FEDERATED INCOME TRUST, 485APOS, 1999-01-28

FEDERATED INCOME TRUST
485APOS, 1999-01-28

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

Post-Effective Amendment No. 29........................... X
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and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 24........................................... 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
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
on ________________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
x on April 1, 1999 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

Prospectus

FEDERATED INCOME TRUST

Institutional Shares

A mutual fund seeking current income by investing primarily in U.S. government
securities and certain collateralized mortgage
obligations.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

Contents
Risk/Return Summary
What are the Fund's Fees and Expenses?
What are the Fund's Investment Strategies?
What are the Principal Securities in Which the Fund Invests?
What are the Specific Risks of Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem Shares
Account and Share Information
Who Manages the Fund?
Financial Information

March 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The investment objective of the Fund is current income. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the strategies and policies described in this prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The Fund pursues its objective by investing primarily in U.S. government
securities, including mortgage backed securities and collateralized
mortgage obligations. The fund limits its investments to those that would
enable it to qualify as a permissible investment for national banks and
federal savings associations.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in the Fund. The primary factors that may reduce the
Fund's returns include:

o changes in prevailing interest rates and
o increased prepayments of mortgages.

Complex mortgage backed securities generally entail greater risks than ordinary
mortgage backed securities. An investment in the Fund involves additional risks
such as credit risks, liquidity risks, and leverage risks.

The 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 or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.

Risk/Return Bar Chart and Table

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Fund's Institutional Shares as of the calendar
year-end for each of ten years.

The `y' axis reflects the "% Total Return" beginning with "-2.00%" and
increasing in increments of 2% up to 16%. The `x' axis represents calculation
periods the through the calendar year ended December 31, 1998. The light gray
shaded chart features ten distinct vertical bars, each shaded in charcoal, and
each visually representing by height the total return percentages for the
calendar year stated directly at its base. The calculated total return
percentage for the Fund's Institutional Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1989 through
1998, The percentages noted are: 12.47%, 10.24%, 13.90%, 5.67%, 5.89%, -1.61%,
15.41%, 4.71%, 8.95%, and 6.56%, respectively. The bar chart shows the
variability of the Fund's Institutional Shares' total returns on a yearly basis.
The Fund's Institutional Shares are not sold subject to a sales charge (load).
Hence the total returns displayed above are based upon the net asset value.

Within the period shown in the Chart, the Fund's highest quarterly return was
5.75% (quarter ended June 30, 1989). Its lowest quarterly return was -1.38%
(quarter ended March 31, 1994). The following table represents the Fund's
Average Annual Total Returns for the calendar periods ending December 31, 1998.

Average Annual Total Return
1 Year 5 Years 10 Years
Institutional Shares 6.56% 6.66% 8.13%
Broad-Based Index % % %

The table shows the Fund's total returns averaged over a period of years
relative to (name of index), a broad based market index. Past performance does
not necessarily predict future performance. This information provides you with
historical performance so that you can analyze whether the Fund's investment
risks are balanced by its potential rewards.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

Federated Income TRUST

Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
the Fund's Institutional Shares.

<S> <C>

Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering None
price)
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase None
price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None
Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None

Annual Fund Operating Expenses (Before Reimbursements)(1)
Expenses That are Deducted From Fund Assets (as a percentage of average net
assets)
Management Fee 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee (2) 0.25%
Other Expenses (3) %
Total Annual Fund Operating Expenses %
1 Although not contractually obligated to do so, the distributor reimbursed
certain amounts. These are shown below along with the net expenses the Fund
actually paid for the fiscal year ended January 31, 1999.
Reimbursements of Fund Expenses %
Total Actual Annual Fund Operating Expenses (after reimbursements) %

</TABLE>

2 The shareholder services fee has been voluntarily reduced. This voluntary
reduction can be terminated at any time. The shareholder services fee paid
by the Fund (after voluntary reduction) was 0.04% for the year ended
January 31, 1999.

3 The adviser voluntarily reimbursed certain operating expenses of the Fund.
The adviser can terminate this voluntary reimbursement at any time.

<PAGE>

Example

The following Example is intended to help you compare the cost of investing in
the Fund's Institutional Shares with the cost of investing in other mutual
funds.

The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are before
reimbursements as shown in the table and remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
$ $ $ $

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund pursues its objective by investing primarily in U.S. government
securities, including mortgage backed securities and collateralized mortgage
obligations (CMOs). The fund limits its investments to those that would enable
it to qualify as a permissible investment for national banks and federal savings
associations. A description of the various types of securities in which the Fund
invests immediately follows the strategy discussion.

The adviser manages the portfolio by targeting a dollar weighted average
duration. Duration measures the price sensitivity of a portfolio of fixed income
securities to changes in interest rates. Under ordinary market conditions, the
Fund's duration, as determined by the adviser, will be within 25% of the Lehman
Brothers Mortgage Index. The adviser adjusts the Fund's duration within this
range based upon its interest rate outlook. The adviser formulates its interest
rate outlook by analyzing a variety of factors, such as:

o....current U.S. economic activity and the economic outlook,

o current short-term interest rates,

o the Federal Reserve Board's policies regarding short-term interest rates,
and

o potential effects of foreign economic activity on short-term interest
rates.

The adviser generally shortens the portfolio's average duration when it expects
interest rates to rise and extends the duration when it expects interest rates
to fall.

