- --
waiver/reimbursement(b)
SUPPLEMENTAL DATA
Net assets, end of $746,407 $838,542 $983,093 $1,119,976 $1,727,247 $1,548,858 $1,231,978 $892,255 $1,023,886 $1,196,585
period (000 omitted)
Portfolio turnover 306% 212% 184% 217% 178% 52% 51% 36% 45% 77%
</TABLE>

(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(b) 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)

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 17, 1981. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") has established two classes of shares of the Trust, known
as Institutional Shares and Institutional Service Shares. This prospectus
relates only to Institutional Shares of the Trust. Institutional Shares
("Shares") are sold primarily to accounts for which financial institutions act
in a fiduciary or agency capacity or other accounts where the financial
institution maintains master accounts with an aggregate investment of at least
$400 million in certain funds which are advised or distributed by affiliates of
Federated Investors. Shares are also made available to financial intermediaries,
public and private organizations. An investment in the Trust serves as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of U.S. government securities. A minimum initial
investment of $25,000 over a 90-day period is required. Shares are
currently sold and redeemed at net asset value without a sales charge imposed by
the Trust.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Trust is current income. The investment
objective may not be changed without the approval of shareholders. The Trust
pursues this investment objective by investing only in U.S. government
securities and certain collateralized mortgage obligations ("CMOs"). While there
is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus. INVESTMENT POLICIES As a matter of investment policy which
may be changed without shareholder approval, the Trust will limit its
investments to those that are permitted for purchase by federal savings
associations pursuant to applicable rules, regulations, or interpretations of
the Office of Thrift Supervision. Should additional permitted investments be
allowed as a result of future changes in applicable regulations or federal laws,
the Trust reserves the right, without shareholder approval, to make such
investments consistent with the Trust's investment objective, policies, and
limitations. Further, should existing statutes or regulations change so as to
cause any securities held by the Trust to become ineligible for purchase by
federal savings associations, the Trust will dispose of those securities at
times advantageous to the Trust. As operated within the above limitation,
the Trust may also serve as an appropriate vehicle for a national bank as an
investment for its own account.

Except as otherwise noted, the investment policies and limitations described
below cannot be changed without approval of shareholders.

ACCEPTABLE INVESTMENTS

The U.S. government securities in which the Trust invests are either issued
or guaranteed by the U.S. government, its agencies, or instrumentalities.
The securities in which the Trust may invest are limited to:

* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;

* notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith
and credit of the United States;
* notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities.

Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instruments are supported by:

* the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
* the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
* the credit of the agency or instrumentality.

CMOS

CMOs are bonds issued by single-purpose stand-alone finance subsidiaries or
trusts of financial institutions, government agencies, investment bankers, or
companies related to the construction industry and may meet the Internal Revenue
Code requirements to be classified as real estate mortgage investment conduits.
Most of the CMOs in which the Trust would invest use the same basic structure:

* Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of securities:
The first three (A, B, and C bonds) pay interest at their stated rates
beginning with the issue date; the final class (or Z bond) typically
receives the residual income from the underlying investments after payments
are made to the other classes.
* The cash flows from the underlying mortgages are applied first to pay
interest and then to retire securities.
* The classes of securities are retired sequentially. All principal payments
are directed first to the shortest-maturity class (or A bonds). When those
securities are completely retired, all principal payments are then directed
to the next-shortest-maturity security (or B bond.) This process continues
until all of the classes have been paid off.

Because the cash flow is distributed sequentially instead of pro rata as with
pass-through securities, the cash flows and average lives of CMOs are more
predictable, and there is a period of time during which the investors in the
longer-maturity classes receive no principal paydowns. The interest portion of
these payments is distributed by the Trust as income and the capital portion is
reinvested. One or more of the classes may be adjustable rate. In addition, the
Trust may invest in CMOs that include a class whose yield floats inversely
against a specified index rate.

The Trust will invest only in CMOs which are rated AAA by a nationally
recognized rating agency, and which may be: (a) collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S. government; (b)
collateralized by pools of mortgages in which payment of principal and interest
is guaranteed by the issuer and such guarantee is collateralized by U.S.
government securities; or (c) securities in which the proceeds of the issuance
are invested in mortgage securities and payment of the principal and interest
are supported by the credit of an agency or instrumentality of the U.S.
government.

The prices of fixed income securities fluctuate inversely to the direction of
interest rates.

REPURCHASE AGREEMENTS

Repurchase agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government securities or other
securities to the Trust and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Trust, the Trust could receive less than
the repurchase price on any sale of such securities.

As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 15% of its net assets in
repurchase agreements providing for settlement in more than seven days after
notice.

CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES

Some of the U.S. government securities in which the Trust will invest can
represent an undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages ("mortgage-backed
securities"). Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying mortgages. Distributions to holders of
mortgage-backed securities include both interest and principal payments.
Principal payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment, refinancing, or
foreclosure of the underlying mortgages. Although maturities of the underlying
mortgage loans may range up to 30 years, amortization and prepayments
substantially shorten the effective maturities of mortgage-backed securities.
Due to these features, mortgage-backed securities are less effective as a means
of "locking in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the entire
principal amount is returned. This is caused by the need to reinvest at lower
interest rates both distributions of principal generally and significant
prepayments which become more likely as mortgage interest rates decline. Since
comparatively high interest rates cannot be effectively "locked in,"
mortgage-backed securities may have less potential for capital appreciation
during periods of declining interest rates than other non-callable fixed-income
government securities of comparable stated maturities. However, mortgage-backed
securities may experience less pronounced declines in value during periods of
rising interest rates.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Trust may purchase U.S. government obligations on a when-issued or delayed
delivery basis. These transactions are arrangements in which the Trust purchases
securities with payment and delivery scheduled for a future time. The seller's
failure to complete these transactions may cause the Trust to miss a price or
yield considered to be advantageous. 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.

The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments. LENDING OF PORTFOLIO SECURITIES

In order to generate additional income, the Trust may lend its portfolio
securities on a short-term or long-term basis to broker/dealers, banks, or other
institutional borrowers of securities. As a matter of operating policy, which
may be changed by the Trustees without shareholder approval, the Trust will
limit its lending to one-third of the value of its total assets. The Trust will
only enter into loan arrangements with broker/dealers, banks, or other
institutions which the Adviser has determined are creditworthy under guidelines
established by the Directors and will receive collateral in the form of cash or
U.S. government securities equal to at least 100% of the value of the securities
loaned.

There is the risk that when lending portfolio securities, the securities may not
be available to the Trust on a timely basis and the Fund may, therefore, lose
the opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
INVESTMENT LIMITATIONS

The Trust will not borrow money or pledge securities except, under certain
circumstances, the Trust may borrow up to one-third of the value of its total
assets and pledge up to 10% of the value of those assets to secure such
borrowings. These limitations may not be changed without shareholder approval.

PORTFOLIO TURNOVER

The Trust does not attempt to set or meet any specific portfolio turnover rate,
since turnover is incidental to transactions undertaken in an attempt to achieve
the Trust's investment objective. High turnover rates may result in higher
brokerage commissions and capital gains. See "Tax Information" in this
prospectus and "Brokerage Transactions" in the Statement of Additional
Information.

TRUST INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The Trust is managed by a Board of Trustees. The Trustees are responsible for
managing the Trust's business affairs and for exercising all the Trust's powers
except those reserved for the shareholders. The Executive Committee of the Board
of Trustees handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER

Pursuant to an investment advisory contract with the Trust, investment decisions
for the Trust are made by Federated Management, the Trust's investment adviser
(the "Adviser"), subject to direction by the Trustees. The Adviser continually
conducts investment research and supervision for the Trust and is responsible
for the purchase and sale of portfolio instruments, for which it receives an
annual fee from the Trust.

ADVISORY FEES

The Adviser receives an annual investment advisory fee equal to 0.40% of the
Trust's average daily net assets.

ADVISER'S BACKGROUND

Federated Management, a Delaware business trust organized on April 11, 1989,
is a registered investment adviser under the Investment Advisers Act of 1940.
It is a subsidiary of Federated Investors. All of the Class A (voting) shares
of Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife,
and Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee
of Federated Investors.

Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number
of investment companies. With over $120 billion invested across more than 300
funds under management and/or administration by its subsidiaries, as of
December 31, 1997, Federated Investors is one of the largest mutual fund
investment managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the company in
1955. Federated funds are presently at work in and through approximately
4,000 financial institutions nationwide.

Kathleen M. Foody-Malus has been the Trust's portfolio manager since April
1990. Ms. Foody-Malus joined Federated Investors in 1983 and has been a Vice
President of the Trust's investment adviser since 1993. Ms. Foody-Malus
served as an Assistant Vice President of the investment adviser from 1990
until 1992. Ms. Foody-Malus received her M.B.A. in Accounting/Finance from
the University of Pittsburgh.

Edward J. Tiedge has been the Trust's portfolio manager since October 1995.
Mr. Tiedge joined Federated Investors in 1993 and has been a Vice President
of the Trust's investment adviser since January 1996. He served as an
Assistant Vice President of the Trust's investment adviser in 1995, and an
Investment Analyst during 1993 and 1994. Mr. Tiedge served as Director of
Investments at Duquesne Light Company from 1990 to 1993. Mr. Tiedge is a
Chartered Financial Analyst and received his M.S. in Industrial
Administration from Carnegie Mellon University.

Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Trust and its portfolio securities.
These codes recognize that such persons owe a fiduciary duty to the Trust's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.

DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the principal distributor for Institutional
Shares. It is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.

SHAREHOLDER SERVICES

The Trust has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the Trust
may make payments up to 0.25% of the average daily net asset value of
Institutional Shares, computed at an annual rate, to obtain certain personal
services for shareholders and to maintain shareholder accounts. From time to
time and for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or will
select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Trust and Federated Shareholder
Services. SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS In addition
to payments made pursuant to the Shareholder Services Agreement, Federated
Securities Corp. and Federated Shareholder Services, from their own assets, may
pay financial institutions supplemental fees for the performance of substantial
sales services, distribution-related support services, or shareholder services.
The support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Trust. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Trust's investment adviser or its affiliates.
ADMINISTRATION OF THE TRUST

ADMINISTRATIVE SERVICES

Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Trust. Federated Services Company
provides these at an annual rate, which relates to the average aggregate daily
net assets of all funds advised by subsidiaries of Federated Investors as
specified below:

MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS

0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.

NET ASSET VALUE

The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of the Shares
in the liabilities of the Trust and those attributable to Shares, and dividing
the remainder by the number of Shares outstanding. The net asset value for
Shares may exceed that of Institutional Service Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.

INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased either by wire or mail.

To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Trust reserves the right to reject any purchase request.

BY WIRE

To purchase Shares by Federal Reserve wire, call the Trust before 4:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) on the
next business day following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company c/o State Street Bank and Trust Company,
Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated Income
Trust--Institutional Shares; Trust Number (this number can be found on the
account statement or by contacting the Trust); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Institutional Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.

BY MAIL

To purchase Shares by mail, send a check made payable to Federated Income
Trust--Institutional Shares to Federated Shareholder Services Company, c/o State
Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts 02266-8600.
Please include an account number on the check. Orders by mail are considered
received after payment by check is converted by the transfer agent's bank, State
Street Bank and Trust Company ("State Street Bank") into federal funds. This is
generally the next business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED

The minimum initial investment in Shares is $25,000 plus any financial
intermediary's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a financial
intermediary may be subject to a smaller minimum investment.

WHAT SHARES COST

Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Trust. Investors who purchase
Shares through a financial intermediary may be charged a service fee by that
financial intermediary. The net asset value is determined as of the close of
trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange,
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Trust's portfolio securities that its net asset
value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. EXCHANGING SECURITIES FOR TRUST SHARES

Investors may exchange certain U.S. government securities or a combination of
securities and cash for Shares. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. Securities accepted by the Trust
are valued in the same manner as the Trust values its assets. Investors wishing
to exchange securities should first contact Federated Securities Corp.

Shares purchased by exchange of U.S. government securities cannot be
redeemed by telephone for five business days to allow time for the transfer
to settle.

CONFIRMATIONS AND ACCOUNT STATEMENTS

DIVIDENDS

Dividends are declared daily and paid monthly to all shareholders invested in
the Trust on the record date. Dividends are declared just prior to determining
net asset value. If an order for Shares is placed on the preceding business day,
Shares purchased by wire begin earning dividends on the business day wire
payment is received by State Street Bank. If the order for Shares and payment by
wire are received on the same day, shares begin earning dividends on the next
business day. Shares purchased by check begin earning dividends on the business
day after the check is converted, upon instruction of the transfer agent, into
federal funds. Dividends are automatically reinvested in additional Shares
unless cash payments are requested by contacting the Trust. CAPITAL GAINS

Capital gains realized by the Trust, if any, are distributed at least once every
12 months.

REDEEMING INSTITUTIONAL SHARES

The Trust redeems Shares at the net asset value next determined after the Trust
receives the redemption request. Investors who redeem shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Trust computes its net asset
value. Redemption requests must be received in proper form and can be made by
telephone request or by written request.

TELEPHONE REDEMPTION

Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wire-transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System. If
at any time, the Trust shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified. An
authorization form permitting the Trust to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
such a case should occur, another method of redemption, such as "Written
Requests," should be considered. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS

Shares may also be redeemed by sending a written request to the Trust. Call the
Trust for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Trust name, his account number,
and the share or dollar amount requested. All owners of the account must sign
the request exactly as the shares are registered. If share certificates have
been issued, they must be sent unendorsed with the written request by registered
or certified mail.

SIGNATURES

Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Trust or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:

* a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
* a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
* a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
* any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Trust does not accept signatures guaranteed by a notary public.

The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.

RECEIVING PAYMENT

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Trust may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum of $25,000 due to shareholder
redemptions. This requirement does not apply, however, if the balance falls
below $25,000 because of changes in the Trust's net asset value.

Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION

VOTING RIGHTS

Each Share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote.

As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's operation and for the election of Trustees under certain
circumstances.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares entitled to vote.

TAX INFORMATION

FEDERAL INCOME TAX

The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time the Trust advertises its total return and yield for Shares.

Total return represents the change, over a specified period of time, in the
value of an investment in Shares of the Trust after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.

Total return and yield will be calculated separately for Institutional Shares
and Institutional Service Shares. Because Institutional Service Shares are
subject to a 12b-1 fee and shareholder services fee, the total return and yield
for Institutional Shares, for the same period, will exceed that of Institutional
Service Shares.

Institutional Shares are sold without any sales charge or other similar
non-recurring charges.

From time to time, advertisements for the Trust may refer to ratings, rankings,
and certain other information in certain financial publications and/or compare
the performance of Institutional Shares to certain indices.

OTHER CLASSES OF SHARES

Institutional Service Shares are designed primarily for retail and private
banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
U.S. government securities. A minimum initial investment of $25,000 over a
90-day period is required.

Institutional Service Shares are distributed pursuant to a 12b-1 Plan adopted by
the Trust whereby the distributor is paid a fee of 0.25% of the Institutional
Service Shares' average daily net assets. In addition, Institutional Service
Shares pay a shareholder services fee of 0.25% of the Institutional Service
Shares' average daily net assets.

Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Trust is sold.

The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between class expenses and
distribution and shareholder service expenses borne by shares of each respective
class. The stated advisory fee is the same for both classes of shares.

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on the inside back cover.

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
1998 1997 1996 1995 1994 1993(A)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.15 $10.39 $ 9.70 $10.50 $10.73 $10.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.64 0.65 0.65 0.68 0.75 0.51
Net realized and unrealized gain (loss) on 0.24 (0.24) 0.69 (0.80) (0.23) 0.09
investments
Total from investment operations 0.88 0.41 1.34 (0.12) 0.52 0.60
LESS DISTRIBUTIONS
Distributions from net investment income (0.65) (0.65) (0.65) (0.68) (0.75) (0.51)
NET ASSET VALUE, END OF PERIOD $10.38 $10.15 $10.39 $ 9.70 $10.50 $10.73
TOTAL RETURN(B) 8.96% 4.21% 14.19% (1.08%) 4.96% 4.80%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80% 0.80% 0.80% 0.78% 0.76% 0.76%*
Net investment income 6.28% 6.49% 6.45% 6.75% 7.03% 7.16%*
Expense waiver/reimbursement(c) 0.25% 0.25% 0.25% 0.22% -- --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $43,424 $43,257 $40,788 $40,428 $67,176 $53,981
Portfolio turnover 306% 212% 184% 217% 178% 52%
</TABLE>
* Computed on an annualized basis.

(a) Reflects operations for the period from May 31, 1992 (effective date of
Institutional Service Shares) to January 31, 1993.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

PORTFOLIO OF INVESTMENTS
FEDERATED INCOME TRUST

JANUARY 31, 1998

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
LONG-TERM OBLIGATIONS--97.5%
(A)FEDERAL HOME LOAN MORTGAGE CORP.--29.2%
$ 124,634 11.50%, 12/1/2014 $ 141,265
242,304 11.00%, 5/1/2000 253,208
161,147 10.50%, 7/1/2000 168,386
11,093,750 9.50%, 11/1/2009-12/1/2022 12,018,477
2,878,701 9.00%, 4/1/2009 - 2/1/2013 3,061,002
62,591,738 8.00%, 6/1/2027 - 1/1/2028 64,979,024
14,294,951 7.50%, 12/1/2022 - 2/1/2027 14,739,261
37,400,000 (b) 7.50%, 2/15/2028 38,533,595
24,715,722 7.00%, 10/1/2007 - 2/15/2013 25,230,750
24,000,000 (b) 6.50%, 2/15/2013 23,940,000
21,420,000 6.50%, 3/15/2028 21,366,450
26,313,338 6.00%, 3/1/2011 - 6/1/2011 26,142,828
TOTAL 230,574,246
(A)FEDERAL HOME LOAN MORTGAGE CORP. REMIC--12.8%
14,900,347 7.25%, Series 1967-J, 1/17/2011 15,356,000
11,250,000 7.00%, Series 1541-H, 10/15/2022 11,761,988
20,000,000 6.75%, Series 1583-K, 2/15/2023 20,773,800
15,000,000 6.50%, Series 1992-PM, 2/15/2026 15,272,100
15,000,000 6.50%, Series 1959-C, 5/15/2027 14,890,200
22,731,000 6.50%, Series 1994-E, 9/15/2027 22,717,816
TOTAL 100,771,904
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION--20.9%
13,034,834 10.50%, 12/1/2019 - 4/1/2022 14,562,810
20,980,357 10.00%, 11/1/2009 - 4/1/2025 23,179,312
17,920,645 8.00%, 12/1/2026 18,612,741
5,058,979 7.50%, 3/1/2010 - 4/1/2010 5,281,878
44,000,000 (b)6.50%, 2/15/2028 44,302,720
20,000,000 (b)6.00%, 2/15/2013 19,878,126
39,837,712 6.00%, 2/1/2010-12/1/2024 39,195,325
TOTAL 165,012,912
</TABLE>

FEDERATED INCOME TRUST

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE

<C> <S> <C>
LONG-TERM OBLIGATIONS--CONTINUED
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC--1.6%
$ 17,110,817 8.50%, Strip 32-2, (Interest Only), 4/1/2018 $ 3,946,268
20,284,464 7.00%, Series 97-89 E, (Interest Only), 12/20/2027 9,115,432
TOTAL 13,061,700
(A)GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--33.0%
79,444,703 8.00%, 12/15/2012 - 2/15/2028 82,705,857
58,506,117 7.00%, 7/20/2022 - 11/15/2026 59,786,513
7,500,000 (b) 7.00%, 2/15/2028 7,610,175
109,949,668 6.50%, 12/15/2023 - 10/15/2024 110,226,700
TOTAL 260,329,245
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST $761,545,363) 769,750,007
(C)REPURCHASE AGREEMENTS--21.3%
21,435,000 BT Securities Corp., 5.61%, dated 1/30/1998, due 2/2/1998
21,435,000 68,000,000 (d)Credit Suisse First Boston, Inc., 5.50%,
dated 1/13/1998, 68,000,000
due 2/18/1998
20,000,000 (d)Credit Suisse First Boston, Inc., 5.50%, dated 1/15/1998, 20,000,000
due 2/18/1998
13,700,000 (d)Morgan Stanley Group, Inc., 5.49%, dated 1/14/1998, due 13,700,000
2/18/1998
37,400,000 (d)UBS Securities, Inc., 5.47%, dated 1/12/1998, due 37,400,000
2/12/1998
7,500,000 (d)UBS Securities, Inc., 5.48%, dated 1/22/1998, due 7,500,000
2/19/1998
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 168,035,000
TOTAL INVESTMENTS (IDENTIFIED COST $929,580,363)(E) $ 937,785,007
</TABLE>

(a) Because of monthly principal payments, the average lives of the Federal Home
Loan Mortgage Corp., Federal National Mortgage Association, and Government
National Mortgage Association securities approximates 1-10 years.