The adviser selects securities used to lengthen or shorten the portfolio's
average duration by comparing the returns currently offered by different
investments to their historical and expected returns. In selecting mortgage
backed securities, including CMOs, the analysis also focuses on the expected
cash flows from the pool of mortgages supporting the security. The Adviser
attempts to assess the relative returns and risks of these securities by
analyzing how the timing, amount and division of cash flows from the pool might
change in response to changing economic and market conditions. The adviser may
use CMOs with more predictable cash flows (such as sequential pay, planned
amortization class and targeted amortization class) to improve the Fund's
performance in volatile markets. The adviser may also use combinations of CMOs
or CMOs and pass-through certificates to provide a higher yielding investment
with market risks similar to a pass-through certificate or a Treasury security.
The combination may involve different mortgage pools. Unanticipated differences
in prepayment rates of the pools may reduce the return of the combined
investment. Combinations may also include CMOs (such as IOs, POs and inverse
floaters) that have complex terms or less predictable cash flows.

In addition to buying mortgage backed securities outright, the Fund may acquire
securities on a "to be announced" basis in order to enhance yield. The Fund
engages in dollar roll transactions to increase income. The Fund uses repurchase
agreements to secure its obligations in these transactions.

Portfolio Turnover

The Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause the Fund to have an increased
portfolio turnover rate, which is likely to generate shorter-term gains (losses)
for its shareholders, which are taxed at a higher rate than longer-term gains
(losses). Actively trading portfolio securities increases the Fund's trading
costs and may have an adverse impact the Fund's performance.

Temporary Defensive Investments

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

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

Fixed Income Securities

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

The following describes the types of fixed income securities in which the Fund
invests.

Treasury Securities

Treasury securities are direct obligations of the federal government of the
United States.

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The
United States supports some GSEs with its full, faith and credit. Other
GSEs receive support through federal subsidies, loans or other benefits. A
few GSEs have no explicit financial support, but are regarded as having
implied support because the federal government sponsors their activities.

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

Mortgage Backed Securities

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the prepayment
risks of the underlying mortgages.

<PAGE>

Collateralized Mortgage Obligations (CMOs)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different prepayment and market risks for each CMO
class.

Sequential CMOs

In a sequential pay CMO, one class of CMOs receives all principal payments
and prepayments. The next class of CMOs receives all principal payments
after the first class is paid off. This process repeats for each sequential
class of CMO. As a result, each class of sequential pay CMOs reduces the
prepayment risks of subsequent classes.

PACs, TACs and Companion Classes

More sophisticated CMOs include planned amortization classes (PACs) and
targeted amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and prepayments
at a specified rate. The companion classes receive principal payments and
prepayments in excess of the specified rate. In addition, PACs will receive
the companion classes' share of principal payments, if necessary, to cover
a shortfall in the prepayment rate. This helps PACs and TACs to control
prepayment risks by increasing the risks to their companion classes.

IOs and POs

CMOs may allocate interest payments to one class (Interest Only or IOs) and
principal payments to another class (Principal Only or POs). POs increase
in value when prepayment rates increase. In contrast, IOs decrease in value
when prepayments increase, because the underlying mortgages generate less
interest payments. However, IOs tend to increase in value when interest
rates rise (and prepayments decrease), making IOs a useful hedge against
market risks.

Floaters and Inverse Floaters

Another variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based upon a
market index such as LIBOR. The other class (Inverse Floaters) receives any
remaining interest payments from the underlying mortgages. Floater classes
receive more interest (and Inverse Floater classes receive correspondingly
less interest) as interest rates rise. This shifts prepayment and market
risks from the Floater to the Inverse Floater class, reducing the price
volatility of the Floater class and increasing the price volatility of the
Inverse Floater class.

The degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of mortgage
backed security depend upon the performance of the underlying pool of
mortgages, which no one can predict and will vary among pools.

Special Transactions

Delayed Delivery Transactions

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with
payment and delivery of the securities scheduled for a future time. During
the period between purchase and settlement, no payment is made by the Fund
to the issuer and no interest accrues to the Fund. The Fund records the
transaction when it agrees to buy the securities and reflects their value
in determining the price of its shares. Settlement dates may be a month or
more after entering into these transactions so that the market values of
the securities bought may vary from the purchase prices. Therefore, delayed
delivery transactions create market risks for the Fund. Delayed delivery
transactions also involve credit risks in the event of a counterparty
default.

To Be Announced Securities (TBAs)

As with other delayed delivery transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to accept
any security that meets specified terms. For example, in a TBA mortgage
backed transaction, the Fund and the seller would agree upon the issuer,
interest rate and terms of the underlying mortgages. The seller would not
identify the specific underlying mortgages until it issues the security.
TBA mortgage backed securities increase market risks because the underlying
mortgages may be less favorable than anticipated by the Fund.

<PAGE>

Dollar Rolls

Dollar rolls are transactions where the Fund sells mortgage-backed
securities with a commitment to buy similar, but not identical,
mortgage-backed securities on a future date at a lower price. Normally, one
or both securities involved are TBA mortgage backed securities. Dollar
rolls are subject to market risks.

Repurchase Agreements

Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated
to the interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser.

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

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

Bond Market Risks

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

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

Prepayment Risks

o Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates.
Other factors can also lead to increases or decreases in prepayments.
Increases in prepayments of high interest rate mortgage backed securities,
or decreases in prepayments of lower interest rate mortgage backed
securities, may reduce their yield and price. These factors, particularly
the relationship between interest rates and mortgage prepayments, make the
price of mortgage backed securities more volatile than most other types of
fixed income securities with comparable credit risks.

o Mortgage backed securities generally compensate for greater prepayment risk
by paying a higher yield. The difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security is
perceived to have increased prepayment risk or less market demand. An
increase in the spread may cause the price of the security to decline.

o The Fund may have to reinvest the proceeds in other securities with lower
interest rates, higher prepayment risks, or other less favorable
characteristics.

Liquidity Risks

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

o Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security when it wants to. If this happens, the Fund will be
required to continue to hold the security, and the Fund could incur losses.

Risks Associated with Complex CMOs

o CMOs with complex or highly variable prepayment terms, such as companion
classes, IOs, POs, and Inverse Floaters, generally entail greater market,
prepayment and liquidity risks than other mortgage backed securities. For
example, their prices are more volatile and their trading market may be
more limited.