(b) Indicates securities subject to dollar roll transactions with a total market
value of $134,264,616.

(c) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts 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 if creditworthiness of the issuer is downgraded.

(e) The cost of investments for federal tax purposes amounts to $929,580,363.
The net unrealized appreciation of investments on a federal tax basis amounts to
$8,204,644 which is comprised of $11,802,942 appreciation and $3,598,298
depreciation at January 31, 1998.

Note: The categories of investments are shown as a percentage of net assets
($789,831,322) at January 31, 1998.

The following acronyms are used throughout this portfolio:

REMIC --Real Estate Mortgage Investment Conduit

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF ASSETS AND LIABILITIES

FEDERATED INCOME TRUST

JANUARY 31, 1998

<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 168,035,000
Investments in securities 769,750,007
Total investments in securities, at value (identified and $ 937,785,007
tax cost $929,580,363)
Income receivable 4,556,606
Receivable for investments sold 42,322,046
Receivable for shares sold 3,476,218
Total assets 988,139,877
LIABILITIES:
Payable for investments purchased $ 59,544,297
Payable for shares redeemed 789,432
Income distribution payable 2,985,580
Payable for dollar roll transactions 134,808,547
Accrued expenses 180,699
Total liabilities 198,308,555
NET ASSETS for 76,124,100 shares outstanding $ 789,831,322
NET ASSETS CONSIST OF:
Paid in capital $ 887,783,612
Net unrealized appreciation of investments 8,204,644
Accumulated net realized loss on investments (106,156,934)
Total Net Assets $ 789,831,322
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$746,407,311 / 71,939,256 shares outstanding $10.38
INSTITUTIONAL SERVICE SHARES:
$43,424,011 / 4,184,844 shares outstanding $10.38
</TABLE>

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF OPERATIONS
FEDERATED INCOME TRUST

YEAR ENDED JANUARY 31, 1998

<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of dollar roll expense of $ 59,026,546
$2,698,298)
EXPENSES:
Investment advisory fee $ 3,331,788
Administrative personnel and services fee 628,738
Custodian fees 66,335
Transfer and dividend disbursing agent fees
and expenses 279,119
Directors'/Trustees' fees 12,189
Auditing fees 24,874
Legal fees 9,581
Portfolio accounting fees 128,060
Distribution services fee--Institutional Service 107,761
Shares
Shareholder services fee--Institutional Shares 1,974,679
Shareholder services fee--Institutional Service 107,761
Shares
Share registration costs 26,523
Printing and postage 23,759
Taxes 37,695
Miscellaneous 15,132
Total expenses 6,773,994
Waivers --
Waiver of distribution services fee
--Institutional Service Shares $ (103,450)
Waiver of shareholder services fee
--Institutional Shares (1,718,521)
Waiver of shareholder services fee
--Institutional Service Shares (3,218)
Total waivers (1,825,189)
Net expenses 4,948,805
Net investment income 54,077,741
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments 16,279,577
Net change in unrealized appreciation of 2,287,217
investments
Net realized and unrealized gain on investments 18,566,794
Change in net assets resulting from operations $ 72,644,535

</TABLE>
(See Notes which are an integral part of the Financial Statements)

STATEMENT OF CHANGES IN NET ASSETS
FEDERATED INCOME TRUST

<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 54,077,741 $ 63,340,272
Net realized gain (loss) on investments ($16,260,368 net gain 16,279,577 (4,670,222)
and $4,661,466 net loss, respectively, as computed for federal
tax purposes)
Net change in unrealized appreciation/depreciation 2,287,217 (19,622,703)
Change in net assets resulting from operations 72,644,535 39,047,347
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (51,782,096) (60,187,940)
Institutional Service Shares (2,738,632) (2,622,790)
Change in net assets resulting from distributions to (54,520,728) (62,810,730)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 171,602,234 181,714,820
Net asset value of shares issued to shareholders in payment of 14,317,427 16,144,090
distributions declared
Cost of shares redeemed (296,011,693) (316,176,917)
Change in net assets resulting from share transactions (110,092,032) (118,318,007)
Change in net assets (91,968,225) (142,081,390)
NET ASSETS:
Beginning of period 881,799,547 1,023,880,937
End of period (including undistributed net investment income of $ 789,831,322 $ 881,799,547
$0 and $442,987, respectively)
</TABLE>

(See Notes which are an integral part of the Financial Statements)

NOTES TO FINANCIAL STATEMENTS

FEDERATED INCOME TRUST

JANUARY 31, 1998

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 offers two classes of shares: Institutional Shares
and Institutional Service Shares. The investment objective of the Trust is
current income.

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

U.S. government securities are generally valued at the mean of the latest bid
and asked price as furnished by an independent pricing service. Short-term
securities are valued at the prices provided by an independent pricing service.
However, 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.

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 agreement
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 (the "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.

Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for expiring capital
loss carryforwards. The following reclassifications have been made to the
financial statements.
INCREASE (DECREASE)
ACCUMULATED
NET REALIZED
PAID-IN CAPITAL GAIN/LOSS

($129,457) $129,457

Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.

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 income. Accordingly, no provisions for federal tax are
necessary. At January 31, 1998, the Trust, for federal tax purposes, had a
capital loss carryforward of $106,232,141, which will reduce the Trust's taxable
income arising from future net realized gain on investments, if any, 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 as follows:

EXPIRATION YEAR EXPIRATION AMOUNT
1999 $ 1,962,942
2003 99,607,733
2005 4,661,466

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 GNMA, FNMA, and FHLMC, in which the Trust sells 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 involve "to be announced"
securities and are treated as 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.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.

OTHER

Investment transactions are accounted for on the trade date.

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 shares were as follows:

YEAR ENDED JANUARY 31,
1998 1997
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 15,549,209 $ 159,250,672 16,566,782 $ 167,676,822
Shares issued to shareholders in payment 1,254,667 12,827,066 1,436,529 14,505,137
of distributions declared
Shares redeemed (27,486,985) (281,173,119) (30,045,652) (303,965,855)
Net change resulting from Institutional
Share transactions (10,683,109) $ (109,095,381) (12,042,341) $ (121,783,896)
<CAPTION>
YEAR ENDED JANUARY 31,
1998 1997
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,224,367 $ 12,546,246 1,383,128 $ 14,037,998
Shares issued to shareholders in payment
of distributions declared 145,892 1,490,361 162,236 1,638,953
Shares redeemed (1,448,069) (14,838,574) (1,210,371) (12,211,062)
Net change resulting from Institutional
Service Share transactions (77,810) $ (801,967) 334,993 $ 3,465,889
Net change resulting from share
transactions (10,760,919) $ (109,897,348) (11,707,348) $ (118,318,007)
</TABLE>

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 0.40% of the Trust's
average daily net assets.

ADMINISTRATIVE FEE

Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Trust with administrative personnel and services. The
fee paid to FServ 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. DISTRIBUTION SERVICES FEE

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 0.25% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. The distributor may
voluntarily choose to waive any 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 0.25% of average daily net assets
of the Trust for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Trust. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.

PORTFOLIO ACCOUNTING FEES

FServ 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 Directors or
Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended January 31, 1998, were as follows:

PURCHASES $2,511,635,255
SALES $2,541,718,196

INDEPENDENT AUDITORS' REPORT

To the Trustees and Shareholders of FEDERATED INCOME TRUST:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated Income Trust as of January 31, 1998,
and the related statement of operations for the year then ended, the statements
of changes in net assets for the years ended January 31, 1998 and 1997, and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
January 31, 1998, by correspondence with the custodian and brokers; where
replies were not received, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Federated Income
Trust as of January 31, 1998, the results of its operations, the changes in its
net assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
March 18, 1998

FEDERATED INCOME TRUST
INSTITUTIONAL SHARES

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

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

INVESTMENT ADVISER
Federated Management
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 AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222-5401

Federated Securities Corp., Distributor
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM

[Graphic]

FEDERATED INCOME TRUST

Institutional Shares

PROSPECTUS

MARCH 31, 1998

An Open-End, Diversified Management
Investment Company

Cusip 314199100
8030102A-IS (3/98)

[Graphic]

FEDERATED INCOME TRUST

Institutional Service Shares

PROSPECTUS

The Institutional Service Shares of Federated Income Trust (the "Trust") offered
by this prospectus represent interests in a diversified portfolio of securities.
The Trust is a no-load, open-end, diversified management investment company (a
mutual fund). The investment objective of the Trust is to provide current
income. The Trust pursues this investment objective by investing in U.S.
government securities. As of the date of this prospectus, it is anticipated that
the Trust will invest primarily in securities of U.S. government agencies or
instrumentalities, such as the Federal Home Loan Mortgage Corporation.

THE INSTITUTIONAL SERVICE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SERVICE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in Institutional Service Shares of the Trust. Keep this prospectus for
future reference. The Trust has also filed a Statement of Additional
Information dated March 31, 1998, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of the
Statement of Additional Information, or a paper copy of this prospectus, if you
have received your prospectus electronically, free of charge by calling
1-800-341-7400. To obtain other information, or make inquiries about the Trust,
contact the Trust at the address listed in the back of this prospectus. This
Statement of Additional Information, material incorporated by reference into
this document, and other information regarding the Trust is maintained
electronically with the SEC at Internet Website (http://www.sec.gov). THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. Prospectus dated March 31, 1998 TABLE OF CONTENTS
Summary of Trust Expenses 1 Financial Highlights--Institutional Service Shares
2 General Information 3 Investment Information 3 Investment Objective 3
Investment Policies 3 Investment Limitations 5 Portfolio Turnover 5 Trust
Information 5 Management of the Trust 5 Distribution of Institutional Service
Shares 6 Supplemental Payments to Financial Institutions 6 Administration of
the Trust 7 Administrative Services 7 Net Asset Value 7 Investing in
Institutional Service Shares 7 Share Purchases 7 Exchange Privilege 7 Minimum
Investment Required 8 What Shares Cost 8 Exchanging Securities for Trust Shares
8 Confirmations and Account Statements 8 Dividends 8 Capital Gains 8 Redeeming
Institutional Service Shares 8 Telephone Redemption 8 Written Requests 9
Accounts with Low Balances 9 Shareholder Information 9 Voting Rights 9 Tax
Information 9 Federal Income Tax 9 State and Local Taxes 10 Performance
Information 10 Other Classes of Shares 10 Financial Highlights--Institutional
Shares 11 Financial Statements 12 Independent Auditors' Report Inside Back
Cover

SUMMARY OF TRUST EXPENSES

INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee 0.40%
12b-1 Fee (after waiver)(1) None
Total Other Expenses 0.40%
Shareholder Services Fee 0.25%
Total Operating Expenses(2) 0.81%
</TABLE>

(1) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the 12b-1 fee.The distributor can terminate this
voluntary waiver at any time at its sole discretion. The maximum 12b-1 fee is
0.25%.

(2) The total operating expenses are estimated to be 1.05% absent the voluntary
waiver of a portion of the 12b-1 fee. The total operating expenses were 0.80%
for the fiscal year ended January 31, 1998 and would have been 1.05% absent the
voluntary waiver of a portion of the 12b-1 fee.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Institutional Service Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Trust Information" and "Investing in
Institutional Service Shares." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.

LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE MAXIMIM
FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS, INC.

EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<S> <C>
1 Year $ 8
3 Years $ 26
5 Years $ 45
10 Years $100
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on the inside back cover.

(a) Reflects operations for the period from May 31, 1992 (effective date of
Institutional Service Shares) to January 31, 1993.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION

Institutional Service Shares ("Shares") are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
U.S. government securities. A minimum initial investment of $25,000 over a
90-day period is required.

Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Trust.

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

As a matter of investment policy which may be changed without shareholder
approval, the Trust will limit its investments to those that are permitted for
purchase by federal savings associations pursuant to applicable rules,
regulations, or interpretations of the Office of Thrift Supervision. Should
additional permitted investments be allowed as a result of future changes in
applicable regulations or federal laws, the Trust reserves the right, without
shareholder approval, to make such investments consistent with the Trust's
investment objective, policies, and limitations. Further, should existing
statutes or regulations change so as to cause any securities held by the Trust
to become ineligible for purchase by federal savings associations, the Trust
will dispose of those securities at times advantageous to the Trust.

As operated within the above limitation, the Trust may also serve as an
appropriate vehicle for a national bank as an investment for its own account.

Except as otherwise noted, the investment policies and limitations described
below cannot be changed without approval of shareholders.

ACCEPTABLE INVESTMENTS

* direct obligations of the U.S. Treasury such as U.S. Treasury bills,
notes, and bonds;

CMOS

The prices of fixed income securities fluctuate inversely to the direction of
interest rates.

REPURCHASE AGREEMENTS

CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

PORTFOLIO TURNOVER

TRUST INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

INVESTMENT ADVISER

ADVISORY FEES

The Adviser receives an annual investment advisory fee equal to 0.40% of the
Trust's average daily net assets.

ADVISER'S BACKGROUND

DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES

Federated Securities Corp. is the principal distributor for Institutional
Service Shares. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

Under a distribution plan adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan"), the distributor may be paid a fee
by the Trust in an amount computed at an annual rate of up to 0.25% of the
average daily net asset value of the Institutional Service Shares. The
distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers to provide
sales services or distribution-related support services as agents for their
clients or customers.

The Plan is a compensation-type plan. As such, the Trust makes no payments to
the distributor except as described above. Therefore, the Trust does not pay for
unreimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Trust, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Trust
under the Plan.

In addition, the Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Trust may make payments up to 0.25% of the average daily net asset value of
the Institutional Service Shares to obtain certain personal services for
shareholders and to maintain shareholder accounts. From time to time and for
such periods as deemed appropriate, the amount stated above may be reduced
voluntarily. Under the Shareholder Services Agreement, Federated Shareholder
Services will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Trust and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS

In addition to payments made pursuant to the Distribution Plan and Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions supplemental
fees for the performance of substantial sales services, distribution-related
support services, or shareholder services. The support may include sponsoring
sales, educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Trust. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Trust's investment
adviser or its affiliates.

ADMINISTRATION OF THE TRUST

ADMINISTRATIVE SERVICES

MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS

0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

NET ASSET VALUE

The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of Shares in
the liabilities of the Trust and those attributable to Shares, and dividing the
remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Shares due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.

INVESTING IN INSTITUTIONAL SERVICE SHARES

SHARE PURCHASES

Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased either by wire or mail.

BY WIRE

To purchase Shares by Federal Reserve wire, call the Trust before 4:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) on the
next business day following the order. Federal funds should be wired as follows:
Federated Shareholder Services Company c/o State Street Bank and Trust Company,
Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated Income
Trust--Institutional Service Shares; Trust Number (this number can be found on
the account statement or by contacting the Trust); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Institutional Service
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.

BY MAIL

To purchase Shares by mail, send a check made payable to Federated Income
Trust--Institutional Service Shares to Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. Please include an account number on the check. Orders by mail are
considered received after payment by check is converted by the transfer agent's
bank, State Street Bank and Trust Company ("State Street Bank") into federal
funds. This is generally the next business day after State Street Bank receives
the check. EXCHANGE PRIVILEGE

Financial institutions that maintain master accounts with an aggregate
investment of at least $400 million in certain funds which are advised or
distributed by affiliates of Federated Investors may exchange their Shares for
Institutional Shares of the Trust.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in Shares is $25,000 plus any non-affiliated bank
or broker's fee, if applicable. However, an account may be opened with a smaller
amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a
non-affiliated bank or broker may be subject to a smaller minimum investment.

WHAT SHARES COST

The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Trust's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR TRUST SHARES

Shares purchased by exchange of U.S. government securities cannot be redeemed
for five business days to allow time for the transfer to settle.

CONFIRMATIONS AND ACCOUNT STATEMENTS

Shareholders will receive detailed confirmations of transactions. In addition,
shareholders will receive periodic statements reporting all account activity,
including dividends paid. The Trust will not issue share certificates.
DIVIDENDS Dividends are declared daily and paid monthly to all shareholders
invested in the Trust on the record date. Dividends are declared just prior to
determining net asset value. If an order for Shares is placed on the preceding
business day, Shares purchased by wire begin earning dividends on the business
day wire payment is received by State Street Bank. If the order for Shares and
payment by wire are received on the same day, Shares begin earning dividends on
the next business day. Shares purchased by check begin earning dividends on the
business day after the check is converted, upon instruction of the transfer
agent, into federal funds. Dividends are automatically reinvested in additional
Shares unless cash payments are requested by contacting the Trust. CAPITAL
GAINS

Capital gains realized by the Trust, if any, are distributed at least once every
12 months.