Leverage Risks

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

o Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.

WHAT DO SHARES COST?

You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). The Fund does not charge
a front-end sales charge. NAV is determined at the end of regular trading
(normally 4 p.m. Eastern time) each day the NYSE is open.

The required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.

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 is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.

HOW IS THE FUND SOLD?

The Fund offers two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
This prospectus relates only to Institutional Shares. Each share class has
different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
class.

The Fund's Distributor markets the Shares described in this prospectus to
institutions acting in an agency or fiduciary 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, Inc. (Federated). Shares are also made
available to investment professionals, public and private organizations or
individuals, directly or through investment professionals.

The Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated.

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional or directly from the
Fund. The Fund reserves the right to reject any request to purchase Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

o Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund on the same day and the Fund receives payment within one
business day. You will become the owner of Shares and receive dividends
when the Fund receives your payment.

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares and your Shares will be priced at the next
calculated NAV after the Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees the Fund or its transfer agent incurs.

An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.

By Wire
Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

By Check

Make your check payable to The Federated Funds, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds).

BY AUTOMATED CLEARING HOUSE (ACH)

Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional.

DIRECTLY FROM THE FUND

By Telephone

You may redeem Shares by calling the Fund once you have completed the
appropriate authorization form for telephone transactions. If you call before
the end of regular trading on the NYSE (normally 4 p.m. Eastern time) you will
receive a redemption amount based on that day's NAV.

By Mail

You may redeem Shares by mailing a written request to the Fund. You will receive
a redemption amount based on the next calculated NAV after the Fund receives
your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by private courier or overnight delivery service to:

Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed; and

o signatures of all Shareholders exactly as registered.
Call your investment professional or the Fund if you need special instructions.

Signature Guarantees
Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days; or

o a redemption is payable to someone other than the shareholder(s) of record.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.

Redemption in Kind

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

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

ADDITIONAL CONDITIONS

Telephone Transactions

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates

The Fund no longer issues share certificates. If you are redeeming Shares
represented by certificates previously issued by the Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases and redemptions. In addition, you
will receive periodic statements reporting all account activity, including
dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares any dividends daily and pays them monthly to shareholders. If
you purchase shares by wire, you begin earning dividends on the day your wire is
received. If you purchase shares by check, you begin earning dividends on the
business day after the Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.

If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.

TAX INFORMATION

The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.

Fund distributions are expected to be primarily dividends. Redemptions are
taxable sales. Please consult your tax adviser regarding your federal, state,
and local tax liability.

WHO MANAGES THE FUND?

The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Federated Management. The Adviser manages the Fund's assets, including
buying and selling portfolio securities. The Adviser's address is Federated
Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

The Fund's portfolio managers are:

Kathleen M. Foody-Malus has been the Fund's portfolio manager since April 1990.
She is Vice President of the Trust. Ms. Foody-Malus joined Federated Investors
in 1983 and has been a Senior Portfolio Manager since 1996 and a Vice President
of the Fund's investment adviser since 1993. She was a Portfolio Manager and a
Vice President of the Fund's investment adviser from 1993 to 1996. Ms.
Foody-Malus received her M.B.A. in Accounting/Finance from the University of
Pittsburgh.

Edward J. Tiedge has been the Fund's portfolio manager since October 1995. Mr.
Tiedge joined Federated Investors in 1993 as a Senior Analyst and has been a
Portfolio Manager and a Vice President of the Fund's investment adviser since
1996. He served as Portfolio Manager and an Assistant Vice President of the
Fund's investment adviser in 1995, and an Investment Analyst during 1993 and
1994. Mr. Tiedge is a Chartered Financial Analyst and received his M.S. in
Industrial Administration from Carnegie Mellon University.

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

Advisory Fees

The Adviser receives an annual investment advisory fee of 0.40% of the Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse the Fund for certain operating expenses.

Year 2000 Readiness

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

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

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

Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase. The financial impact of these issues for the Fund is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Fund.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The following Financial Highlights will help you understand the Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of any dividends and capital
gains.

This information has been audited by Deloitte & Touche LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.

(Financial Statements to be filed by Amendment)

<PAGE>

FEDERATED INCOME TRUST

Institutional shares

A Statement of Additional Information (SAI) dated March 31, 1999 is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's annual and semi-annual reports to
shareholders as they become available. The annual report discusses market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year. To obtain the SAI, the annual report,
semi-annual report and other information without charge, call your investment
professional or the Fund at 1-800-341-7400.

You can obtain information about the Fund (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

Investment Company Act File No. 811-3352
Cusip 314199100

8030102A-IS (3/99)

Prospectus

FEDERATED INCOME TRUST

Institutional service shares

A mutual fund seeking current income by investing primarily in U.S. government
securities and certain collateralized mortgage obligations.

Contents
Risk/Return Summary
What are the Fund's Fees and Expenses?
What are the Fund's Investment Strategies?
What are the Principal Securities in Which the Fund Invests?
What are the Specific Risks of Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem and Exchange Shares
Account and Share Information
Who Manages the Fund?
Financial Information

march 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The Fund pursues its objective by investing primarily in U.S. government
securities, including mortgage backed securities and collateralized mortgage
obligations. The fund limits its investments to those that would enable it to
qualify as a permissible investment for national banks and federal savings
associations.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:

o changes in prevailing interest rates and

o increased prepayments of mortgages.

Risk/Return Bar Chart and Table

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Fund's Institutional Service Shares as of the
calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "-2.00%" and
increasing in increments of 2% up to 16%. The `x' axis represents calculation
periods from the earliest calendar year end of the Fund's start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features six distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1993 through 1998, The
percentages noted are: 5.62%, -1.83%, 15.16%, 4.48%, 8.72%, and 6.33%. The bar
chart shows the variability of the Fund's Institutional Service Shares' total
returns on a yearly basis. Within the period shown in the Chart, the Fund's
highest quarterly return was 4.69% (quarter ended June 30, 1995). Its lowest
quarterly return was -1.44% (quarter ended March 31, 1994).

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ending December 31, 1998.

Life of the Fund1 1 Year 5 Years
Institutional Service Shares 6.40% 6.33% 6.43%
Broad-Based Index % % %
1 Since inception date of May 31, 1992.

The table shows the Fund's total returns averaged over a period of years
relative to (name of index), a broad-based market index. Past performance does
not necessarily predict future performance. This information provides you with
historical performance so that you can analyze whether the Fund's investment
risks are balanced by its potential rewards.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

Federated income TRUST

Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund's Institutional Service Shares.

<S> <C>

Annual Fund Operating Expenses (Before Reimbursements)(1)
Expenses That are Deducted From Fund Assets (as a percentage of average net
assets)
Management Fee 0.40%
Distribution (12b-1) Fee(2) 0.25%
Shareholder Services Fee 0.25%
Other Expenses (3) %
Total Annual Fund Operating Expenses %
1 Although not contractually obligated to do so, the distributor reimbursed
certain amounts. These are shown below along with the net expenses the Fund
actually paid for the fiscal year ended January 31, 1999.
Reimbursements of Fund Expenses %
Total Actual Annual Fund Operating Expenses (after reimbursements) %
</TABLE>

2 The distribution (12b-1) fee has been voluntarily reduced. This voluntary
reduction can be terminated at any time. The distribution (12b-1) fee paid
by the Fund (after the voluntary reimbursement) was .01% for the year ended
January 31, 1999.

3 The adviser voluntarily reimbursed certain operating expenses of the Fund.
The adviser can terminate this voluntary reimbursement at any time.

<PAGE>

Example

This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are before reimbursements as shown in the table and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 Year 3 Years 5 Years 10 Years
$ $ $ $

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

o........current U.S. economic activity and the economic outlook,

o current short-term interest rates,

o the Federal Reserve Board's policies regarding short-term interest rates,
and

o potential effects of foreign economic activity on short-term interest
rates.

The adviser generally shortens the portfolio's average duration when it expects
interest rates to rise and extends the duration when it expects interest rates
to fall.

Portfolio Turnover

Temporary Defensive Investments

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

Fixed Income Securities

The following describes the types of fixed income securities in which the Fund
invests.

Treasury Securities

Treasury securities are direct obligations of the federal government of the
United States.

Agency Securities

Mortgage Backed Securities

<PAGE>

Collateralized Mortgage Obligations (CMOs)

Sequential CMOs

PACs, TACs and Companion Classes

IOs and POs

Floaters and Inverse Floaters

Special Transactions

Delayed Delivery Transactions

To Be Announced Securities (TBAs)

Dollar Rolls

Repurchase Agreements

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

Bond Market Risks

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

Prepayment Risks

o The Fund may have to reinvest the proceeds in other securities with lower
interest rates, higher prepayment risks, or other less favorable
characteristics.

Liquidity Risks

Risks Associated with Complex CMOs

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

o Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.

WHAT DO SHARES COST?

You can purchase, redeem, or exchange Shares any day the New York Stock
Exchange (NYSE) is open. When the Fund receives your transaction request in
proper form, it is processed at the next calculated net asset value (NAV).
The Fund does not charge a front-end sales charge. NAV is determined at the
end of regular trading (normally 4 p.m. Eastern time) each day the NYSE is
open.

The required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.

HOW IS THE FUND SOLD?

The Fund offers two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
This prospectus relates only to Institutional Service Shares. Each share class
has different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
class.

The Fund's Distributor markets the Shares described in this prospectus to retail
and private banking customers of financial institutions or individuals, directly
or through investment professionals.

When the Distributor receives marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and investment professionals for the sale, distribution and
customer servicing of the Fund's Institutional Service Shares. Because these
Shares pay marketing fees on an ongoing basis, your investment cost may be
higher over time than other shares with different sales charges and marketing
fees.

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional, directly from the
Fund, or through an exchange from another Federated Fund. The Fund reserves the
right to reject any request to purchase or exchange Shares.

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.

By Wire
Send your wire to:

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

By Check

Make your check payable to The Federated Funds, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds).

THROUGH AN EXCHANGE

You may purchase Shares through an exchange from the same Share class of another
Federated Fund. You must meet the minimum initial investment requirement for
purchasing Shares and both accounts must have identical registrations.

BY AUTOMATED CLEARING HOUSE (ACH)

HOW TO REDEEM AND EXCHANGE SHARES

You should redeem or exchange Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption or exchange request to your investment professional by
the end of regular trading on the NYSE (normally 4 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV after
the Fund receives the order from your investment professional.

DIRECTLY FROM THE FUND

By Telephone

You may redeem or exchange Shares by calling the Fund once you have completed
the appropriate authorization form for telephone transactions. If you call
before the end of regular trading on the NYSE (normally 4 p.m. Eastern time) you
will receive a redemption amount based on that day's NAV.

By Mail

You may redeem or exchange Shares by mailing a written request to the Fund. You
will receive a redemption amount based on the next calculated NAV after the Fund
receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by private courier or overnight delivery service to:

Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed or exchanged;

o signatures of all Shareholders exactly as registered; and

o if exchanging, the Fund Name and Share Class, account number and account
registration into which you are exchanging.

Call your investment professional or the Fund if you need special instructions.

Signature Guarantees
Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days;

o a redemption is payable to someone other than the shareholder(s) of record;
or

o if exchanging (transferring) into another fund with a different shareholder
registration.

PAYMENT METHODS FOR REDEMPTIONS

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.