REDEEMING INSTITUTIONAL SERVICE SHARES

The Trust redeems Shares at the net asset value next determined after the Trust
receives the redemption request. Redemptions will be made on days on which the
Trust computes its net asset value. Investors who redeem shares through a
financial intermediary may be charged a service fee by that financial
intermediary. Redemption requests must be received in proper form and can be
made by telephone request or by written request.

TELEPHONE REDEMPTION

Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). All proceeds will normally be wire-transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System. If
at any time the Trust shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified. An
authorization form permitting the Trust to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
such a case should occur, another method of redemption, such as "Written
Requests," should be considered. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS

SIGNATURES

* a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");

* a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
* a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
* any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Trust does not accept signatures guaranteed by a notary public.

RECEIVING PAYMENT

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.

ACCOUNTS WITH LOW BALANCES

Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION

VOTING RIGHTS

TAX INFORMATION

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION

From time to time the Trust advertises its total return and yield for Shares.

The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the SEC) earned by Shares over a thirty-day
period by the offering price per share of Shares on the last day of the period.
This number is then annualized using semi-annual compounding. The yield does not
necessarily reflect income actually earned by Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
Total return and yield will be calculated separately for Institutional Service
Shares and Institutional Shares. Because Institutional Service Shares are
subject to a 12b-1 fee and shareholder services fee, the total return and yield
for Institutional Shares, for the same period, will exceed that of Institutional
Service Shares.

Institutional Service Shares are sold without any sales charge or other similar
non-recurring charges.

From time to time, advertisements for the Trust may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
performance of Institutional Service Shares to certain indices.

OTHER CLASSES OF SHARES

Institutional Shares are sold primarily to accounts for which financial
institutions act in a fiduciary or agency capacity. Institutional Shares are
sold at net asset value. Investments in Institutional Shares are subject to a
minimum initial investment of $25,000.

Institutional Shares are distributed without a 12b-1 Plan. Institutional Shares
pay a shareholder services fee of 0.25% of the Institutional Shares' average
daily net assets.

Financial institutions and brokers providing sales and administrative services
may receive different compensation depending upon which class of shares of the
Trust is sold.

The stated advisory fee is the same for both classes of shares.

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on the inside back cover.

(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(b) 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)

PORTFOLIO OF INVESTMENTS
FEDERATED INCOME TRUST

JANUARY 31, 1998

FEDERATED INCOME TRUST

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE

(b) Indicates securities subject to dollar roll transactions with a total market
value of $134,264,616.

Note: The categories of investments are shown as a percentage of net assets
($789,831,322) at January 31, 1998.

The following acronyms are used throughout this portfolio:

REMIC --Real Estate Mortgage Investment Conduit

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF ASSETS AND LIABILITIES

FEDERATED INCOME TRUST

JANUARY 31, 1998

<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 168,035,000
Investments in securities 769,750,007
Total investments in securities, at value (identified and $ 937,785,007
tax cost $929,580,363)
Income receivable 4,556,606
Receivable for investments sold 42,322,046
Receivable for shares sold 3,476,218
Total assets 988,139,877
LIABILITIES:
Payable for investments purchased $ 59,544,297
Payable for shares redeemed 789,432
Income distribution payable 2,985,580
Payable for dollar roll transactions 134,808,547
Accrued expenses 180,699
Total liabilities 198,308,555
Net Assets for 76,124,100 shares outstanding $ 789,831,322
NET ASSETS CONSIST OF:
Paid in capital $ 887,783,612
Net unrealized appreciation of investments 8,204,644
Accumulated net realized loss on investments (106,156,934)
Total Net Assets $ 789,831,322
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$746,407,311 / 71,939,256 shares outstanding $10.38
INSTITUTIONAL SERVICE SHARES:
$43,424,011 / 4,184,844 shares outstanding $10.38
</TABLE>

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF OPERATIONS
FEDERATED INCOME TRUST

YEAR ENDED JANUARY 31, 1998

</TABLE>

(See Notes which are an integral part of the Financial Statements)

STATEMENT OF CHANGES IN NET ASSETS
FEDERATED INCOME TRUST

(See Notes which are an integral part of the Financial Statements)

NOTES TO FINANCIAL STATEMENTS

FEDERATED INCOME TRUST

JANUARY 31, 1998

ORGANIZATION

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

REPURCHASE AGREEMENTS

INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS

INCREASE (DECREASE)
ACCUMULATED
NET REALIZED
PAID-IN CAPITAL GAIN/LOSS

($129,457) $129,457

Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.

FEDERAL TAXES

EXPIRATION YEAR EXPIRATION AMOUNT
1999 $ 1,962,942
2003 99,607,733
2005 4,661,466

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

DOLLAR ROLL TRANSACTIONS

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

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 shares were as follows:

YEAR ENDED JANUARY 31,

1998 1997
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT

Shares sold 1,224,367 $ 12,546,246 1,383,128 $ 14,037,998
Shares issued to shareholders in payment
of distributions declared 145,892 1,490,361 162,236 1,638,953
Shares redeemed (1,448,069) (14,838,574) (1,210,371) (12,211,062)
Net change resulting from Institutional
Service Share transactions (77,810) $ (801,967) 334,993 $ 3,465,889
Net change resulting from share
transactions (10,760,919) $ (109,897,348) (11,707,348) $ (118,318,007)
</TABLE>

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 0.40% of the Trust's
average daily net assets.

ADMINISTRATIVE FEE

DISTRIBUTION SERVICES FEE

SHAREHOLDER SERVICES FEE

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

PORTFOLIO ACCOUNTING FEES

FServ 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 Directors or
Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended January 31, 1998, were as follows:

Purchases $2,511,635,255
Sales $2,541,718,196

INDEPENDENT AUDITORS' REPORT

To the Trustees and Shareholders of FEDERATED INCOME TRUST:

DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
March 18, 1998

FEDERATED INCOME TRUST
INSTITUTIONAL SERVICE SHARES

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

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

INVESTMENT ADVISER
Federated Management
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 AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222-5401

Federated Securities Corp., Distributor
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM

[Graphic]

FEDERATED INCOME TRUST

Institutional Service Shares

PROSPECTUS

MARCH 31, 1998

An Open-End, Diversified Management
Investment Company

Cusip 314199209
8030102A-SS (3/98)

[Graphic]

FEDERATED INCOME TRUST

INSTITUTIONAL SHARES

INSTITUTIONAL SERVICE SHARES

STATEMENT OF ADDITIONAL INFORMATION

The Institutional Shares and Institutional Service Shares of Federated Income
Trust (the "Trust") represent interests in a diversified portfolio of
securities. This Statement of Additional Information should be read with the
prospectuses of the Trust dated March 31, 1998. This Statement is not a
prospectus. You may request a copy of a prospectus or a paper copy of this
Statement, if you have received it electronically, free of charge by calling
1-800-341-7400.

FEDERATED INVESTORS FUNDS

5800 CORPORATE DRIVE

PITTSBURGH, PENNSYLVANIA 15237-7000

Statement dated March 31, 1998

[Graphic]

Cusip 314199100
Cusip 314199209

8030102B (3/98)

[Graphic]

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT THE TRUST 1 INVESTMENT OBJECTIVE AND POLICIES 1 Types
of Investments 1 When-Issued and Delayed Delivery Transactions 1 Lending
Portfolio Securities 1 Repurchase Agreements 1 Interest-Only and Principal-Only
Investments 1 Inverse Floaters 2 Portfolio Turnover 2 INVESTMENT LIMITATIONS 2
Selling Short and Buying on Margin 2 Borrowing Money 2 Pledging Assets 2
Lending Cash or Securities 3 Issuing Senior Securities 3 Investing in
Securities of Other Investment Companies 3 FEDERATED INCOME TRUST MANAGEMENT 3
Trust Ownership 7 Trustee Compensation 8 Trustee Liability 8 INVESTMENT
ADVISORY SERVICES 8 Adviser to the Trust 8 Advisory Fees 9 BROKERAGE
TRANSACTIONS 9 OTHER SERVICES 9 Trust Administration 9 Custodian and Portfolio
Accountant 9 Transfer Agent 9 Independent Auditors 9 PURCHASING SHARES 10
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES 10 Conversion to Federal Funds 10
DETERMINING NET ASSET VALUE 10 Determining Market Value of Securities 10
REDEEMING SHARES 11 MASSACHUSETTS PARTNERSHIP LAW 11 EXCHANGING SECURITIES FOR
TRUST SHARES 11 Tax Consequences 11 TAX STATUS 11 The Trust's Tax Status 11
Shareholders' Tax Status 12 TOTAL RETURN 12 YIELD 12 PERFORMANCE COMPARISONS 12
Economic and Market Information 13 Duration 13 ABOUT FEDERATED INVESTORS 14
Mutual Fund Market 14 Institutional Clients 14 Bank Marketing 14 Broker/Dealers
and Bank Broker/Dealer Subsidiaries 14

GENERAL INFORMATION ABOUT THE TRUST

Federated Income Trust was established as a Massachusetts business trust under a
Declaration of Trust dated November 17, 1981.

Shares of the Trust are offered in two classes known as Institutional Shares and
Institutional Service Shares (individually and collectively referred to as
"Shares"). This Statement of Additional Information relates to the
above-mentioned Shares of the Trust.

INVESTMENT OBJECTIVE AND POLICIES

The Trust's investment objective is current income. The investment objective
cannot be changed without approval of shareholders.

Unless indicated otherwise, the policies described below cannot be changed
without the approval of shareholders.

TYPES OF INVESTMENTS

The Trust invests only in U.S. government securities and certain
collateralized mortgage obligations. This investment policy cannot be
changed without approval of shareholders.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price or yield for the Trust. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Trust sufficient
to make payment for the securities to be purchased are segregated on the Trust's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Trust does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
LENDING PORTFOLIO SECURITIES

The collateral received when the Trust lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Trust. During the time
portfolio securities are on loan, the borrower pays the Trust any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Trust or the borrower. The Trust 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 or equivalent collateral to the borrower or placing
broker. The Trust does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment. REPURCHASE AGREEMENTS

The Trust requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are marked to market daily. To the
extent that the original seller does not repurchase the securities from the
Trust, the Trust could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Trust might be
delayed pending court action. The Trust believes that under the regular
procedures normally in effect for custody of the Trust's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Trust and allow retention or disposition of such securities. 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 guidelines established by the Trustees.

INTEREST-ONLY AND PRINCIPAL-ONLY INVESTMENTS

Some of the securities purchased by the Fund may represent an interest solely in
the principal repayments or solely in the interest payments on mortgage-backed
securities (stripped mortgage-backed securities or "SMBSs"). SMBSs are usually
structured with two classes and receive different proportions of the interest
and principal distributions on the pool of underlying mortgage-backed
securities. Due to the possibility of prepayments on the underlying mortgages,
SMBSs may be more interest-rate sensitive than other securities purchased by the
Fund. If prevailing interest rates fall below the level at which SMBSs were
issued, there may be substantial prepayments on the underlying mortgages,
leading to the relatively early prepayments of principal-only SMBSs (the
principal-only or "PO" class) and a reduction in the amount of payments made to
holders of interest-only SMBSs (the interest-only or "IO" class). Because the
yield to maturity of an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage-backed
securities, it is possible that the Fund might not recover its original
investment on interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. The Fund's inability to fully recoup its investments in
these securities as a result of a rapid rate of principal prepayments may occur
even if the securities are rated by a nationally rated statistical rating
organization. Therefore, interest-only SMBSs generally increase in value as
interest rates rise and decrease in value as interest rates fall, counter to
changes in value experienced by most fixed income securities.

INVERSE FLOATERS

Some of the collateralized mortgage obligations ("CMOs") purchased by the Fund
may include a class whose yield floats inversely against a specified index rate.
These "inverse floaters" are more volatile than conventional fixed or floating
rate classes of a CMO and the yield thereon, as well as the value thereof, will
fluctuate in inverse proportion to changes in the index on which interest rate
adjustments are based. As a result, the yield on an inverse floater class of a
CMO will generally increase when market yields (as reflected by the index)
decrease and decrease when market yields increase. The extent of the volatility
of inverse floaters depends on the extent of anticipated changes in market rates
of interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments.

PORTFOLIO TURNOVER

The Trust conducts portfolio transactions to accomplish its investment objective
as interest rates change, to invest new money obtained from selling its shares,
and to meet redemption requests. The Trust may dispose of portfolio securities
at any time if it appears that selling the securities will help the Trust
achieve its investment objective.

The Trust will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Trust's investment objective. During the fiscal years ended January 31, 1998
and 1997, the portfolio turnover rates were 306% and 212%, respectively.
INVESTMENT LIMITATIONS

The Trust will not change any of the investment limitations described below
without approval of shareholders.

SELLING SHORT AND BUYING ON MARGIN

The Trust 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.

BORROWING MONEY

The Trust will not borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in amounts not in excess of 5% of the value
of its total assets or in an amount up to one-third of the value of its total
assets, including the amount borrowed, in order to meet redemption requests
without immediately selling portfolio securities. This borrowing provision is
not for investment leverage but solely to facilitate management of the portfolio
by enabling the Trust to meet redemption requests when the liquidation of
portfolio securities would be inconvenient or disadvantageous.

Interest paid on borrowed funds will not be available for investment. The Trust
will liquidate any such borrowings as soon as possible and may not purchase any
portfolio securities while any borrowings are outstanding.

PLEDGING ASSETS

The Trust 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 10% of the value of total assets at
the time of the borrowing.

LENDING CASH OR SECURITIES

The Trust will not lend any assets except portfolio securities. (This will not
prevent the purchase or holding of bonds, debentures, notes, certificates of
indebtedness or other debt securities of an issuer, repurchase agreements or
other transactions which are permitted by the Trust's investment objective and
policies or Declaration of Trust).

ISSUING SENIOR SECURITIES

The Trust will not issue senior securities, except as permitted by its
investment objective and policies.

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 or net
assets will not result in a violation of such restriction nor will the Trust be
required to make any changes in portfolio holdings.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Trust will not own securities of open-end investment companies. The Trust
can acquire up to 3% of the total outstanding stock of closed-end investment
companies. The Trust will not be subject to any other limitations with regard to
the acquisition of securities of closed-end investment companies so long as the
public offering price of the Trust's Shares does not include a sales load
exceeding 11U2%. The Trust will purchase securities of closed-end investment
companies only in open-market transactions involving only customary broker's
commissions. However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, or acquisition of assets. 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 or net assets will not result in a violation of such
restriction.

The Trust did not borrow money or pledge securities in excess of 5% of the value
of its total assets during the last fiscal year and has no present intent to do
so in the coming fiscal year.

FEDERATED INCOME TRUST MANAGEMENT

Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Income Trust, and principal occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Trustee

Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.

Thomas G. Bigley

15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Trustee

Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member
of Executive Committee, University of Pittsburgh; Director or Trustee of the
Funds.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL

Birthdate: June 23, 1937

Trustee

President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.

Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA

Birthdate: September 3, 1939

Trustee

Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.

William J. Copeland

One PNC Plaza--3rd Floor

Pittsburgh, PA

Birthdate: July 4, 1918

Trustee

Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.

James E. Dowd
571 Hayward Mill Road
Concord, MA

Birthdate: May 18, 1922

Trustee

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA

Birthdate: October 11, 1932

Trustee

Professor of Medicine, University of Pittsburgh; Medical Director, University of
Pittsburgh Medical Center--Downtown; Member, Board of Directors, University of
Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and Internist,
Presbyterian and Montefiore Hospitals; Director or Trustee of the Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA

Birthdate: June 18, 1924

Trustee

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Glen R. Johnson*
Federated Investors Tower
Pittsburgh, PA

Birthdate: May 2, 1929

President and Trustee

Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942

Trustee

Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.

John E. Murray, Jr., J.D., S.J.D.

President, Duquesne University
Pittsburgh, PA

Birthdate: December 20, 1932

Trustee

President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA

Birthdate: September 14, 1925

Trustee

Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board and Czech Management Center, Prague; Director or
Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Trustee

Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President

President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 22, 1930

Executive Vice President

Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company; Director, Federated Services Company; President
and Trustee, Federated Shareholder Services; Director, Federated Securities
Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of
the Funds.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA

Birthdate: May 17, 1923

Vice President

Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.

* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.

@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board between meetings of the
Board.

As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash
Trust Series II; Cash Trust Series, Inc.; DG Investor Series; 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 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 Investment
Portfolios; Federated Investment Trust; 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.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Term Trust, Inc.--1999; Liberty U.S. Government Money Market Trust;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc.

TRUST OWNERSHIP

Officers and Trustees own less than 1% of the Trust's outstanding shares. As
of March 2, 1998, the following shareholder of record owned 5% or more of the
outstanding Institutional Service Shares of the Trust: First National Bank &
Trust of McAllister, McAllister, Oklahoma owned approximately 559,908 (13.14%)
shares; Heritage Trust Company, Grand Junction, Colorado owned approximately
533,397 (12.52%) shares; CPB Trust Division Fiduciary, Honolulu, Hawaii owned
approximately 523,697 (12.29%) shares; Charles Schwab & Co., Inc.,. San
Francisco, California owned approximately 381,009 (8.94%) shares; Community
First National Bank, Fargo, North Dakota owned approximately 331,994 (7.79%)
shares; and Citizens' Scholarship FOA, Inc., St. Peter, Minnesota owned
approximately 301,140 (7.07%) shares.

TRUSTEE COMPENSATION

NAME, AGGREGATE TOTAL COMPENSATION
POSITION WITH COMPENSATION PAID TO TRUSTEES FROM
TRUST FROM TRUST*# TRUST AND FUND COMPLEX+

John F. Donahue, $0 $0 for the Trust and

Chairman and Trustee 56 investment companies

Glen R. Johnson, $0 $0 for the Trust and

President and Trustee 8 investment companies

Thomas G. Bigley, $1,698 $111,222 for the Trust and

Trustee 56 investment companies

John T. Conroy, Jr., $1,868 $122,362 for the Trust and

Trustee 56 investment companies

Nicholas P. Constantakis,** $0 $0 for the Trust and

Trustee 34 investment companies

William J. Copeland, $1,868 $122,362 for the Trust and

Trustee 56 investment companies

James E. Dowd, $1,868 $122,362 for the Trust and

Trustee 56 investment companies

Lawrence D. Ellis, M.D., $1,698 $111,222 for the Trust and

Trustee 56 investment companies

Edward L. Flaherty, Jr., $1,868 $122,362 for the Trust and

Trustee 56 investment companies

Peter E. Madden, $1,698 $111,222 for the Trust and

Trustee 56 investment companies

John E. Murray, Jr., $1,698 $111,222 for the Trust and

Trustee 56 investment companies

Wesley W. Posvar, $1,698 $111,222 for the Trust and

Trustee 56 investment companies

Marjorie P. Smuts, $1,698 $111,222 for the Trust and

Trustee 56 investment companies

* Information is furnished for the fiscal year ended January 31, 1998.

** Mr. Constantakis became a member of the Board of Trustees on February 23,
1998. He did not receive any fees as of the fiscal year end of the Trust.

# The aggregate compensation is provided for the Trust which is comprised of
one portfolio.

+ The information provided is for the last calendar year.

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees are not liable for
errors of judgment or mistakes of fact or law. However, they are not protected
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES

ADVISER TO THE TRUST

The Trust's investment adviser is Federated Management (the "Adviser"). It
is a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife, and his son, J. Christopher Donahue.

The Adviser shall not be liable to the Trust or any shareholder of the Trust 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.

ADVISORY FEES

For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectuses. During the fiscal years ended
January 31, 1998, 1997, and 1996 the Trust's Adviser earned $3,331,788,
$3,763,073, and $4,380,678, respectively.

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. In working with dealers, 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 makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established by the Trustees. The Adviser may select brokers and
dealers who offer brokerage and research services. These services may be
furnished directly to the Trust or to the Adviser and 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 provided by brokers and
dealers may be used by the Adviser or its affiliates in advising the Fund and
other accounts. To the extent that receipt of these services may supplant
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 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. During the fiscal
years ended January 31, 1998, 1997, 1996, the Trust paid no brokerage
commissions. Although investment decisions for the Trust are made
independently from those of the other accounts managed by the Adviser,
investments of the type the Trust may make may also be made by those other
accounts. When the Trust and one or more other accounts managed by the Adviser
are prepared to invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner believed by
the Adviser to be equitable to each. In some cases, this procedure may adversely
affect the price paid or received by the Trust or the size of the position
obtained or disposed of by the Trust. In other cases, however, it is believed
that coordination and the ability to participate in volume transactions will be
to the benefit of the Trust.

OTHER SERVICES

TRUST ADMINISTRATION

Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectus. From March 1, 1994, to March 1, 1996, Federated Administrative
Services served as the Trust's Administrator. For purposes of this Statement of
Additional Information, Federated Services Company and Federated Administrative
Services may hereinafter collectively be referred to as the "Administrators."
For the fiscal years ended January 31, 1998, 1997, and 1996 the Administrators
earned $628,738, $711,038, and $828,876, respectively. CUSTODIAN AND
PORTFOLIO ACCOUNTANT

State Street Bank and Trust Company, Boston, MA, is custodian for the securities
and cash of the Trust. Federated Services Company, Pittsburgh, PA, provides
certain accounting and recordkeeping services with respect to the Trust's
portfolio investments. The fee paid for this service is based upon the level of
the Trust's average net assets for the period plus out-of-pocket expenses.

TRANSFER AGENT

Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records and
receives a fee based on the size, type and number of accounts and transactions
made by shareholders.

INDEPENDENT AUDITORS

The independent auditors for the Trust are Deloitte & Touche LLP, Pittsburgh,
Pennsylvania.

PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing Shares is
explained in the respective prospectus under "Investing in Institutional Shares"
or "Investing in Institutional Service Shares."

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
With respect to the Institutional Service Shares class of the Trust, by adopting
the Distribution Plan, the Trustees expect that the Trust will be able to
achieve a more predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management and assist
the Trust in pursuing its investment objectives. By identifying potential
investors whose needs are served by the Trust's objectives, and properly
servicing these accounts, it may be possible to curb sharp fluctuations in rates
of redemptions and sales. Other benefits, which may be realized under
either arrangement, may include: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping systems; and (4)
responding promptly to shareholders' requests and inquiries concerning their
accounts. For the year ended January 31, 1998, payments in the amount of
$107,761 were made pursuant to the Distribution Plan (Institutional Service
Shares only), $103,450 of which was paid to financial institutions. In addition,
for this period, the Trust paid shareholder service fees in the amount of
$1,974,679 for Institutional Shares and $1,718,521 for Institutional Service
Shares, of which $107,761 and $3,218, respectively, were paid to financial
institutions. CONVERSION TO FEDERAL FUNDS

It is the Trust's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.

DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which the net asset
value is calculated by the Trust are described in the respective prospectuses.

DETERMINING MARKET VALUE OF SECURITIES

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

* according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair value
as determined in good faith by the Trustees; or
* for short-term obligations with remaining maturities of less than 60 days
at the time of purchase, at amortized cost unless the Trustees determine
that particular circumstances of the security indicate otherwise.

REDEEMING SHARES

The Trust is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Trust's net asset value, whichever is less, for any one shareholder within a
90-day period. Any redemption beyond this amount will also be in cash unless the
Trustees determine that further payments should be in kind. In such cases, the
Trust will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Trust determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees deem fair
and equitable. Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders who sell these securities, could
receive less than the redemption value and could incur certain transaction
costs.

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. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.

In the unlikely event a shareholder is held personally liable for the Trust's
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.

EXCHANGING SECURITIES FOR TRUST SHARES

Investors may exchange certain U.S. government securities they already own for
Shares of either class, or they may exchange a combination of securities and
cash for Shares of either class. An investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. specifying whether the investor will receive Institutional Shares or
Institutional Service Shares. The Trust will notify the investor of its
acceptance and valuation of the securities within five business days of their
receipt by the transfer agent.

The Trust values securities in the same manner as the Trust values its assets.
The basis of the exchange will depend upon the net asset value of Shares on the
day the securities are valued. One share of the Trust will be issued for each
equivalent amount of securities accepted.

Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, or other
rights attached to the securities become the property of the Trust, along with
the securities.

TAX CONSEQUENCES

Exercise of this exchange privilege is treated as a sale for federal income tax
purposes. Depending upon the cost basis of the securities exchanged for Shares,
a gain or loss may be realized by the investor.

TAX STATUS

THE TRUST'S TAX STATUS

The Trust will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the Trust
must, among other requirements:

* derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;

* invest in securities within certain statutory limits; and

* distribute to its shareholders at least 90% of its net income earned
during the year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional Shares. No portion of any income dividend paid by
the Trust is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable as
ordinary income.

CAPITAL GAINS

Capital gains distributed to shareholders will be treated as long-term capital
gains regardless of how long shareholders have held Shares.

TOTAL RETURN

The average annual total return for Shares of the Trust is the average
compounded rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at the
end of the period by the offering price per share at the end of the period. The
number of shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the period
by any additional shares, assuming the monthly reinvestment of all dividends and
distributions. The Trust's average annual total return for Institutional
Shares for the one-year, five-year and ten-year periods ended January 31, 1998
were 9.20%, 6.37%, and 8.02%, respectively. The Trust's average annual total
return for Institutional Service Shares for the year ended January 31, 1998 and
the period from June 2, 1992 (date of Institutional Service Shares inception) to
January 31, 1998, was 8.96% and 6.47%, respectively. YIELD

The yield for both classes of Shares of the Trust is determined each day by
dividing the net investment income per share (as defined by the Securities and
Exchange Commission) earned by either class of shares over a thirty-day period
by the offering price per share by either class of shares on the last day of the
period. This value is then annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is assumed to
be generated each month over a twelve-month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Trust because of certain adjustments required by the Securities and Exchange
Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in either
class of Shares, performance will be reduced for those shareholders paying those
fees. The Trust's yield for Institutional Shares for the thirty-day period
ended January 31, 1998, was 6.38%. The Trust's yield for Institutional Service
Shares was 6.16% for the same period. PERFORMANCE COMPARISONS

The performance of both classes of Shares depends upon such variables as:

* portfolio quality;
* average portfolio maturity;
* type of instruments in which the portfolio is invested; * changes in
interest rates and market value of portfolio securities; * changes in the
Trust's expenses or either class of shares' expenses;
and
* various other factors.

Both classes of Shares' performance fluctuates on a daily basis largely because
net earnings and net asset value per share fluctuate daily. Both net earnings
and net asset value per share are factors in the computation of yield and total
return. Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Trust uses in advertising may include:

* Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time. From time to time, the Trust will quote its Lipper ranking in the
U.S. government funds category in advertising and sales literature.
* Lehman Brothers Government Index is an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government, or
any agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Only notes and bonds with a minimum
outstanding principal of $1 million and a minimum maturity of one year are
included.

* Salomon Brothers 15 Year Mortgage-Backed Securities Index includes the
average of all 15 year mortgage securities which include Federal Home
Loan Mortgage Corp. (Freddie Mac), Federal National Mortgage
Association (Fannie Mae), and Government National Mortgage Association
(GNMA).

* Lehman Brothers Five Year Treasury Bellwether Index is an unmanaged index
comprised of U.S. government Treasury bonds with an average maturity of
five years.

* Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.

* Lehman Brothers Mortgage-Backed Securities Index is an unmanaged index
composed of all fixed rate, securitized mortgage pools by GNMA, FNMA, and
the FHLMC, including GNMA Graduated Payment Mortgages. The minimum
principal amount required for inclusion is $50 million. Total return
comprises price appreciation/depreciation and income as a percentage of the
original investment.

In addition, the Trust will make comparisons to certain direct market securities
in which it is permitted to invest. The type of security that will be used for
such comparisons, and the sources of its performance are listed below.

* 5-Year Treasury Notes--Source: Wall Street Journal, Bloomberg Financial
Markets, and Telerate.

Advertisements and other sales literature for both classes of Shares may quote
total returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in
either class of Shares based on monthly reinvestment of dividends over a
specified period of time.

Advertising and other promotional literature may include charts, graphs and
other illustrations using the Trust's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Trust can
compare its performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION

Advertising and sales literature for the Trust may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by Trust portfolio managers and their views and analysis on how
such developments could affect the Funds. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute.

DURATION

Duration is a commonly used measure of the potential volatility in the price of
a bond, or other fixed income security, or in a portfolio of fixed income
securities, prior to maturity. Volatility is the magnitude of the change in the
price of a bond relative to a given change in the market rate of interest. A
bond's price volatility depends on three primary variables: the bond's coupon
rate; maturity date; and the level of market yields of similar fixed-income
securities. Generally, bonds with lower coupons or longer maturities will be
more volatile than bonds with higher coupons or shorter maturities. Duration
combines these variables into a single measure.

Duration is calculated by dividing the sum of the time-weighted values of the
cash flows of a bond or bonds, including interest and principal payments, by the
sum of the present values of the cash flows.

When the Trust invests in mortgage pass-through securities, its duration will be
calculated in a manner which requires assumptions to be made regarding future
principal prepayments. A more complete description of this calculation is
available upon request from the Trust.

ABOUT FEDERATED INVESTORS

Federated Investors is dedicated to meeting investor needs which is reflected in
its investment decision making--structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands of
clients and their customers.

The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment decisions
are made and executed by teams of portfolio managers, analysts, and traders
dedicated to specific market sectors. These traders handle trillions of dollars
in annual trading volume. In the government sector, as of December 31, 1997,
Federated Investors managed 9 mortgage-backed, 6 government/agency and 17
government money market mutual funds, with assets approximating $5.9 billion,
$1.5 billion and $29.7 billion, respectively. Federated trades approximately
$400 million in U.S. government and mortgage-backed securities daily and places
approximately $23 billion in repurchase agreements each day. Federated
introduced the first U.S. government fund to invest in U.S. government bond
securities in 1969. Federated has been a major force in the short-and
intermediate-term government markets since 1982 and currently manages nearly $36
billion in government funds within these maturity ranges. J. Thomas Madden,
Executive Vice President, oversees Federated Investors' equity and high yield
corporate bond management while William D. Dawson, Executive Vice President,
oversees Federated Investors' domestic fixed income management. Henry A.
Frantzen, Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.

MUTUAL FUND MARKET

Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:

INSTITUTIONAL CLIENTS

Federated Investors meets the needs of approximately 900 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional clients
include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisers. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division.

BANK MARKETING

Other institutional clients include close relationships with more than 1,600
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios. The
marketing effort to trust clients is headed by Timothy C.
Pillion, Senior Vice President.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial professionals and
institutions has earned it high ratings in several surveys performed by DALBAR,
Inc. DALBAR is recognized as the industry benchmark for service quality
measurement. The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.

* Source: Investment Company Institute

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1) (i) Conformed copy of the Declaration of Trust of the Registrant as
amended March 15, 1982 (3);
(ii) Conformed copy of Amendment No. 3 to the Declaration of Trust of
the Registrant as amended May 26,
1992; +
(2) Copy of the By-Laws of the Registrant(5);
(i) Copy of Amendment No. 2 to the By-Laws of the Registrant dated
February 2, 1987 (6);
(ii) Copy of Amendment No. 3 to the By-Laws of the Registrant dated
May 26, 1992; +
(iii) Copy of Amendment No. 4 to the By-Laws of the Registrant dated
November 18, 1997; +
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial Interest of the
Registrant;
(i) Institutional Shares (3);
(ii) Institutional Service Shares (14);
(5) Conformed copy of the revised Investment Advisory Contract of the
Registrant dated August 1, 1989 (9);
(6) (i) Conformed copy of the Distributor's Contract (14);
(ii) The Registrant hereby incorporates the conformed
copy of the secimen Mutual Funds Sales and
Service Agreement; Mutual Funds Service
Agreement; and Plan Trustee/Mutual Funds Service
Agreement from Item 24(b)(6) of the Cash Trust
Series II Registration Statement on Form N-1A,
filed with the Commission on July 24, 1995.
(File Nos. 33-38550 and 811-6269).
(7) Not applicable;
(8) (i) Conformed copy of the Custodian Agreement of the
Registrant (14); (ii) Copy of Custody Fee Schedule; (+)

+ All exhibits have been filed electronically.

3. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1 dated March 17, 1982. (File Nos. 2-75366 and
811-3352)

5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed January 30, 1985. (File Nos. 2-75366 and
811-3352)

6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N1-A filed March 23, 1987. (File Nos. 2-75366 and
811-3352)

9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed March 13, 1990. (File Nos. 2-75366 and
811-3352)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 27 on Form N-1A filed March 26, 1997. (File Nos. 2-75366 and
811-3352)

<PAGE>

Item 24. Financial Statements and Exhibits: (Continued)
(9) (i) Conformed copy of the Agreement for Fund
Accounting Services, Administrative
Services, Transfer Agency Services, and
Custody Services Procurement of the
Registrant (14);
(ii) The responses described in Item 24(b)(6)(ii)
are hereby incorporated by reference;
(iii) The Registrant hereby incorporates the conformed
copy of the Shareholder Services Sub-Contract between
Fidelity and Federated Shareholder Services from Item
24(b)(9)(iii) of the Federated GNMA Trust Registration
Statement on Form N-1A, filed with the Commission on
March 25, 1996. (File Nos. 2-75670 and 811-3375);
(10) Conformed copy of the Opinion and Consent of Counsel as
to legality of shares being registered (10);
(11) Conformed copy of the Consent of Independent Public
Accountants;+
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding (2);
(14) Not applicable;
(15) (i) Conformed copy of Rule 12B-1 Plan (13);
(ii) The responses described in Item 24(b)(ii) are
hereby incorporated by reference.
(16) Copy of Schedule for Computation of Trust Performance
Data;
(i) Institutional Shares (8);
(ii) Institutional Service Shares (8);
(17) Copy of Financial Data Schedules;+
(18) The Registrant hereby incorporates the conformed copy of
the specimen Multiple Class Plan from Item 24(b)(18) of
the World Investment Series, Inc. Registration Statement
on Form N-1A, filed with the Commission on January 26,
1996. (File Nos. 33-52149 and 811-07141);
(19) Conformed copy of Power of Attorney.+
-----------------------
+ All exhibits have been filed electronically.

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1 filed February 3, 1982. (File Nos. 2-75366 and
811-3352)

8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed March 22, 1989. (File Nos. 2-75366 and
811-3352)

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed March 22, 1991. (File Nos. 2-75366 and
811-3352)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 on Form N-1A filed March 27, 1996. (File Nos. 2-75366 and
811-3352)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 27 on Form N-1A filed March 26, 1997. (File Nos. 2-75366 and
811-3352)

<PAGE>

Item 25. Persons Controlled By or Under Common Control with
Registrant:

None

Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class as of March 2,1998

Shares of Beneficial Interest
(no par value)

Institutional Shares 5,344
Institutional Service Shares 692

Item 27. Indemnification: (3);

Item 28. Business and Other Connections of Investment Adviser:

(a) For a description of the other business of the investment adviser, see
the section entitled "INSERT PROSPECTUS HEADING"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 "INSERT SAI HEADING." 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.

The remaining Officers of the investment adviser are:

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

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

Vice Presidents: J. Scott Albrecht
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

- -------------------------

3. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1 dated March 17, 1982. (File Nos. 2-75366 and
811-3352)

Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit

Jeff A. Kozemchak
Steven Lehman
Marian R. Marinack
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
Christopher Smith
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka

Assistant Vice Presidents: Todd A. Abraham
Stefanie L. Bachhuber
Arthur J. Barry
Robert E. Cauley
Lee R. Cunningham, II
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Natalie F. Metz
Joseph M. Natoli
Keith J. Sabol
John Sheehy
Michael W. Sirianni
Gregg S. Tenser
Leonardo A. Vila
Lori A. Wolff

Secretary: Stephen A. Keen

Treasurer: Thomas R. Donahue

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

Assistant Treasurer: Richard B. Fisher

The business address of each of the Officers of the investment adviser
is Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
These individuals are also officers of a majority of the investment
advisers to the Funds listed in Part B of this Registration Statement.

<PAGE>

Item 29. Principal Underwriters:

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

111 Corcoran Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; 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 Investment Portfolios; Federated Investment Trust; 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.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; 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; Peachtree
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Virtus
Funds; The Wachovia Funds; The Wachovia Municipal Funds; Tower Mutual Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Vision Group of Funds, Inc.; and World Investment Series, Inc.

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
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

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

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

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

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

Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Item 30. 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
Pittsburgh, PA 15222-3779

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

Federated Services Federated Investors Tower
Company Pittsburgh, PA 15222-3779
Administrator

Federated Advisers Federated Investors Tower
Investment Adviser Pittsburgh, PA 15222-3779

Federated Global Research 175 Water Street
Corp. New York, NY 10038-4965
Investment Adviser

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

Item 31. Management Services: Not applicable.

Item 32. 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.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED INCOME TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its 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
26th day of March, 1998.