Redemption in Kind

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

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

EXCHANGE PRIVILEGES

You may exchange Shares of the Fund into Shares of the same class of another
Federated Fund. To do this, you must:

o ensure that the account registrations are identical;

o meet any minimum initial investment requirements; and

o receive a prospectus for the fund into which you wish to exchange.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

The Fund may modify or terminate the exchange privilege at any time. The Fund's
management or investment adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading that is
detrimental to the Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other Federated Funds.

ADDITIONAL CONDITIONS

Telephone Transactions

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates

The Fund no longer issues share certificates. If you are redeeming or exchanging
Shares represented by certificates previously issued by the Fund, you must
return the certificates with your written redemption or exchange request. For
your protection, send your certificates by registered or certified mail, but do
not endorse them.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges. In
addition, you will receive periodic statements reporting all account activity,
including dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments. If you purchase
Shares just before a Fund declares a dividend or capital gain distribution, you
will pay the full price for the Shares and then receive a portion of the price
back in the form of a taxable distribution, whether or not you reinvest the
distribution in Shares. Therefore, you should consider the tax implications of
purchasing Shares shortly before the Fund declares a dividend or capital gain.
Contact your investment professional or the Fund for information concerning when
dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions or exchanges cause the account balance to fall below the
minimum initial investment amount. Before an account is closed, you will be
notified and allowed 30 days to purchase additional Shares to meet the minimum.

TAX INFORMATION

Fund distributions are expected to be primarily dividends. Redemptions and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.

WHO MANAGES THE FUND?

The Fund's portfolio managers are:

Advisory Fees

The Adviser receives an annual investment advisory fee of 0.40% of the Fund's
average daily net assets The Adviser may voluntarily waive a portion of its fee
or reimburse the Fund for certain operating expenses.

Year 2000 Readiness

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

This information has been audited by Deloitte & Touche LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.

(Financial Statements to be filed by Amendment)

<PAGE>

FEDERATED INCOME TRUST

Institutional Service Shares

Investment Company Act File No. 811-3352
Cusip 314199209

8030102A-SS (3/99)

Statement of Additional Information

FEDERATED INCOME TRUST

institutional shares

institutional service shares

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for Institutional Shares and
Institutional Service Shares of Federated Income Trust (Fund), dated March 31,
1999. Obtain the prospectuses without charge by calling 1-800-341-7400.

March 31, 1999

Contents
How is the Fund Organized?
Securities in Which the Fund Invests
What do Shares Cost?
How is the Fund Sold?
Exchanging Securities for Shares
Subaccounting Services
Redemption in Kind
Massachusetts Partnership Law
Account and Share Information
Tax Information
Who Manages and Provides Services to the Fund?
How Does the Fund Measure Performance?
Who is Federated Investors, Inc.?
Addresses
Cusip 314199100
Cusip 314199209
8030102B (3/99)

<PAGE>

HOW IS THE FUND ORGANIZED?

The Fund is a diversified open-end, management investment company that was
established under the laws of the Commonwealth of Massachusetts on November 17,
1981.

The Board of Trustees (the Board) has established two classes of shares of the
Fund, known as Institutional Shares and Institutional Service Shares (Shares).
This SAI relates to all classes of the above-mentioned Shares.

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.

SECURITIES DESCRIPTIONS AND TECHNIQUES

Fixed Income Securities

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

The following describes the types of fixed income securities in which the Fund
invests.

Treasury Securities

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs (e.g., Government National Mortgage Association) with
its full, faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally regarded
as having low credit risks, but not as low as treasury securities.

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

Mortgage Backed Securities

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.

Collateralized Mortgage Obligations (CMOs)

CMOs, including interests in real estate mortgage investment conduits (REMICs),
allocate payments and prepayments from an underlying pass-through certificate
among holders of different classes of mortgage backed securities. This creates
different prepayment and market risks for each CMO class.

Sequential CMOs

In a sequential pay CMO, one class of CMOs receives all principal payments and
prepayments. The next class of CMOs receives all principal payments after the
first class is paid off. This process repeats for each sequential class of CMO.
As a result, each class of sequential pay CMOs reduces the prepayment risks of
subsequent classes.

PACs, TACs and Companion Classes

More sophisticated CMOs include planned amortization classes (PACs) and targeted
amortization classes (TACs). PACs and TACs are issued with companion classes.
PACs and TACs receive principal payments and prepayments at a specified rate.
The companion classes receive principal payments and prepayments in excess of
the specified rate. In addition, PACs will receive the companion classes' share
of principal payments, if necessary, to cover a shortfall in the prepayment
rate. This helps PACs and TACs to control prepayment risks by increasing the
risks to their companion classes.

IOs and POs

Floaters and Inverse Floaters

Special Transactions

Repurchase Agreements

Repurchase agreements are subject to credit risks.

Reverse Repurchase Agreements

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

<PAGE>

Delayed Delivery Transactions

To Be Announced Securities (TBAs)

Dollar Rolls

Securities Lending

The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Fund the equivalent of any dividends or interest received on
the loaned securities.

The Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for the Fund. However, the Fund must pay interest to
the borrower for the use of cash collateral.

Loans are subject to termination at the option of the Fund or the borrower.
The Fund will not have the right to vote on securities while they are on
loan, but it will terminate a loan in anticipation of any important vote.
The Fund may pay administrative and custodial fees in connection with a
loan and may pay a negotiated portion of the interest earned on the cash
collateral to a securities lending agent or broker.

Securities lending activities are subject to market risks and credit risks.

Asset Coverage

In order to secure its obligations in connection with derivatives contracts
or special transactions, the Fund will either own the underlying assets,
enter into an offsetting transaction or set aside readily marketable
securities with a value that equals or exceeds the Fund's obligations.
Unless the Fund has other readily marketable assets to set aside, it cannot
trade assets used to secure such obligations entering into an offsetting
derivative contract or terminating a special transaction. This may cause
the Fund to miss favorable trading opportunities or to realize losses on
derivative contracts or special transactions.