FEDERATED INCOME TRUST

BY: /s/ Anthony R. Bosch
Anthony R. Bosch, Assistant Secretary
Attorney in Fact for John F. Donahue
March 26, 1998

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:

NAME TITLE DATE

By: /s/ Anthony R. Bosch
Anthony R. Bosch Attorney In Fact March 26, 1998
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

Glen R. Johnson* President

John W. McGonigle* Treasurer, Executive Vice
President and Secretary
(Principal Financial and
Accounting Officer)

Thomas J. Bigley * Trustee

John T. Conroy, Jr.* Trustee

Nicholas P. Constantakis* Trustee

William J. Copeland* Trustee

James E. Dowd* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr.* Trustee

Peter E. Madden* Trustee

John E. Murray, Jr.* Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney

Exhibit 1 under Form N-1A
Exhibit 3(i) under Item 601/Reg. s-k

AMENDMENT NO. 3
AMENDED AND RESTATED
DECLARATION OF TRUST
FEDERATED INCOME TRUST
(formerly known as Federated Government Income Trust)
(formerly known as Federated Government Trust)
TABLE OF CONTENTS
Page
ARTICLE I. NAMES AND DEFINITIONS 1
1. Name 1
2. Definitions
(a) Affiliated Person, Assignment, Commission,
Interested Person, Majority Shareholder Vote,
Principal Underwriter 1
(b) Trust 2
(c) Class 2
(d) Series 2
(e) Series Company 2
(f) Accumulated Net Income 2
(g) Shareholder 2
(h) Trustees 2
(i) Shares 2
(j) 1940 Act 2
ARTICLE II. PURPOSE OF TRUST 2
ARTICLE III. BENEFICIAL INTEREST 3
1. Shares of Beneficial Interest 3
2. Ownership of Shares 3
3. Investment in the Trust 4
4. No Pre-emptive Rights 4
5. Establishment and Designation of Series or Class 4
ARTICLE IV. THE TRUSTEES 7
1. Management of the Trust 7
2. Election of Trustees at the 1982 Meeting of Shareholders 8
3. Terms of Office of Trustees 8
4. Termination of Service and Appointment of Trustees 8
5. Temporary Absence of Trustees 9
6. Number of Trustees 9
7. Effect of Death, Resignation, Etc. of a Trustee 9
8. Ownership of the Trust 9
ARTICLE V. POWERS OF THE TRUSTEES 10
1. Powers 10
2. Principal Transactions 14
3. Trustees and Officers as Shareholders 14
4. Parties to Contract 14
Page
ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION 15
1. Trustee Reimbursement 15
2. Trustee Compensation 16

ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER AGENT 16
1. Investment Adviser 16
2. Administrative Services 17
3. Principal Underwriter 18
4. Transfer Agent 18
5. Provisions and Amendments 18

ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS 19
----------------------------------------
1. Voting Powers 19
2. Meetings 19
3. Quorum and Required Vote 20
4. Additional Provisions 20

ARTICLE IX. CUSTODIAN 20
---------
1. Appointment and Duties 20
2. Central Certificate System 22

ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS 22
-----------------------------
1. Distributions 22
2. Redemptions and Repurchases 23
3. Determination of Accumulated Net Income 25
4. Net Asset Value of Shares 25
5. Suspension of the Right of Redemption 26
6. Trust's Right to Redeem Shares 26

ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION 27
1. Limitation of Personal Liability and
Indemnification of Shareholders 27
2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust 28
3. Express Exculpatory Clauses and Instruments 28
4. Indemnification of Trustees, Officers,
Employees and Agents 29

ARTICLE XII. MISCELLANEOUS 30
1. Trust is not a Partnership 30
2. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety 30
3. Establishment of Record Dates 31
4. Termination of Trust 32
5. Offices of the Trust, Filing of Copies,
References, Headings 33
6. Applicable Law 33
7. Amendments -- General 34
8. Amendments -- Series and Classes. 34
9. Use of Name 35

<PAGE>

AMENDED AND RESTATED

DECLARATION OF TRUST

FEDERATED INCOME TRUST
(formerly known as Investors Trust)

Dated May 26, 1992

This Amendment to the Declaration of Trust made November 17, 1981, is made
as of this 26th day of May, 1992, by John F. Donahue, John T. Conroy, Jr.,
William J. Copeland, James E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty,
Glen R. Johnson, Peter E. Madden, Gregor F. Meyer, Wesley W. Posvar and Marjorie
P. Smuts.
WHEREAS, the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto; NOW, THEREFORE, the
Trustees declare that all money and property contributed to the trust fund
hereunder shall be held and
managed under this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS

Section 1. Name. This Trust shall be known as the "Federated Income Trust."
Section 2. Definitions. Wherever used herein, unless otherwise required by
the context or specifically provided: (a) The terms "Affiliated Person,"
"Assignment," "Commission," "Interested Person," "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42)
of the 1940 Act, whichever may be applicable) and "Principal Underwriter"
shall have the meanings given them in the Investment Company Act of 1940,
as amended from time to time;

<PAGE>

(b) The "Trust" refers to Federated Income Trust;
(c) "Class" refers to a class of Shares established and designated under
or in accordance with the provisions of Article III; (d) "Series" refers
to a series of Shares established and designated under or in accordance
with the provisions of Article III; (e) "Series Company" refers to the
form of a registered open-end investment company described in Section
18(f)(2) of the 1940 Act or in any successor statutory provision; (f)
"Accumulated Net Income" means the accumulated net income of the Trust
determined in the manner provided or authorized in Article X, Section 3;
(g) "Shareholder" means a record owner of Shares of the Trust; (h) The
"Trustees" refer to the individual Trustees in their capacity as Trustees
hereunder of the Trust and their successor or successors for the time
being in office as such Trustees; (i) "Shares" means the equal
proportionate units of interest into which the beneficial interest in the
Trust shall be divided from time to time, or if more than one Series or
Class of Shares is authorized by the Trustees, the equal proportionate
units into which each Series or Class of Shares shall be divided from time
to time and includes fractions of Shares as well as whole Shares; and (j)
The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investments primarily in securities.

<PAGE>

ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into transferable Shares, without par value.
Subject to the provisions of Section 5 of this Article III, each Share shall
have voting rights as provided in Article VIII hereof, and holders of the Shares
of any Series shall be entitled to receive dividends, when and as declared with
respect thereto in the manner provided in Article X, Section 1 hereof. The
Shares of any Series may be issued in two or more Classes, as the Trustees may
authorize pursuant to Article XII, Section 8 hereof. Unless the Trustees have
authorized the issuance of Shares of a Series in two or more Classes, each Share
of a Series shall represent an equal proportionate interest in the assets and
liabilities of the Series with each other Share of the same Series, none having
priority or preference over another. If the Trustees have authorized the
issuance of Shares of a Series in two or more Classes, then the Classes may have
such variations as to dividend, redemption, and voting rights, net asset values,
expenses borne by the Classes, and other matters as the Trustees have authorized
provided that each Share of a Class shall represent an equal proportionate
interest in the assets and liabilities of the Class with each other Share of the
same Class, none having priority or preference over another. The number of
Shares which may be issued is unlimited. The Trustees may from time to time
divide or combine the Shares of any Series or Class into a greater or lesser
number without thereby changing the proportionate beneficial interests in the
Series or Class. Contributions to the Trust may be accepted for, and Shares
shall be redeemed as, whole Shares and/or fractions.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
in the books of the Trust or a transfer agent which books shall be maintained
separately for the Shares of each Series or Class. The Trustees may make such
rules as they consider appropriate for the transfer of Shares and similar
matters. The record books of the Trust or any transfer agent, as the case may
be, shall be conclusive as to who are the Shareholders of each Series or Class
and as to the number of Shares of each Series or Class held from time to time by
each.
Section 3. Investment in the Trust. The Trustees shall accept investments
in the Trust from such persons and on such terms as they may from time to time
authorize. After the date of the initial contribution of capital (which shall
occur prior to the initial public offering of Shares of the Trust), the number
of Shares to represent the initial contribution shall be considered as
outstanding and the amount received by the Trustees on account of the
contribution shall be treated as an asset of the Trust to be allocated among any
Series or Class in the manner described in Section 5(a) of this Article.
Subsequent to such initial contribution of capital, Shares (including Shares
which may have been redeemed or repurchased by the Trust) may be issued or sold
at a price which will net the relevant Series or Class, as the case may be,
before paying any taxes in connection with such issue or sale, not less than the
net asset value (as defined in Article X, Section 4) thereof; provided, however,
that the Trustees may in their discretion impose a sales charge upon investments
in the Trust.
Section 4. No Pre-emptive Right. Shareholders shall have no pre-emptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or the Trustees.
Section 5. Establishment and Designation of Series or Class. Without
limiting the authority of the Trustees set forth in Article XII, Section 8,
inter alia, to establish and designate any additional Series or Class or to
modify the rights and preferences of any existing Series or Class, the Series
and Classes of the Trust shall be, and are established and designated as:
Federated Income Trust - Institutional Shares and Federated Income Trust -
Institutional Service Shares.

<PAGE>

Shares of any Series or Class established in this Section 5 shall have the
following relative rights and preferences: (a) Assets belonging to Series
or Class. All consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class, together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived, including,
without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series or Class for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from whatever source derived, including,
without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, are
herein referred to as "assets belonging to" that Series or Class. In the
event that there are any assets, income, earnings, profits and proceeds
thereof, funds or payments which are not readily identifiable as belonging
to any particular Series or Class (collectively "General Assets"), the
Trustees shall allocate such General Assets to, between or among any one
or more of the Series or Classes established and designated from time to
time in such manner and on such basis as they, in their sole discretion,
deem fair and equitable, and any General Assets so allocated to a
particular Series or Class shall belong to that Series or Class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.

<PAGE>

(b) Liabilities Belonging to Series or Class. The assets belonging to each
particular Series or Class shall be charged with the liabilities of the
Trust in respect to that Series or Class and all expenses, costs, charges
and reserves attributable to that Series or Class, and any general
liabilities of the Trust which are not readily identifiable as belonging
to any particular Series or Class shall be allocated and charged by the
Trustees to and among any one or more of the Series or Classes established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges and reserves so charged to a Series
or Class are herein referred to as "liabilities belonging to" that Series
or Class. Each allocation of liabilities belonging to a Series or Class by
the Trustees shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes. (c) Dividends, Distributions,
Redemptions, Repurchases and Indemnification. Notwithstanding any other
provisions of this Declaration, including, without limitation, Article X,
no dividends or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any Series or Class)
with respect to, nor any redemption or repurchase of, the Shares of any
Series or Class shall be effected by the Trust other than from the assets
belonging to such Series or Class, nor except as specifically provided in
Section 1 of Article XI hereof, shall any Shareholder of any particular
Series or Class otherwise have any right or claim against the assets
belonging to any other Series or Class except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such
other Series or Class. (d) Voting. Notwithstanding any of the other
provisions of this Declaration, including, without limitation, Section 1
of Article VIII, only Shareholders of a particular Series or Class shall
be entitled to vote on any matters affecting such Series or Class. Except
with respect to matters as to which any particular Series or Class is
affected, all of the Shares of each Series or Class shall, on matters as
to which such Series or Class is entitled to vote, vote with other Series
or Classes so entitled as a single class. Notwithstanding the foregoing,
with respect to matters which would otherwise be voted on by two or more
Series or Classes as a single class, the Trustees may, in their sole
discretion, submit such matters to the Shareholders of any or all such
Series or Classes, separately. (e) Fraction. Any fractional Share of a
Series or Class shall carry proportionately all the rights and obligations
of a whole Share of that Series or Class, including rights with respect to
voting, receipt of dividends and distributions, redemption of Shares and
termination of the Trust or of any Series or Class. (f) Exchange
Privilege. The Trustees shall have the authority to provide that the
holders of Shares of any Series or Class shall have the right to exchange
said Shares for Shares of one or more other Series or Classes in
accordance with such requirements and procedures as may be established by
the Trustees. (g) Combination of Series or Classes. The Trustees shall
have the authority, without the approval of the Shareholders of any Series
or Class, unless otherwise required by applicable law, to combine the
assets and liabilities belonging to a single Series or Class with the
assets and liabilities of one or more other Series or Classes. (h)
Elimination of Series or Classes. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Trustees may amend this Declaration of Trust to abolish
that Series or Class and to rescind the establishment and designation
thereof.

<PAGE>

ARTICLE IV
THE TRUSTEES

Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility. The Trustees who shall serve until
the election of Trustees at the 1982 Meeting of Shareholders shall be John F.
Donahue, Richard B. Fisher, Joseph J. Maloney, Jr., Wesley W. Posvar, Edward E.
Smuts, Thomas J. Donnelly, Glen R. Johnson, Gregor F. Meyer and Edward L.
Flaherty, Jr.

Section 2. Election of Trustees at 1982 Meeting of Shareholders. In the
year 1982, on a date fixed by the Trustees, which shall be subsequent to the
initial public offering of Shares of the Trust, the Shareholders shall elect
Trustees. The number of Trustees shall be determined by the Trustees pursuant to
Article IV, Section 6.

Section 3. Term of Office of Trustees. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as hereinafter
provided; except (a) that any Trustee may resign his trust at any time by
written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is specified
therein; (b) that any Trustee may be removed at any time by written instrument
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that any
Trustee who requests in writing to be retired or who has become mentally or
physically incapacitated may be retired by written instrument signed by a
majority of the other Trustees, specifying the date of his retirement; and (d) a
Trustee may be removed at any special meeting of Shareholders of the Trust by a
vote of two-thirds of the outstanding Shares.

<PAGE>

Section 4. Termination of Service and Appointment of Trustees. In case of
the death, resignation, retirement, removal or mental or physical incapacity of
any of the Trustees, or in case a vacancy shall, by reason of an increase in
number, or for any other reason, exist, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion shall see
fit. Such appointment shall be effected by the signing of a written instrument
by a majority of the Trustees in office. Within three months of such
appointment, the Trustees shall cause notice of such appointment, the Trustees
shall cause notice of such appointment to be mailed to each Shareholders at his
address as recorded on the books of the Trust. An appointment of a Trustee may
be made by the Trustees then in office and notice thereof mailed to Shareholders
as aforesaid in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this Trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. Any appointment authorized by this Section 4 is
subject to the provisions of Section 16(a) of the 1940 Act.
Section 5. Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two of the Trustees personally exercise the other power hereunder except as
herein otherwise expressly provided.
Section 6. Number of Trustees. The number of Trustees, not less than three
(3) nor more than twenty (20) serving hereunder at any time, shall be determined
by the Trustees themselves.

<PAGE>

Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally incapacitated,
the other Trustees shall have all the powers hereunder and the certificate
signed by a majority of the other Trustees of such vacancy, absence or
incapacity shall be conclusive, provided, however, that no vacancy which reduces
the number of Trustees below three (3) shall remain unfilled for a period longer
than six calendar months.
Section 7. Effect of Death, Resignation, etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical incapacity of the
Trustees, or any one or more of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Declaration of
Trust.
Section 8. Ownership of the Trust. The assets belonging to each Series or
Class shall be held separate and apart from any assets now or hereafter held in
any capacity other than as Trustee hereunder by the Trustees or any successor
Trustee. All of the assets belonging to each Series or Class of the Trust or
owned by the Trust shall at all times be considered as vested in the Trustees.
No Shareholder shall be deemed to have a severable ownership interest in any
individual asset belonging to any Series or Class of the Trust or owned by the
Trust or any right of partition or possession thereof, but each Shareholder
shall have a proportionate undivided beneficial interest in a Series or Class.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust or a Series or
Class. The Trustees shall not be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their uncontrolled discretion,
shall deem proper to accomplish the purpose of this Trust. Without limiting the
foregoing, the Trustees shall have the following specific powers and authority,
subject to any applicable limitation in this Declaration of Trust or in the
By-Laws of the Trust:
(a) To buy, and invest funds in their hands in, securities including, but
not limited to, common stocks, preferred stocks, bonds, debentures,
warrants and rights to purchase securities, certificates of beneficial
interest, money market instruments, notes or other evidences of
indebtedness issued by any corporation, trust or association, domestic or
foreign, or issued or guaranteed by the United States of America or any
agency or instrumentality thereof, by the government of any foreign
country, by any State of the United States, or by any political
subdivision or agency or instrumentality of any State or foreign country,
or in "when-issued" or "delayed-delivery" contracts for any such
securities, or in any repurchase agreement (agreements under which the
seller agrees at the time of sale to repurchase the security at an agreed
upon time and price) or retain assets belonging to each and every Series
or Class in cash, and from time to time to change the investments of the
assets belonging to each Series or Class; (b) To adopt By-Laws not
inconsistent with the Declaration of Trust providing for the conduct of
the business of the Trust and to amend and repeal them to the extent that
they do not reserve that right to the Shareholders; (c) To elect and
remove such officers and appoint and terminate such agents as they
consider appropriate; (d) To appoint or otherwise engage a bank or trust
company as custodian of any assets belonging to any Series or Class
subject to any conditions set forth in this Declaration of Trust or in the
By-Laws;

<PAGE>

(e) To appoint or otherwise engage transfer agents, dividend disbursing
agents, Shareholder servicing agents, investment advisers, sub-investment
advisers, principal underwriters, administrative service agents, and such
other agents as the Trustees may from time to time appoint or otherwise
engage; (f) To provide for the distribution of any Shares of any Series or
Class either through a principal underwriter in the manner hereinafter
provided for or by the Trust itself, or both; (g) To set record dates in
the manner hereinafter provided for; (h) To delegate such authority as
they consider desirable to a committee or committees composed of Trustees,
including without limitation, an Executive Committee, or to any officers
of the Trust and to any agent, custodian or underwriter; (i) To sell or
exchange any or all of the assets belonging to one or more Series or
Classes of the Trust, subject to the provisions of Article XII, Section
4(b) hereof; (j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to
execute and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper; (k) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities; (l) To
hold any security or property in a form not indicating any trust, whether
in bearer, unregistered or other negotiable form; or either in its own
name or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual business practice
of Massachusetts trust companies or investment companies;

<PAGE>

(m) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which belongs to any Series or Class; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern,
and to pay calls or subscriptions with respect to any security which
belongs to any Series or Class; (n) To engage in and to prosecute,
compound, compromise, abandon, or adjust, by arbitration or otherwise, any
actions, suits, proceedings, disputes, claims, demands, and things
relating to the Trust, and out of the assets belonging to any Series or
Class to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any evidence
that the Trustees may deem sufficient (such powers shall include without
limitation any actions, suits, proceedings, disputes, claims, demands and
things relating to the Trust wherein any of the Trustees may be named
individually and the subject matter of which arises by reason of business
for or on behalf of the Trust); (o) To make distributions of income and of
capital gains to Shareholders in the manner hereinafter provided for; (p)
To borrow money but only as a temporary measure for extra-ordinary or
emergency purposes and then (a) only in amounts not in excess of 5% of the
value of its total assets or (b) in any amount up to one-third of the
value of its total assets, including the amount borrowed, in order to meet
redemption requests without immediately selling any portfolio securities.
The Trustees shall not pledge, mortgage or hypothecate the assets of the
Trust, except in connection with any borrowing described in (a) and (b)
herein and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the Trust's total assets at the time of
such borrowing;

<PAGE>

(q) From time to time to issue and sell the Shares of any Series or Class
of the Trust either for cash or for property whenever and in such amounts
as the Trustees may deem desirable, but subject to the limitation set
forth in Section 3 of Article III. (r) To purchase insurance of any kind,
including, without limitation, insurance on behalf of any person who is or
was a Trustee, Officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a Trustee, Director, Officer, agent
or employee of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or incurred by
him in any such capacity or arising out of his status as such. No one
dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees
upon their order. Section 2. Principal Transactions. The Trustees shall
not cause the Trust on behalf of any Series or Class to buy any
securities (other than Shares) from or sell any securities (other than Shares)
to, or lend any assets belonging to any Series or Class to any Trustee or
Officer or employee of the Trust or any firm of which any such Trustee or
officer is a member acting as principal unless permitted by the 1940 Act, but
the Trust may employ any such other party or any such person or firm or company
in which any such person is an interested person in any capacity not prohibited
by the 1940 Act.
Section 3. Trustees and Officers as Shareholders. Any Trustee, Officer or
other agent of the Trust or any Series or Class may acquire, own and dispose of
Shares of any Series or Class to the same extent as if he were not a Trustee,
Officer or agent; and the Trustees may issue and sell or cause to be issued or
sold Shares of any Series or Class to and buy such Shares from any such person
or any firm or company in which he is an interested person subject only to the
general limitations herein contained as to the sale and purchase of such Shares;
and all subject to any restrictions which may be contained in the By-Laws.