INVESTMENT RISKS

There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk
factors are outlined below.

Bond Market Risks

o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.

Prepayment Risks

o The Fund may have to reinvest the proceeds in other securities with lower
interest rates, higher prepayment risks, or other less favorable
characteristics.

Liquidity Risks

Risks Associated with Complex CMOs

Leverage Risks

o Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.

Credit Risks

o Credit risk includes the possibility that a party to a transaction
involving the Fund will fail to meet its obligations. This could cause the
Fund to lose the benefit of the transaction or prevent the Fund from
selling or buying other securities to implement its investment strategy.

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

INVESTMENT LIMITATIONS
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 1-1/2 %.
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.

The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act. Shareholders will be notified before any material change in these
limitations becomes effective.

DETERMINING MARKET VALUE OF SECURITIES

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

for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;

in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;

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

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

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

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

The Fund values futures contracts and options at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value.

WHAT DO SHARES COST?

The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the Fund. The NAV for each class of
Shares may differ 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.

HOW IS THE FUND SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers Shares on a continuous, best-efforts basis.

RULE 12B-1 PLAN (institutional service shares)

As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. Also, the
Fund's service providers that receive asset-based fees also benefit from stable
or increasing Fund assets.

The Fund may compensate the Distributor more or less than its actual marketing
expenses. In no event will the Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.

The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.

SHAREHOLDER SERVICES

The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.

SUPPLEMENTAL PAYMENTS

Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates.

Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.

EXCHANGING SECURITIES FOR SHARES

You may contact the Distributor to request a purchase of Shares in exchange for
securities you own. The Fund reserves the right to determine whether to accept
your securities and the minimum market value to accept. The Fund will value your
securities in the same manner as it values its assets. This exchange is treated
as a sale of your securities for federal tax purposes.

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

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

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

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

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

MASSACHUSETTS PARTNERSHIP LAW

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

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

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS Each Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All Shares of
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.

Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding Shares
of all series entitled to vote.

As of January 7, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Service Shares: CPB Trust
Division Fiduciary, Honolulu, Hawaii owned approximately 593,571 shares
(12.04%); First National Bank & Trust of McAllister, McAllister, Oklahoma, owned
approximately 559,908 shares (11.36%); Community First National Bank, Fargo,
North Dakota, owned approximately 411,938 shares (8.36%); Linaway and Company,
Denver, Colorado, owned approximately 411,826 shares (8.35%); Charles Schwab &
Co., Inc., San Francisco, California, owned approximately 405,666 shares
(8.23%); Forethought National Trustbank, Batesville, Indiana, owned
approximately 362,526 shares (7.35%); and Citizens' Scholarship FOA, Inc., St.
Peter, Minnesota, owned approximately 315,923 shares (6.41%).

TAX INFORMATION

FEDERAL INCOME TAX

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

The Fund is entitled to a loss carry-forward, which may reduce the taxable
income or gain that the Fund would realize, and to which the shareholder would
be subject, in the future.

WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

BOARD OF TRUSTEES

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex is
comprised of 56 investment companies, whose investment advisers are affiliated
with the Fund's Adviser.

As of January 7, 1999, the Fund's Board and Officers as a group owned less than
1% of the Fund's outstanding Institutional Shares and Institutional Service
Shares.

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

<PAGE>

Name
Birthdate Aggregate Total
Address Principal Occupations Compensation Compensation From
Position With Trust for Past 5 Years From Trust Trust and Fund
Complex
John F. Donahue*+ Chief Executive Officer and Director or Trustee of the $0 $0 for the
Birthdate: July 28, 1924 Federated Fund Complex; Chairman and Director, Trust and
Federated Investors Tower Federated Investors, Inc.; Chairman and Trustee, 54 other investment
1001 Liberty Avenue Federated Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, Federated in the Fund Complex
CHAIRMAN AND TRUSTEE Research Corp., and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.
Thomas G. Bigley Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
Birthdate: February 3, 1934 Director, Member of Executive Committee, Children's Trust and
15 Old Timber Trail Hospital of Pittsburgh; formerly: Senior Partner, 54 other investment
Pittsburgh, PA Ernst & Young LLP; Director, MED 3000 Group, Inc.; companies
TRUSTEE Director, Member of Executive Committee, University of in the Fund Complex
Pittsburgh.

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

Previous positions: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic Light Opera.
James E. Dowd, Esq. Director or Trustee of the Federated Fund Complex; $ $125,264.48 for the
Birthdate: May 18, 1922 Attorney-at-law; Director, The Emerging Germany Fund, Trust and
571 Hayward Mill Road Inc. 54 other investment
Concord, MA companies
TRUSTEE Previous positions: President, Boston Stock Exchange, in the Fund Complex
Inc.; Regional Administrator, United States Securities
and Exchange Commission.
Lawrence D. Ellis, M.D.* Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
Birthdate: October 11, 1932 Professor of Medicine, University of Pittsburgh; Trust and
3471 Fifth Avenue Medical Director, University of Pittsburgh Medical 54 other investment
Suite 1111 Center - Downtown; Hematologist, Oncologist, and companies
Pittsburgh, PA Internist, University of Pittsburgh Medical Center; in the Fund Complex
TRUSTEE Member, National Board of Trustees, Leukemia Society
of America.
Edward L. Flaherty, Jr., Esq. Director or Trustee of the Federated Fund Complex; $ $125,264.48 for the
# Attorney, of Counsel, Miller, Ament, Henny & Kochuba; Trust and
Birthdate: June 18, 1924 Director Emeritus, Eat'N Park Restaurants, Inc.; 54 other investment
Miller, Ament, Henny & Kochuba formerly: Counsel, Horizon Financial, F.A., Western companies
205 Ross Street Region; Partner, Meyer and Flaherty. in the Fund Complex
Pittsburgh, PA
TRUSTEE
Peter E. Madden Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
Birthdate: March 16, 1942 formerly: Representative, Commonwealth of Trust and
One Royal Palm Way Massachusetts General Court; President, State Street 54 other investment
100 Royal Palm Way Bank and Trust Company and State Street Corporation. companies
Palm Beach, FL in the Fund Complex
TRUSTEE Previous positions: Director, VISA USA and VISA
International; Chairman and Director, Massachusetts
Bankers Association; Director, Depository Trust
Corporation.
Charles F. Mansfield, Jr.++ Director or Trustee of some of the Federated Funds; $ $0 for the
Birthdate: April 10, 1945 Management Consultant. Trust and
80 South Road 25 other investment
Westhampton Beach, NY TRUSTEE Previous positions: Chief Executive Officer, PBTC companies
International Bank; Chief Financial Officer of Retail in the Fund Complex
Banking Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice President,
Citibank; Assistant Professor of Banking and Finance,
Frank G. Zarb School of Business, Hofstra University.
John E. Murray, Jr., J.D., Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
S.J.D. President, Law Professor, Duquesne University; Trust and
Birthdate: December 20, 1932 Consulting Partner, Mollica & Murray. 54 other investment
President, Duquesne University companies
Pittsburgh, PA Previous positions: Dean and Professor of Law, in the Fund Complex
TRUSTEE University of Pittsburgh School of Law; Dean and
Professor of Law, Villanova University School of Law.
Wesley W. Posvar Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
Birthdate: September 14, 1925 President, World Society of Ekistics (metropolitan Trust and
1202 Cathedral of Learning planning), Athens; Professor, International Politics; 54 other investment
University of Pittsburgh Management Consultant; Trustee, Carnegie Endowment for companies
Pittsbugh, PA International Peace, RAND Corporation, Online Computer in the Fund Complex
TRUSTEE 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; Trustee,
Czech Management Center, Prague.

Previous positions: Professor, United States Military
Academy; Professor, United States Air Force Academy.

Marjorie P. Smuts Director or Trustee of the Federated Fund Complex; $ $113,860.22 for the
Birthdate: June 21, 1935 Public Relations/Marketing/Conference Planning. Trust and
4905 Bayard Street 54 other investment
Pittsburgh, PA Previous positions: National Spokesperson, Aluminum companies
TRUSTEE Company of America; business owner. in the Fund Complex
Glen R. Johnson Trustee, Federated Investors, Inc.; staff member, $ $0 for the
Birthdate: May 2, 1929 Federated Securities Corp. Trust and
Federated Investors Tower 8 other investment
1001 Liberty Avenue companies
Pittsburgh, PA in the Fund Complex
PRESIDENT AND TRUSTEE
J. Christopher Donahue+ President or Executive Vice President of the Federated $0 $0 for the
Birthdate: April 11, 1949 Fund Complex; Director or Trustee of some of the Funds Trust and
Federated Investors Tower in the Federated Fund Complex; President and Director, 16 other investment
1001 Liberty Avenue Federated Investors, Inc.; President and Trustee, companies
Pittsburgh, PA Federated Advisers, Federated Management, and in the Fund Complex
EXECUTIVE VICE PRESIDENT Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director, Federated
Services Company.

<PAGE>

Edward C. Gonzales Trustee or Director of some of the Funds in the $0 $0 for the
Birthdate: October 22, 1930 Federated Fund Complex; President, Executive Vice Trust and
Federated Investors Tower President and Treasurer of some of the Funds in the 1 other investment
1001 Liberty Avenue Federated Fund Complex; Vice Chairman, Federated companies
Pittsburgh, PA Investors, Inc.; Vice President, Federated Advisers, in the Fund Complex
EXECUTIVE VICE PRESIDENT 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.
John W. McGonigle Executive Vice President and Secretary of the $0 $0 for the
Birthdate: October 26, 1938 Federated Fund Complex; Executive Vice President, Trust and
Federated Investors Tower Secretary, and Director, Federated Investors, Inc.; 54 other investment
1001 Liberty Avenue Trustee, Federated Advisers, Federated Management, and company
Pittsburgh, PA Federated Research; Director, Federated Research Corp. in the Fund Complex
EXECUTIVE VICE PRESIDENT AND and Federated Global Research Corp.; Director,
SECRETARY Federated Services Company; Director, Federated
Securities Corp.
Richard J. Thomas Treasurer of the Federated Fund Complex; Vice $0 $0 for the
Birthdate: June 17, 1954 President - Funds Financial Services Division, Trust and
Federated Investors Tower Federated Investors, Inc.; Formerly: various 54 other investment
1001 Liberty Avenue management positions within Funds Financial Services companies
Pittsburgh, PA Division of Federated Investors, Inc. in the Fund Complex
TREASURER
Richard B. Fisher President or Vice President of some of the Funds in $0 $0 for the
Birthdate: May 17, 1923 the Federated Fund Complex; Director or Trustee of Trust and
Federated Investors Tower some of the Funds in the Federated Fund Complex; 6 other investment
1001 Liberty Avenue Executive Vice President, Federated Investors, Inc.; companies
Pittsburgh, PA Chairman and Director, Federated Securities Corp. in the Fund Complex
VICE PRESIDENT