<PAGE>

Section 4. Parties to Contract. The Trustees may enter into any contract
of the character described in Section 1, 2, 3, or 4 of Article VII or in Article
IX hereof or any other capacity not prohibited by the 1940 Act with any
corporation, firm, trust or association, although one or more of the
Shareholders, Trustees, Officers, employees or agents of the Trust or any Series
or Class or their affiliates may be an Officer, Director, Trustee, shareholder
or interested person of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust or any Series
or Class under or by reason of said contract or accountable for any profit
realized directly or indirectly therefrom, in the absence of actual fraud. The
same person (including a firm, corporation, trust or association) may be the
other party to contracts entered into pursuant to Sections 1, 2, 3 and 4 of
Article VII or Article IX or any other capacity deemed legal under the 1940 Act,
and any individual may be financially interested or otherwise an interested
person of persons who are parties to any or all of the contracts mentioned in
this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be reimbursed from
the assets belonging to each particular Series or Class for all of such
Trustees' expenses as such expenses are allocated to and among any one or more
of the Series or Classes pursuant to Article III, Section 5(b), including,
without limitation, expenses of organizing the Trust or any Series or Class and
continuing its or their existence; fees and expenses of Trustees and Officers of
the Trust; fees for investment advisory services, administrative services and
principal underwriting services provided for in Article VII, Sections 1, 2 and
3; fees and expenses of preparing and printing its Registration Statements under
the Securities Act of 1933 and the Investment Company Act of 1940 and any
amendments thereto; expenses of registering and qualifying the Trust and any
Series or Class and the Shares of any Series or Class under federal and state
laws and regulations; expenses of preparing, printing and distributing
prospectuses and any amendments thereto sent to Shareholders, underwriters,
broker-dealers and to investors who may be considering the purchase of Shares;
expenses of registering, licensing or other authorization of the Trust or any
Series or Class as a broker-dealer and of its or their Officers as agents and
salesmen under federal and state laws and regulations; interest expenses, taxes,
fees and commissions of every kind; expense of issue (including cost of share
certificates), purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of custodians,
transfer agents, dividend disbursing agents, Shareholder servicing agents and
registrars; printing and mailing costs; auditing, accounting and legal expenses;
reports to Shareholders and governmental officers and commissions; expenses of
meetings of Shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and nonrecurring items as may arise, including all
losses and liabilities by them incurred in administering the Trust and any
Series or Class, including expenses incurred in connection with litigation,
proceedings and claims and the obligations of the Trust under Article XI hereof
to indemnify its Trustees, Officers, employees, Shareholders and agents, and any
contract obligation to indemnify principal underwriters under Section 3 of
Article VII and for the payment of such expenses, disbursements, losses and
liabilities, the Trustees shall have a lien on the assets belonging to each
Series or Class prior to any rights or interests of the Shareholders of any
Series or Class. This section shall not preclude the Trust from directly paying
any of the aforementioned fees and expenses.

<PAGE>

Section 2. Trustee Compensation. The Trustees shall be entitled to
compensation from the assets belonging to any Series or Class for their
respective services as Trustees, to be determined from time to time by vote of
the Trustees, and the Trustees shall also determine the compensation of all
Officers, employees, consultants and agents whom they may elect or appoint. The
Trust may pay out of the assets belonging to any Series or Class any Trustee or
any corporation, firm, trust or association of which a Trustee is an interested
person for services rendered to the Trust in any capacity not prohibited by the
1940 Act, and such payments shall not be deemed compensation for services as a
Trustee under the first sentence of this Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 1. Investment Adviser. Subject to a Majority Shareholder Vote by
the relevant Series or Class, the Trustees may in their discretion from time to
time enter into an investment advisory contract whereby the other party to such
contract shall undertake to furnish the Trustees investment advisory services
for such Series or Class upon such terms and conditions and for such
compensation as the Trustees may in their discretion determine. Subject to a
Majority Shareholder Vote by the relevant Series or Class, the investment
adviser may enter into a sub-investment advisory contract to receive investment
advice and/or statistical and factual information from the sub-investment
adviser for such Series or Class upon such terms and conditions and for such
compensation as the Trustees may in their discretion agree to. Notwithstanding
any provisions of this Declaration of Trust, the Trustees may authorize the
investment adviser or sub-investment adviser or any person furnishing
administrative personnel and services as set forth in Article VII, Section 2
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales or exchanges of portfolio securities
belonging to a Series or Class of the Trust on behalf of the Trustees or may
authorize any Officer or Trustee to effect such purchases, sales, or exchanges
pursuant to recommendations of the investment adviser (and all without further
action by the Trustees). Any such purchases, sales and exchanges shall be deemed
to have been authorized by the Trustees. The Trustees may also authorize the
investment adviser to determine what firms shall be employed to effect
transactions in securities for the account of a Series or Class and to determine
what firms shall participate in any such transactions or shall share in
commissions or fees charged in connection with such transactions.
Section 2. Administrative Services. The Trustees may in their discretion
from time to time contract for administrative personnel and services whereby the
other party shall agree to provide the Trustees administrative personnel and
services to operate the Trust or a Series or Class on a daily basis, on such
terms and conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more entities.
Section 3. Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or nonexclusive contract or contracts
providing for the sale of the Shares of a Series or Class to net such Series or
Class not less than the amount provided in Article III, Section 3 hereof,
whereby a Series or Class may either agree to sell the Shares to the other party
to the contract or appoint such other party its sales agent for such Shares. In
either case, the contract shall be on such terms and conditions (including
indemnification of principal underwriters allowable under applicable law and
regulation) as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article VII; and such contract may also provide for
the repurchase or sale of Shares of a Series or Class by such other party as
principal or as agent of the Trust and may provide that the other party may
maintain a market for Shares of a Series or Class.

<PAGE>

Section 4. Transfer Agent. The Trustees may in their discretion from time
to time enter into transfer agency and shareholder services contracts whereby
the other party shall undertake to furnish the Trustees transfer agency and
shareholder services. The contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the provisions
of this Declaration of Trust or of the By-Laws. Such services may be provided by
one or more entities.
Section 5. Provisions and Amendments. Any contract entered into pursuant
to Section 1 or 3 of Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendments thereof or
other applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination and the method of authorization and
approval of such contract or renewal thereof.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. Subject to the provisions set forth in Article
III, Section 5(d), the Shareholders shall have power to vote, (i) for the
election of Trustees as provided in Article IV, Section 2; (ii) for the removal
of Trustees as provided in Article IV, Section 3(d); (iii) with respect to any
investment adviser or sub-investment adviser as provided in Article VII, Section
1; (iv) with respect to the amendment of this Declaration of Trust as provided
in Article XII, Section 7; and (v) to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders and (vi) with respect to such
additional matters relating to the Trust or any regulation of the Trust or with
the Commission or any State, or as the Trustees may consider desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. Until Shares of a Series or
Class are issued, the Trustees may exercise all rights of Shareholders of such
Series or Class with respect to matters affecting such Series or Class, and may
take any action with respect to the Trust or such Series or Class required or
permitted by law, this Declaration of Trust or any By-Laws of the Trust to be
taken by Shareholders.
Section 2. Meetings. A Shareholders meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other place
as the Trustees may designate. Special meetings of the Shareholders of the Trust
or of any Series or Class may be called by the Trustees or the Chief Executive
Officer of the Trust and shall be called by the Trustees upon the written
request of Shareholders owning at least one-tenth of the outstanding Shares
entitled to vote on the matter in question. Shareholders shall be entitled to at
least fifteen days' notice of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by law
to constitute a quorum for the transaction of any business at any meeting of the
Shareholders, there must be present, in person or by proxy, holders of
one-fourth of the total number of Shares of all Series or Classes of the Trust
then outstanding and entitled to vote at such meeting. When any one or more
Series or Classes is entitled to vote as a single Series or Class, more than
fifty percent of the shares of each such Series or Class entitled to vote shall
constitute a quorum at a Shareholders' meeting of that Series or Class. If a
quorum, as above defined, shall not be present for the purpose of any vote that
may properly come before the meeting, the Shareholders present in person or by
proxy and entitled to vote at such meeting on such matter holding a majority of
the Shares present entitled to vote on such matter may by vote adjourn the
meeting from time to time to be held at the same place and without further
notice than by announcement to be given at the meeting until a quorum, as
defined above, entitled to vote on such matter shall be present, whereupon any
such matter may be voted upon at the meeting as though held when originally
convened. Subject to any applicable requirement of law or of this Declaration of
Trust or the By-Laws, a plurality of the votes cast shall elect a Trustee and
all other matters shall be decided by a majority of the votes cast entitled to
vote thereon.

<PAGE>

Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.

ARTICLE IX
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall appoint or otherwise
engage a bank or trust company having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements, if any, as may
be contained in the By-Laws of the Trust:
(1) To receive and hold the securities owned by the Trust and deliver the
same upon written order;
(2) To receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct; and
(3) To disburse any such funds upon orders or vouchers;
(4) To keep the books and accounts of the Trust and furnish clerical and
accounting services to the Trust or any Series or Class;
(5) To compute, if authorized to do so by the Trustees, the Accumulated
Net Income of the Trust and the net asset value of the Shares in accordance with
the provisions hereof; all upon such basis of compensation as may be agreed upon
between the Trustees and the custodian. If so directed by a Majority Shareholder
Vote, the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
domestic or foreign sub-custodians from time to time to perform such of the acts
and services of the custodian and upon such terms and conditions, as may be
agreed upon between the custodian and such sub-custodian and approved by the
Trustees, provided that in every cash such domestic sub-custodian shall be a
bank or trust company organized under the laws of the United States or one of
the states thereof and having an aggregate capital, surplus and undivided
profits (as shown in it last published report) of at least two million dollars
($2,000,000) and each such foreign sub-custodian shall have been approved by the
Trustees and shall be a foreign banking institution or foreign security
depository.
Section 2. Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission or otherwise in accordance with the 1940 Act as from time to time
amended, pursuant to which system all securities of any particular Class or
Series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the custodian at the direction of the Trustees.

<PAGE>

ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay dividends to the
Shareholders of any Series or Class, and the amount of such dividends and
the payment of them shall be wholly in the discretion of the Trustees.
Such dividends may be accrued and automatically reinvested in additional
Shares (or fractions thereof) of the relevant Series or Class or paid in
cash or additional Shares of such Series or Class, all upon such terms and
conditions as the Trustees may prescribe. (b) The Trustees may, on each
day Accumulated net Income of the Trust (as defined in Section 3 of this
Article X) is determined and is positive, declare such Accumulated Net
Income as a dividend to Shareholders of record at such time as the
Trustees shall designate, payable in additional full and fractional Shares
or in cash. (c) The Trustees may distribute in respect of any fiscal year
as ordinary dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a regulated
investment company and to avoid any liability for federal income taxes in
respect of that year. (d) The decision of the Trustees as to what, in
accordance with good accounting practice is income and what is principal
shall be final, and except as specifically provided herein the decision of
the Trustees as to what expenses and charges of any Series or Class shall
be charged against principal and what against the income shall be final.
Any income not distributed in any year may be permitted to accumulate and
as long as not distributed may be invested from time to time in the same
manner as the principal funds of any Series or Class. (e) All dividends
and distributions on Shares of a particular Series or Class shall be
distributed pro rata to the holders of that Series or Class in proportion
to the number of Shares of that Series or Class held by such holders and
recorded on the books of the Trust or its transfer agent at the date and
time of record established for that payment. (f) The Trustees shall have
power, to the fullest extent permitted by the laws of Massachusetts, at
any time, or from time to time, to declare and cause to be paid dividends
of any Series or Class, which dividends, at the election of the Trustees,
may be accrued, automatically reinvested in additional Shares (or
fractions thereof) of such Series and Class or paid in cash or additional
Shares of such Series or Class, all upon such terms and conditions as the
Trustees may prescribe. (g) Anything in this instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a
dividend consisting of shares of the Trust. Section 2. Redemptions and
Repurchases. (a) In case any Shareholder of record of any Series or Class
at any time desires to dispose of Shares of such Series or Class recorded
in his name, he may deposit a written request (or such other form of
request as the Trustees may from time to time authorize) requesting that
the Trust purchase his Shares, out of assets attributable to such Series
or Class together with such other instruments or authorizations to effect
the transfer as the Trustees may from time to time require, at the office
of the Custodian, and the Trust shall purchase said Shares out of assets
attributable to such Series or Class, but only at the next asset value of
such Shares (as defined in Section 4 of this Article X) determined by or
on behalf of the Trustees next after said deposit, less any applicable
redemption charges as determined by the Trustees. Payment for such Shares
shall be made by the Trust to the Shareholder of record within seven (7)
days after the date upon which the request (and, if request, such other
instruments or authorizations of transfer) is deposited, subject to the
right of the Trustees to postpone the date of payment pursuant to Section
5 of this Article X. If the redemption is postponed beyond the date on
which it would normally occur by reason of a declaration by the Trustees
suspending the right of redemption pursuant to Section 5 of this Article
X, the right of the Shareholder to have his Shares purchased by the Trust
shall be similarly suspended, and he may withdraw his request (or such
other instruments or authorizations of transfer) from deposit if he so
elects; or, if he does not so elect, the purchase price shall be the net
asset value of his Shares, determined next after termination of such
suspension, (less any applicable redemption charges), and payment therefor
shall be made within seven (7) days thereafter. (b) The Trust may purchase
Shares of a Series or Class by agreement with the owner thereof (1) at a
price not exceeding the net asset value per Share determined next after
the purchase or contract of purchase is made, less any applicable
redemption charges or (2) at a price not exceeding the net asset value per
Share determined at some later time, less any applicable redemption
charges. (c) Shares purchased by the Trust either pursuant to paragraph
(a) or paragraph (b) of this Section 2 shall be deemed treasury Shares and
be resold by the Trust. (d) If the Trustees determine that economic
conditions would make it seriously detrimental to the best interests of
the remaining Shareholders of the Trust to make payment wholly or partly
in cash, the Trust may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of the relevant
Series or Class, in lieu of cash in conformity with applicable rules of
the Securities and Exchange Commission, take such securities at the same
value employed in determining net asset value, and selecting the
securities in such manner as the Trustees may deem fair and equitable.

<PAGE>

Section 3. Determination of Accumulated Net Income. The Accumulated Net
Income of the Trust shall be determined by or on behalf of the Trustees at such
time or times as the Trustees shall in their discretion determine. Such
determination shall be made in accordance with generally accepted accounting
principles and practices and may include realized and/or unrealized gains from
the sale or other disposition of securities or other property of the Trust. The
power and duty to determine Accumulated Net Income may be delegated by the
Trustees from time to time to one or more of the Trustees or Officers of the
Trust, to the other party to any contract entered into pursuant to Section 1 or
2 of Article VII, or to the Custodian or to a transfer agent.
Section 4. Net Asset Value of Shares. The net asset value of each Share of
a Series or Class outstanding shall be determined at such time or times as may
be determined by or on behalf of the Trustees. The power and duty to determine
net asset value may be delegated by the Trustees from time to time to one or
more of the Trustees or Officers of the Trust, to the other party to any
contract entered into pursuant to Section 1 or 2 of Article VII or to the
Custodian or to a transfer agent.
The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained by
dividing the value, as of such time, of the net assets belonging to such Series
or Class (i.e., the value of the assets belonging to such Series or Class less
the liabilities belonging to such Series or Class exclusive of capital and
surplus) by the total number of Shares outstanding of the Series or Class
(exclusive of treasury Shares) at such time in accordance with the requirements
of the 1940 Act and applicable provisions of the By-Laws of the Trust in
conformity with generally accepted accounting practices and principles.
The Trustees may declare a suspension of the determination of net asset
value for the whole or any part of any period in accordance with the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.

<PAGE>

Section 5. Suspension of the Right of Redemption. The Trustees may declare
a suspension of the right of redemption or postpone the date of payment for the
whole or any part of any period in accordance with the Investment Company Act of
1940 and the rules and regulations adopted thereunder.
Section 6. Trust's Right to Redeem Shares. The Trust shall have the right
to cause the redemption of Shares of any Series or Class in any Shareholder's
account for their then current net asset value (which will be promptly paid to
the Shareholder in cash), if at any time the total investment in the account
does not have a minimum dollar value determined from time to time by the
Trustees in their sole discretion. Shares of the Trust are redeemable at the
option of the Trust if, in the opinion of the Trustees, ownership of Trust
Shares has or may become concentrated to an extent which would cause the Trust
to be a personal holding company within the meaning of the Internal Revenue Code
(and thereby disqualified under Sub-Chapter M of said Code); in such
circumstances the Trust may compel the redemption of Shares, reject any order
for the purchase of Shares or refuse to give effect to the transfer of Shares.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, Officers, employees or agents of the Trust shall
have no power to bind any Shareholder of any Series or Class personally or to
call upon any Shareholder for the payment of any sum of money or assessment
whatsoever, other than such as the Shareholder may at any time agree to pay by
way of subscription for any Shares or otherwise.

<PAGE>

No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against or with respect to the Trust or any Series or
Class arising out of any action taken or omitted for or on behalf of the Trust
or such Series or Class, and the Trust or such Series or Class shall be solely
liable therefor and resort shall be had solely to the property of the relevant
Series or Class of the Trust for the payment or performance thereof.
Each Shareholder or former Shareholder of any Series or Class (or their
heirs, executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust property to the full extent of such
liability and the costs of any litigation or other proceedings in which such
liability shall have been determined, including, without limitation, the fees
and disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of such Series or Class shall be held to
personal liability. Such indemnification and reimbursement shall come
exclusively from the assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any act or
obligation of the Trust or any Series or Class and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust. No Trustee, Officer, employee or agent of the
Trust shall have the power to bind any other Trustee, Officer, employee or agent
of the Trust personally. The Trustees, Officers, employees or agents of the
Trust in incurring any debts, liabilities or obligations, or in taking or
omitting any other actions for or in connection with the Trust are, and each
shall be deemed to be, acting as Trustee, Officer, employee or agent of the
Trust and not in his own individual capacity.
Provided they have acted under the belief that their actions are in the
best interest of the Trust, the Trustees and Officers shall not be responsible
for or liable in any event for neglect or wrong doing by them or any Officer,
agent, employee, investment adviser or principal underwriter of the Trust or of
any entity providing administrative services for the Trust, but nothing herein
contained shall protect any Trustee of Officer against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 3. Express Exculpatory Clauses and Instruments. The Trustees shall
use every reasonable means to assure that all persons having dealings with the
Trust or any Series or Class shall be informed that the property of the
Shareholders and the Trustees, Officers, employees and agents of the Trust or
any Series or Class shall not be subject to claims against or obligations of the
Trust or any other Series or Class to any extent whatsoever. The Trustees shall
cause to be inserted in any written agreement, undertaking or obligation made or
issued on behalf of the Trust or any Series or Class (including certificates for
Shares of any Series or Class) an appropriate reference to this Declaration,
providing that neither the Shareholders, the Trustees, the Officers, the
employees nor any agent of the Trust or any Series or Class shall be liable
thereunder, and that the other parties to such instrument shall look solely to
the assets attributable to the relevant Series or Class for the payment of any
claim thereunder or for the performance thereof; but the omission of such
provisions from any such instrument shall not render any Shareholder, Trustee,
Officer, employee or agent liable, nor shall the Trustee, or any Officer, agent
or employee of the Trust or any Series or Class be liable to anyone for such
omission. If, notwithstanding this provision, any Shareholder, Trustee, officer,
employee or agent shall be held liable to any other person by reason of the
omission of such provision from any such agreement, undertaking or obligation,
the Shareholder, Trustee, Officer, employee or agent shall be entitled to
indemnity and reimbursement out of the Trust property, as provided in this
Article XI.

<PAGE>

Section 4. Indemnification of Trustees, Officers, Employees and Agents.
(a) Every person who is or has been a Trustee, Officer, employee or agent
of the Trust and persons who serve at the Trust's request as Director,
Officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Trust to
the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee, Officer,
employee or agent of the Trust or of another corporation, partnership,
joint venture, trust or other enterprise at the request of the Trust and
against amounts paid or incurred by him in the settlement thereof. (b) The
words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, administrative,
legislative, investigative or other, including appeals), actual or
threatened, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities. (c) No indemnification
shall be provided hereunder to a Trustee, Officer, employee or agent
against any liability to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.

<PAGE>

(d) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect
any other rights to which any Trustee, Officer, employee or agent may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee, Officer, employee, or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. (e)
Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 4 may be paid by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
Trustee, Officer, employee or agent secured by a surety bond or other
suitable insurance that such amount will be paid over by him to the Trust
if it is ultimately determined that he is not entitled to indemnification
under this Section 4.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby.
Section 2. Trustee`s Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and subject to the provisions of Article XI, shall be under no liability
for any act or omission in accordance with such advice or for failing to follow
such advice. The Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.

<PAGE>

Section 3. Establishment of Record Dates. The Trustees may close the Share
transfer books of the Trust maintained with respect to any Series or Class for a
period not exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or such Series or Class, or the date for the payment
of any dividend or the making of any distribution to Shareholders, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of Shares of any Series or Class shall go into effect; or in lieu of
closing the Share transfer books as aforesaid, the Trustees may fix in advance a
date, not exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or such Series or Class, or the date for the payment
of any dividend or the making of any distribution to Shareholders of such Series
or Class, or the date for the allotment of rights, or the date when any change
or conversion or exchange of Shares of such Series or Class shall go into
effect, or the last day on which the consent or dissent of Shareholders of the
Trust or such Series or Class may be effectively expressed for any purpose, as a
record date for the determination of the Shareholders entitled to notice of,
and, to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or distribution, or to any such allotment
of rights, or to exercise the rights in respect of any such change, conversion
or exchange of shares, or to exercise the right to give such consent or dissent,
and in such case such Shareholder and only such Shareholder as shall be
Shareholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting, or to receive payment of such dividend or
distribution, or to receive such allotment or rights, or to exercise such
rights, as the case may be, notwithstanding, after such date fixed aforesaid,
any transfer of any Shares on the books of the Trust maintained with respect to
any Series or Class. Nothing in the foregoing sentence shall be construed as
precluding the Trustees from setting different record dates for different Series
or Classes.

<PAGE>

Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to
the provisions of paragraphs (b), (c) and (d) of this Section 4. (b) The
Trustees with the approval of the holders of at least two-thirds of the
outstanding Shares of each Series or Class entitled to vote, and voting
separately by Series or Class may by unanimous action sell and convey the
assets of the Trust or any Series or Class to another trust or corporation
organized under the laws of any state of the United States, which is a
diversified open-end management investment company as defined in the 1940
Act, for an adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the trust or such Series and Class and which may include
shares of beneficial interest or stock of such trust or corporation. Upon
making provision for the payment of all such liabilities, by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds from the sale or conveyance of assets belonging to any Series or
Class ratably among the holders of the Shares of that Series or Class of
the Trust then outstanding. (c) Subject to a Majority Shareholder Vote by
the Trust or any Series or Class, the Trustees may at any time sell and
convert into money all the assets of the Trust or such Series or Class,
unless otherwise required by applicable law. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities,
accrued or contingent belonging to each Series or Class, the Trustees
shall distribute the remaining assets belonging to each Series or Class
ratably among the holders of the outstanding Shares of that Series or
Class. (d) Upon completion of the distribution of the remaining proceeds
of the remaining assets as provided in paragraphs (b) and (c), the Trust
or the applicable Series or Class shall terminate and the Trustees shall
be discharged of any and all further liabilities and duties hereunder or
with respect thereto and the right, title and interest of all parties
shall be canceled and discharged.

<PAGE>

Section 5. Offices of the Trust, Filing of Copies, References, Headings.
The Trust shall maintain a usual place of business in Massachusetts, which,
initially, shall be c/o Donnelly, Conroy & Gelhaar, 176 Federal Street, Boston,
Massachusetts, and shall continue to maintain an office at such address unless
changed by the Trustees to another location in Massachusetts. The Trust may
maintain other offices as the Trustees may from time to time determine. The
original or a copy of this instrument and of each declaration of trust
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each supplemental
declaration of trust shall be filed by the Trustees with the Massachusetts
Secretary of State and the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust or any Series or Class may rely on a certificate by an Officer of the
Trust as to whether or not any such supplemental declaration of trust has been
made and as to any matters in connection with the Trust hereunder, and with the
same effect as if it were the original, may rely on a copy certified by an
Officer of the Trust to be a copy of this instrument or of any such supplemental
declaration of trust. In this instrument or in any such supplemental declaration
of trust, references to this instrument, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this instrument as
amended or affected by such supplemental declaration of trust. Headings are
placed herein for convenience of reference only and in case of any conflict, the
text of this instrument, rather than the headings shall control. This instrument
may be executed in any number of counterparts each of which shall be deemed an
original.

<PAGE>

Section 6. Applicable Law. The Trust set forth in this instrument is
created under and is to be governed by and construed and administered according
to the laws of the Commonwealth of Massachusetts. The Trust shall be of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 7. Amendments -- General. Prior to the initial issuance of Shares
pursuant to the second sentence of Section 3 of Article III, a majority of the
Trustees then in office may amend or otherwise supplement this instrument by
make a Declaration of Trust supplemental hereto, which thereafter shall form a
part hereof. Subsequent to such initial issuance of Shares, if authorized by a
majority of the Trustees then in office and by the holders of a Majority of the
Shares of all Series and Classes then outstanding and entitled to vote thereon
or by a larger vote which may be required by applicable law or this Declaration
of Trust in any particular case, the Trustees shall amend or otherwise
supplement this instrument, by make a Declaration of Trust supplemental hereto,
which thereafter shall form a part hereof. Any such supplemental Declaration of
Trust shall be signed by at least a majority of the Trustees then in office.
Copies of the supplemental Declaration of Trust shall be filed as specified in
Section 5 of this Article XII.
Section 8. Amendments -- Series and Classes. The establishment and
designation of any Series or Class of Shares in addition to those established
and designated in Section 5 of Article III hereof shall be effective upon the
execution by a majority of the then Trustees, of an amendment to this
Declaration of Trust, taking the form of a complete restatement or otherwise,
setting forth such establishment and designation and the relative rights and
preferences of any such Series or Class, or as otherwise provided in such
instrument.
Without limiting the generality of the foregoing, the Declaration of the
Trust may be amended to:
(a) create one or more Series or Classes of Shares (in addition to any
Series or Classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as
the Trustees shall determine and reclassify any or all outstanding Shares
as Shares of particular Series or Classes in accordance with such
eligibility requirements; (b) combine two or more Series or Classes of
Shares into a single Series or Class on such terms and conditions as the
Trustees shall determine; (c) change or eliminate any eligibility
requirements for investment in Shares of any Series or Class, including
without limitation the power to provide for the issue of Shares of any
Series or Class in connection with any merger or consolidation of the
Trust with another trust or company or any acquisition by the Trust of
part or all of the assets of another trust or company; (d) change the
method of allocating dividends among the various Series and Classes of
Shares; (e) allocate any specific assets or liabilities of the Trust or
any specific items of income or expense of the Trust to one or more Series
and Classes of Shares; (f) specifically allocate assets to any or all
Series or Classes of Shares or create one or more additional Series or
Classes of Shares which are preferred over all other Series or Classes of
Shares in respect of assets specifically allocated thereto or any
dividends paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any assets so
allocated or otherwise and provide for any special voting or other rights
with respect to such Series or Classes.

<PAGE>

Section 9. Use of Name. The Trust acknowledges that Federated Investors
has reserved the right to grant the non-exclusive use of the name "Federated" or
any derivative thereof to any other investment company, investment adviser,
distributor or other business enterprise, and to withdraw from the Trust the use
of the name "Federated".

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the day and year first above written.

/s/ John F. Donahue /s/ Edward L. Flaherty, Jr.
John F. Donahue Edward L. Flaherty

/s/ John T. Conroy, Jr. /s/ Glen R. Johnson
John T. Conroy, Jr. Glen R. Johnson

/s/ William J. Copeland /s/ Peter E. Madden
William J. Copeland Peter E. Madden

/s/ James E. Dowd /s/ Gregor F. Meyer
James E. Dowd Gregor F. Meyer

/s/ Lawrence D. Ellis, M.D. /s/ Wesley W. Posvar
Lawrence D. Ellis, M.D. Wesley W. Posvar

/s/ Marjorie P. Smuts
Marjorie P. Smuts

<PAGE>

COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )

I hereby certify that on May 26, 1992, before me, the subscriber, a Notary
Public of the Commonwealth of Pennsylvania, in for the County of Allegheny,
personally appeared John F. Donahue, John T. Conroy, Jr., William J. Copeland,
James E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Glen R.
Johnson, Peter E. Madden, Gregor F. Meyer, Wesley W. Posvar and Marjorie P.
Smuts who acknowledged the foregoing Declaration of Trust to be their act.

Witness my hand and notarial seal the day and year above written.

/s/ Cynthia L. Gorseth
Notary Public

Exhibit 2 under Form N-1A
Exhibit 3(ii) under Item 601/Reg. s-k

BY-LAWS
of
FEDERATED INCOME TRUST
(formerly known as INVESTORS TRUST)
AMENDMENT NO. 3 AND RESTATEMENT
OUTLINE OF BY-LAWS

Page
ARTICLE I: OFFICERS AND THEIR ELECTION..............................1
1 Officers.................................................1
2 Election of Officers.....................................1
3 Resignations and Removals and Vacancies..................1

ARTICLE II: POWERS AND DUTIES OF TRUSTEES AND OFFICERS.................1
1 Trustees.................................................1
2 Chairman of the Trustees.................................1
3 President ...............................................2
4 Vice President ..........................................2
5 Secretary ...............................................2
6 Treasurer ...............................................2
7 Assistant Vice President ................................2
8 Assistant Secretaries and Assistant Treasurers ..........2
9 Salaries ................................................3

ARTICLE III: POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES..3
1 Executive and Other Committees ..........................3
2 Vacancies in Executive Committee ........................3
3 Executive Committee to Report to Trustees................3
4 Procedure of Executive Committee ........................3
5 Powers of Executive Committee ...........................3
6 Compensation ............................................3
7 Informal Action by Executive Committee or
Other Committees.........................................3

ARTICLE IV: SHAREHOLDERS' MEETINGS...................................4
1 Special Meetings ........................................4
2 Notices .................................................4
Page

3 Place of Meeting ....................................................4
4 Action by Consent .......................................4
5 Proxies .................................................4

ARTICLE V: TRUSTEES' MEETINGS.......................................4
1 Number and Qualifications of Trustees ...................4
2 Special Meetings ........................................5
3 Regular Meetings ........................................5
4 Quorum and Vote .........................................5
5 Notices .................................................5
6 Place of Meeting ........................................5
7 Telephonic Meeting.......................................5
8 Special Action ..........................................5
9 Action by Consent........................................5
10 Compensation of Trustees ................................6

ARTICLE VI: SHARES OF BENEFICIAL INTEREST............................6
1 Beneficial Interest......................................6
2 Certificates ............................................6
3 Transfer of Shares ......................................6
4 Equitable Interest Not Recognized .......................6
5 Lost, Destroyed or Mutilated Certificates................6
6 Transfer Agent and Registrar: Regulations................6

ARTICLE VII: INSPECTION OF BOOKS......................................7
ARTICLE VIII: AGREEMENTS, CHECKS, DRAFTS,
ENDORSEMENTS, ETC........................................7
1 Agreements, Etc. ........................................7
2 Checks, Drafts, Etc. ....................................7
3 Endorsements, Assignments and Transfer of Securities ....7
4 Evidence of Authority ...................................7

ARTICLE IX: SEAL.....................................................8
ARTICLE X: FISCAL YEAR..............................................8
ARTICLE XI: AMENDMENTS...............................................8
ARTICLE XII: WAIVERS OF NOTICE........................................8
ARTICLE XIII: REPORT TO SHAREHOLDERS...................................8
ARTICLE XIV: BOOKS AND RECORDS........................................9
ARTICLE XV: TERMS....................................................9

<PAGE>

BY-LAWS
of
FEDERATED INCOME TRUST
(formerly known as INVESTORS TRUST)
AMENDMENT NO. 3 AND RESTATEMENT
Effective May 26, 1992

ARTICLE I

OFFICERS AND THEIR ELECTION

Section 1. Officers. The Officers of the Trust shall be a Chairman of the
Trustees, a President, one or more Vice Presidents, a Treasurer, a Secretary and
such other officers as the Trustees may from time to time elect. It shall not be
necessary for any Trustee or other officer to be a holder of shares in the
Trust.
Section 2. Election of Officers. The President, Vice President(s),
Treasurer and Secretary shall be chosen annually by the Trustees. The Chairman
of the Trustees, shall be chosen annually by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. The officers shall hold office until their successors
are chosen and qualified.
Section 3. Resignations and Removals and Vacancies. Any Officer of the
Trust may resign by filing a written resignation with the Chairman of the
Trustees or with the Secretary, which shall take effect on being so filed or at
such time as may be therein specified. The Trustees may remove any Officer, with
or without cause, by a majority vote of all of the Trustees. The Trustees may
fill any vacancy created in any office whether by resignation, removal or
otherwise.
ARTICLE II

POWERS AND DUTIES OF TRUSTEES AND OFFICERS

Section 1. Trustees. The business and affairs of the Trust shall be managed
by the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
Section 2. Chairman of the Trustees ("Chairman"). The Chairman shall be
the chief executive officer of the Trust. He shall have general supervision over
the business of the Trust and policies of the Trust. He shall employ and define
the duties of all employees of the Trust, shall have power to discharge any such
employees, shall exercise general supervision over the affairs of the Trust and
shall perform such other duties as may be assigned to him from time to time by
the Trustees. He shall preside at the meetings of shareholders and of the
Trustees. The Chairman shall appoint a Trustee or Officer to preside at such
meetings in his absence.
Section 3. President. The President, in the absence of the Chairman, shall
perform all duties and may exercise any of the powers of the Chairman subject to
the control of the other Trustees. He shall counsel and advise the Chairman on
matters of major importance and shall perform such other duties as may be
assigned to him from time to time by the Trustees, the Chairman or the Executive
Committee.
Section 4. Vice President. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Trustees. Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Trustees, the Chairman, the President,
or the Executive Committee.
Section 5. Secretary. The Secretary shall keep or cause to be kept in
books provided for that purpose the Minutes of the Meetings of Shareholders of
each and all Series or Classes and of the Trustees; shall see that all Notices
are duly given in accordance with the provisions of these By-Laws and as
required by law; shall be custodian of the records and of the Seal of the Trust
and see that the Seal is affixed to all documents, the execution of which on
behalf of the Trust under its Seal is duly authorized; shall keep directly or
through a transfer agent a register of the post office address of each
shareholder of each Series or Class of the Trust, and make all proper changes in
such register, retaining and filing his authority for such entries; shall see
that the books, reports, statements, certificates and all other documents and
records required by law are properly kept and filed; and in general shall
perform all duties incident to the Office of Secretary and such other duties as
may from time to time be assigned to him by the Trustees, Chairman, the
President, or the Executive Committee.
Section 6. Treasurer. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities
belonging to any Series or Class which may come into his hands to such bank or
trust company as the Trustees shall employ as custodian or sub-custodian for any
Series or Class in accordance with Article IX of the Declaration of Trust. The
Treasurer shall perform such duties additional to the foregoing as the Trustees,
Chairman, the President or the Executive Committee may from time to time
designate.
Section 7. Assistant Vice President. The Assistant Vice President or Vice
Presidents of the Trust shall have such authority and perform such duties as may
be assigned to them by the Trustees, the Executive Committee, or the Chairman.
Section 8. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers shall perform
the duties of the Secretary and of the Treasurer, respectively, in the absence
of those Officers and shall have such further powers and perform such other
duties as may be assigned to them respectively by the Trustees or the Executive
Committee, or the Chairman.
Section 9. Salaries. The salaries of the Officers shall be fixed from time
to time by the Trustees. No Officer shall be prevented from receiving such
salary by reason of the fact that he is also a Trustee.

ARTICLE III

POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES

Section 1. Executive and Other Committees. The Trustees may elect from
their own number an Executive Committee to consist of not less than two members.
The Executive Committee shall be elected by a resolution passed by a vote of at
least a majority of the Trustees then in office. The Trustees may also elect
from their own number other committees from time to time, the number composing
such committees and the powers conferred upon the same to be determined by vote
of the Trustees.
Section 2. Vacancies in Executive Committee. Vacancies occurring in the
Executive Committee from any cause shall be filled by the Trustees by a
resolution passed by the vote of at least a majority of the Trustees then in
office.
Section 3. Executive Committee to Report to Trustees. All action by the
Executive Committee shall be reported to the Trustees at their meeting next
succeeding such action.
Section 4. Procedure of Executive Committee. The Executive Committee shall
fix its own rules of procedure not inconsistent with these By-Laws or with any
directions of the Trustees. It shall meet at such times and places and upon such
notice as shall be provided by such rules or by resolution of the Trustees. The
presence of a majority shall constitute a quorum for the transaction of
business, and in every case an affirmative vote of a majority of all the members
of the Committee present shall be necessary for the taking of any action.
Section 5. Powers of Executive Committee. During the intervals between the
Meetings of the Trustees, the Executive Committee, except as limited by the
By-Laws of the Trust or by specific directions of the Trustees, shall possess
and may exercise all the powers of the Trustees in the management and direction
of the business and conduct of the affairs of the Trust in such manner as the
Executive Committee shall deem to be in the best interests of the Trust, and
shall have power to authorize the Seal of the Trust to be affixed to all
instruments and documents requiring same. Notwithstanding the foregoing, the
Executive Committee shall not have the power to elect or remove Trustees,
increase or decrease the number of Trustees, elect or remove any Officer,
declare dividends, issue shares or recommend to shareholders any action
requiring shareholder approval.
Section 6. Compensation. The members of any duly appointed committee shall
receive such compensation and/or fees as from time to time may be fixed by the
Trustees.
Section 7. Informal Action by the Executive Committee or Other Committee.
Any action required or permitted to be taken at any meeting of the Executive
Committee or any other duly appointed Committee may be taken without a meeting
if a consent in writing setting forth such action is signed by all members of
such committee and such consent is filed with the records of the Trust.
ARTICLE IV

SHAREHOLDERS' MEETINGS

Section 1. Special Meetings. A special meeting of the Shareholders of the
Trust or of a particular Series or Class shall be called by the Secretary
whenever ordered by the Trustees, the Chairman or requested in writing by the
holder or holders of at least one-tenth of the outstanding shares of the Trust
or of the relevant Series or Class entitled to vote. If the Secretary, when so
ordered or requested, refuses or neglects for more than two days to call such
special meeting, the Trustees, Chairman or the Shareholders so requesting may,
in the name of the Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary.
Section 2. Notices. Except as above provided, notices of any special
meeting of the shareholders of the Trust or a particular Series or Class, shall
be given by the Secretary by delivering or mailing, postage prepaid, to each
shareholder entitled to vote at said meeting, a written or printed notification
of such meeting, at least fifteen days before the meeting, to such address as
may be registered with the Trust by the shareholder.
Section 3. Place of Meeting. Meetings of the Shareholders of the Trust or
a particular Series or Class, shall be held at the principal place of business
of the Trust in Pittsburgh, Pennsylvania, or at such place within or without The
Commonwealth of Massachusetts as fixed from time to time by resolution of the
Trustees.
Section 4. Action by Consent. Any action required or permitted to be taken
at any meeting of shareholders may be taken without a meeting, if a consent in
writing, setting forth such action, is signed by all shareholders entitled to
vote on the subject matter thereof, and such consent is filed with the records
of the Trust.
Section 5. Proxies. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person or by proxy. Every proxy shall be in
writing subscribed by the Shareholder or his duly authorized attorney and dated,
but need not be sealed, witnessed or acknowledged. All proxies shall be filed
with and verified by the Secretary or an Assistant Secretary of the Trust or, if
the meeting shall so decide, by the Secretary of the Meeting.
ARTICLE V

TRUSTEES' MEETINGS

Section 1. Number and Qualifications of Trustees. The number of Trustees
shall be as fixed from time to time by a majority of the Trustees but shall be
no less than three nor more than twenty. The Trustees may from time to time
increase or decrease the number as they deem expedient, but not to be less than
three nor more than twenty, however, and fill the vacancies so created. The term
of office of a Trustee shall not be affected by any decrease in the number of
Trustees made by the Trustees pursuant to the foregoing authorization.
Section 2. Special Meetings. Special meetings of the Trustees shall be
called by the Secretary at the written request of the Chairman or any Trustee,
and if the Secretary when so requested refuses or fails for more than
twenty-four hours to call such meeting, the Chairman, or such Trustee may in the
name of the Secretary call such meeting by giving due notice in the manner
required when notice is given by the Secretary.
Section 3. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination.
Section 4. Quorum and Vote. A majority of the Trustees shall constitute a
quorum for the transaction of business. The act of a majority of the Trustees
present at any meeting at which a quorum is present shall be the act of the
Trustees unless a greater proportion is required by the Declaration of Trust or
these By-Laws or applicable law. In the absence of a quorum, a majority of the
Trustees present may adjourn the meeting from time to time until a quorum shall
be present. Notice of any adjourned meeting need not be given.
Section 5. Notices. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the Secretary to each Trustee, by
mailing to him, postage prepaid, addressed to him t his address as registered on
the books of the Trust or, if not so registered, at his last known address, a
written or printed notification of such meeting at least four days before the
meeting or by sending to him at least one day before the meeting, a prepaid
telegram, addressed to him at this said registered address, if any, or if he has
no such registered address, at his last known address, notice of such meeting.
Subject to compliance with Section 15(c) of the Investment Company Act of 1940,
notice or waiver of notice need not specify the purpose of any special meeting.
Section 6. Place of Meeting. Meetings of the Trustees shall be held at the
principal place of business of the Trust in Pittsburgh, Pennsylvania, or at such
place within or without the Commonwealth of Massachusetts as fixed from time to
time by resolution of the Trustees, or as the person or persons requesting said
meeting to be called may designate, but any meeting may adjourn to any other
place.
Section 7. Telephonic Meeting. Subject to Compliance with Sections 15(c)
and 32(a) of the Investment Company Act of 1940, if it is impractical for the
Trustees to meet in person, the Trustees may meet by means of a telephone
conference circuit to which all Trustees are connected or of which all Trustees
shall have waived notice, which meeting shall be deemed to have been held at a
place designated by the Trustees at the meeting..
Section 8. Special Action. When all the Trustees shall be present at any
meeting, however called, or whenever held, or shall assent to the holding of the
meeting without notice, or after the meeting shall sign a written assent thereto
on the record of such meeting, the acts of such meeting shall be valid as if
such meeting had been regularly held.
Section 9. Action by Consent. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meetings. Such consent shall be treated
as a vote of the Trustees for all purposes.
Section 10. Compensation of Trustees. The Trustees may receive a stated
salary for their services as Trustees, and by resolution of Trustees a fixed fee
and expenses of attendance may be allowed for attendance at each Meeting.
Nothing herein contained shall be construed to preclude any Trustee from serving
the Trust in any other capacity, as an officer, agent or otherwise, and
receiving compensation therefor.
ARTICLE VI

SHARES OF BENEFICIAL INTEREST

Section 1. Beneficial Interest. The beneficial interest in the Trust shall
at all times be divided into a unlimited number of shares of particular Series
or Classes, without par value. The shares of beneficial interest shall have one
vote per share on all matters relating to the respective Series or Class of
which such share is held, as appropriate, at any meeting of Shareholders and a
fractional vote for each fraction of a share.
Section 2. Certificates. All certificates for shares shall be signed by
the Chairman, President or any Vice President and by the Treasurer or Secretary
or any Assistant Treasurer or Assistant Secretary and sealed with the seal of
the Trust. The signatures may be either manual or facsimile signatures and the
seal may be either facsimile or any other form of seal. Certificates for shares
for which the Trust has appointed an independent Transfer Agent and Registrar
shall not be valid unless countersigned by such Transfer Agent and registered by
such Registrar. In case any officer who has signed any certificate ceases to be
an officer of the Trust before the certificate is issued, the certificate may
nevertheless be issued by the Trust with the same effect as if the officer had
not ceased to be such officer as of the date of its issuance. Share certificates
of each Series or Class shall be in such form not inconsistent with law or the
Declaration of Trust or these By-Laws as may be determined by the Trustees.
Section 2. Transfer of Shares. The shares of each Series and Class of the
Trust shall be transferable, so as to affect the rights of the Trust or any
Series or Class, only by transfer recorded on the books of the Trust or its
transfer agent, in person or by attorney.
Section 3. Equitable Interest Not Recognized. The Trust shall be entitled
to treat the holder of record of any share or shares of a Series or Class as the
absolute owner thereof and shall not be bound to recognize any equitable or
other claim or interest in such share or shares of a Series or Class on the part
of any other person except as may be otherwise expressly provided by law.
Section 4. Lost, Destroyed or Mutilated Certificates. In case any
certificate for shares of any Series or Class is lost, mutilated or destroyed,
the Trustees may issue a new certificate in place thereof upon indemnity to the
relevant Series or Class against loss and upon such other terms and conditions
as the Trustees may deem advisable.
Section 5. Transfer Agent and Registrar: Regulations. The Trustees shall
have power and authority to make all such rules and regulations as they may deem
expedient concerning the issuance, transfer and registration of certificates for
shares of each Series or Class and may appoint a Transfer Agent and/or Registrar
of certificates for such shares of each Series or Class, and may require all
such share certificates to bear the signature of such Transfer Agent and/or of
such Registrar.
ARTICLE VII

INSPECTION OF BOOKS

The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust maintained on behalf of each Series and Class or
any of them shall be open to the inspection of the Shareholders of any Series or
Class; and no Shareholder shall have any right to inspect any account or book or
document of the Trust except that, to the extent such account or book or
document relates to the Series or Class in which he is a Shareholder or the
Trust generally, such Shareholder shall have such right of inspection as
conferred by laws or authorized by the Trustees or by resolution of the
Shareholders of the Trust or of the relevant Series or Class, as the case may
be.
ARTICLE VIII

AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

Section 1. Agreements, Etc. The Trustees or the Executive Committee may
authorize any Officer or Officers, or agent or agents of the Trust to enter into
any Agreement or execute and deliver any instrument in the name of the Trust on
behalf of any Series or Class, and such authority may be general or confined to
specific instances; and, unless so authorized by the Trustees or by the
Executive Committee or by these By-Laws, no Officer, agent or employee shall
have any power or authority to bind the Trust by any Agreement or engagement or
to pledge its credit or to render it liable pecuniarily for any purpose or for
any amount.
Section 2. Checks, Drafts, Etc. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officer or Officers, employee or employees, or agent or agents, as shall
from time to time be designated by the Trustees or the Executive Committee, or
as may be specified in or pursuant to the agreement between the Trust on behalf
of any Series or Classes and the Bank or Trust Company appointed as custodian,
pursuant to the provisions of the Declaration of Trust.
Section 3. Endorsements, Assignments and Transfer of Securities. All
endorsements, assignments, stock powers, other instruments of transfer of
securities standing in the name of the Trust or its nominee or directions for
the transfer of securities belonging to any Series or Class shall be made by
such Officers, employees or employees, or agent or agents as may be authorized
by the Trustees or the Executive Committee.
Section 4. Evidence of Authority. Anyone dealing with the Trust or any
Series or Class shall be fully justified in relying on a copy of a resolution of
the Trustees or of any committee thereof empowered to act in the premises which
is certified as true by the Secretary or an Assistant Secretary under the seal
of the Trust.
ARTICLE IX

SEAL

The seal of the Trust shall be circular in form, bearing the inscription:
FEDERATED INCOME TRUST - 1981 - MASSACHUSETTS
ARTICLE X

FISCAL YEAR

The fiscal year of the Trust shall be the period of twelve months ending
on the last day of January in each calendar year.
ARTICLE XI

AMENDMENTS

These By-Laws may be amended by a majority vote of all of the Trustees.
ARTICLE XII

WAIVERS OF NOTICE

Whenever any notice whatever is required to be given under the provisions
of any statute of the Commonwealth of Massachusetts, or under the provisions of
the Declaration of Trust or these By-Laws, a waiver thereof in writing, signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. A notice shall be
deemed to have been given if telegraphed, cabled, or sent by wireless when it
has been delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled, or sent by wireless.
Any notice shall be deemed to be given if mailed at the time when the same shall
be deposited in the mail.
ARTICLE XIII

REPORT TO SHAREHOLDERS

The Trustees, shall at least semi-annually submit to the shareholders of
each Series or Class a written financial report of the transactions of that
Series or Class, including financial statements which shall at least annually be
certified by independent public accountants.
ARTICLE XIV

BOOKS AND RECORDS

The books and records of the Trust and any Series or Class, including the
stock ledger or ledgers, may be kept in or outside the Commonwealth of
Massachusetts at such office or agency of the Trust as may from time to time be
determined by the Trustees
ARTICLE XV

TERMS

Terms defined in the Declaration of Trust and not otherwise defined herein
are used herein with the meanings set forth or referred to in the Declaration of
Trust.

Exhibit 2 under Form N-1A
Exhibit 3(ii) under Item 601/Reg. S-K

Federated Income Trust

Amendment No. 4
to the By-Laws

Effective November 18, 1997

Delete Article III, Section 7 and replace with the following:

Action by Consent of the Board of Trustees, Executive Committee or Other
Committee. Subject to Article V, Section 2 of these By-Laws, any action required
or permitted to be taken at any meeting of the Trustees, Executive Committee or
any other duly appointed Committee may be taken without a meeting if consents in
writing setting forth such action are signed by all members of the Board or such
committee and such consents are filed with the records of the Trust. In the
event of the death, removal, resignation or incapacity of any Board or committee
member prior to that Trustee signing such consent, the remaining Board or
committee members may re-constitute themselves as the entire Board or committee
until such time as the vacancy is filled in order to fulfill the requirement
that such consents be signed by all members of the Board of committee.

Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg S-K

STATE STREET
DOMESTIC CUSTODY

FEE SCHEDULE

Federated Funds

I. Custody Services

Maintain custody of fund assets. Settle portfolio purchases and sales.
Report buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Monitor corporate
actions.

ANNUAL FEES

ASSET

Per Fund .25 Basis Points

Wire Fees $3.00 per wire

Settlements:

o Each DTC Transaction $5.00
o Each Federal Reserve Book Entry Transaction $3.75
o Each Repo Transaction (All Repo) $3.75
o Each Physical Transaction (NY/Boston, Private Placement) $15.00
o Each Option Written/Exercised/Expired $18.75
Each Book Entry Muni (Sub-custody) Transaction $15.00
o Government Paydowns $5.00
o Maturity Collections $8.00
o PTC Transactions $6.00

II. Special Services

Fees for activities of a non-recurring nature such as fund consolidation
or reorganization, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.

III. Balance Credit

Municipal Funds
A balance credit equal to 75% of the average demand deposit account
balance in the custodian account for the month billed times the 30 day
T-Bill Rate on the last Monday of the month billed, will be applied
against the month's custodian bill.

Transfer Agent
A balance credit equal to 100% of the average balance in the transfer
agent demand deposit accounts, less the reserve requirement and applicable
related expenses, times 75% of the 30 average Fed Funds Rate.

IV. Payment

The above fees will be charged against the funds' custodian checking
account thirty (30) days after the invoice is mailed to the funds' offices.

V. Term of Contract

The parties agree that this fee schedule shall become effective January 1,
1997.

FEDERATED SERVICES COMPANY STATE STREET

BY: /s/ Douglas L. Hein BY: /s/ Michael E. Hagerty

TITLE: Senior Vice President TITLE: Vice President

DATE: April 15, 1997 DATE: April 8, 1997
----------------------------------- -------------

Exhibit 11 under N-1A
Exhibit 23 under 601/Reg SK

INDEPENDENT AUDITORS' CONSENT

To the Board of Trustees and Shareholders of
Federated Income Trust:

We consent to the use in Post-Effective Amendment No. 28 to Registration
Statement 2-75366 of Federated Income Trust of our report dated March 18, 1998,
appearing in the Prospectus, which is a part of such Registration Statement, and
to the reference to us under heading "Financial Highlights" in such Prospectus.

By: /s/ Deloitte & Touche LLP
Deloitte & Touche LLP

Pittsburgh, Pennsylvania
March 26, 1998

Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of FEDERATED INCOME TRUST and the Deputy
General Counsel of Federated Services Company, and each of them, their true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
Securities and Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.

SIGNATURES TITLE DATE

/s/John F. Donahue Chairman and Trustee March 20, 1998
- ---------------------------
John F. Donahue (Chief Executive Officer)

/s/Glen R. Johnson President and Trustee March 20, 1998
- ---------------------------
Glen R. Johnson

/s/John W. McGonigle Treasurer, Executive Vice March 20, 1998
John W. McGonigle President and Secretary
(Principal Financial and
Accounting Officer)

/s/Thomas G. Bigley Trustee March 20, 1998
Thomas G. Bigley

/s/Nicholas P. Constantakis Trustee March 20, 1998
- ---------------------------
Nicholas P. Constantakis

/s/John T. Conroy, Jr. Trustee March 20, 1998
- ---------------------------
John T. Conroy, Jr.

/s/William J. Copeland Trustee March 20, 1998
William J. Copeland

<PAGE>

/s/James E. Dowd Trustee March 20, 1998
James E. Dowd

/s/Lawrence D. Ellis Trustee March 20, 1998
Lawrence D. Ellis

/s/Edward L. Flaherty, Jr. Trustee March 20, 1998
- ---------------------------
Edward L. Flaherty, Jr.

/s/Peter E. Madden Trustee March 20, 1998
Peter E. Madden

/s/John E. Murray, Jr. Trustee March 20, 1998
- ---------------------------
John E. Murray, Jr.

/s/Wesley W. Posvar Trustee March 20, 1998
Wesley W. Posvar

/s/Marjorie P. Smuts Trustee March 20, 1998
Marjorie P. Smuts

Sworn to and subscribed before me this 20th day of March, 1998.

/s/ Cheri S. Good____________
Cheri S. Good
Notary Public

<S> <C>

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<S> <C>

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<NAME> Federated Income Trust
Institutional Service Shares

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