William D. Dawson, III Chief Investment Officer of this Fund and various $0 $0 for the
Birthdate: March 3, 1949 other Funds in the Federated Fund Complex; Executive Trust and
Federated Investors Tower Vice President, Federated Investment Counseling, 41 other investment
1001 Liberty Avenue Federated Global Research Corp., Federated Advisers, companies
Pittsburgh, PA Federated Management, Federated Research, and Passport in the Fund Complex
CHIEF INVESTMENT OFFICER Research, Ltd.; Registered Representative, Federated
Securities Corp.; Portfolio Manager, Federated
Administrative Services; Vice President, Federated
Investors, Inc.; Formerly: Executive Vice President
and Senior Vice President, Federated Investment
Counseling Institutional Portfolio Management Services
Division; Senior Vice President, Federated Research
Corp., Federated Advisers, Federated Management,
Federated Research, and Passport Research, Ltd.
Kathleen M. Foody-Malus Kathleen M. Foody-Malus has been the Fund's portfolio $0 $0 for the
Birthdate: March 26, 1960 manager since April 1990. She is Vice President of Trust and
Federated Investors Tower the Trust. Ms. Foody-Malus joined Federated Investors 3 other investment
1001 Liberty Avenue in 1983 and has been a Senior Portfolio Manager since companies
Pittsburgh, PA 1996 and a Vice President of the Fund's investment in the Fund Complex
VICE PRESIDENT adviser since 1993. She was a Portfolio Manager and a
Vice President of the Fund's investment adviser from
1993 to 1996. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh.
</TABLE>

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

++ Mr. Mansfield became a member of the Board of Trustees on January 1, 1999. He
did not earn any fees for serving the Fund Complex since these fees are reported
as of the end of the last calendar year. He did not receive any fees as of the
fiscal year end of the Trust.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Fund. The Adviser is a wholly-owned subsidiary of Federated.

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

Other Related Services

Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.

BROKERAGE TRANSACTIONS

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

Research Services

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

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

ADMINISTRATOR

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

<S> <C>

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

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 voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.

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

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

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

INDEPENDENT PUBLIC ACCOUNTANTs

Deloitte & Touche LLP is the independent public accountant for the Fund.

FEES PAID BY THE FUND FOR SERVICES
For the Year ended January 31, 1999 1998 1997
Advisory Fee Earned $ $ $
Advisory Fee Reduction $ $ $
Administrative Fee $ $ $
12b-1 Fee
Institutional Service Shares $ ---- ----
Shareholder Services Fee
Institutional Shares $ ---- ----
Institutional Service Shares $ ---- ----
</TABLE>

Fees are allocated among Classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable Class of Shares.

HOW DOES THE FUND MEASURE PERFORMANCE?

The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of Shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's or any class of Shares' expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.

Average Annual Total Returns and Yield

Total returns given for the one-year, five-year and ten-year or since inception
periods ended January 31, 1999.

Yield given for the 30-day period ended January 31, 1999.

30-Day Period 1 Year 5 Years 10 Years

Institutional Shares
Total Return
Yield

30-Day Period 1 Year 5 Years
Since Inception on May 31, 1992
Institutional Service Shares
Total Return
Yield

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

YIELD

The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by Shares because of certain adjustments required
by the SEC and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

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.

PERFORMANCE COMPARISONS
Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

o information about the mutual fund industry from sources such as the
Investment Company Institute.

The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.

The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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 Fund 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.

oLehman 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.

oSalomon 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).

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

oMorningstar, 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.

WHO IS FEDERATED INVESTORS, INC.?

Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.

Federated Funds overview

Municipal Funds

In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.

Equity Funds

In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.

Corporate Bond Funds

In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset-backed securities market, a market
totaling more than $209 billion.

Government Funds

In the government sector, as of December 31, 1998, Federated manages 9
mortgage-backed, 5 government/ agency and 19 government money market mutual
funds, with assets approximating $5.3 billion, $1.8 billion and $41.6 billion,
respectively. Federated trades approximately $425 million in U.S. government and
mortgage-backed securities daily and places approximately $25 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 approximately $43.2 billion in government funds within
these maturity ranges.

Money Market Funds

In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high yield - J. Thomas
Madden; U.S. fixed income -William D. Dawson, III; and global equities and fixed
income - Henry A. Frantzen. The Chief Investment Officers are Executive Vice
Presidents of the Federated advisory companies.

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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.

Federated Clients Overview

Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:

Institutional Clients

Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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, Federated Securities Corp.

Bank Marketing

Other institutional clients include 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, Bank
Marketing & Sales.

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, Broker/Dealer Sales Division, Federated Securities Corp.

<PAGE>

ADDRESSES

federated income fund

Institutional Shares
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 Public Accountants

Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110-1617

PART C. OTHER INFORMATION

Item 23. Exhibits:
(a) (i) Conformed copy of the Declaration of Trust of the Registrant;(2)
(ii) Conformed copy of Amendment No. 3 to the Declaration of Trust
of the Registrant;(9)
(b) Copy of the By-Laws of the Registrant;(3)
(i) Copy of Amendment No. 2 to the By-Laws of the Registrant;(4)
(ii) Copy of Amendment No. 3 to the By-Laws of the Registrant;(9)
(iii) Copy of Amendment No. 4 to the By-Laws of the .Registrant;(9)
(iv) Copy of Amendment No. 5 to the By-laws of the .Registrant; +
(v) Copy of Amendment No. 6 to the By-laws of the .Registrant; +
(vi) Copy of Amendment No. 7 to the By-laws of the .Registrant; +
(c) (i) Copy of Specimen Certificate for Institutional Shares of
Beneficial Interest of the
Registrant;(2)
(ii) Copy of Specimen Certificate for Institutional Service Shares of
Beneficial Interest of the
Registrant;(8)
(d) Conformed copy of the revised Investment Advisory Contract of the
Registrant;(5)
(e) (i) Conformed copy of the Distributor's Contract of the
Registrant;(8)
(ii) The Registrant hereby incorporates the conformed copy of
the specimen Mutual Funds Sales and
Service Agreement; Mutual Funds Service Agreement; and
Plan Trustee/Mutual Funds Service
Agreement from Item 24(e) 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).
(f) Not applicable;
(g) (i) Conformed copy of the Custodian Agreement of the
Registrant;(8)
(ii) Conformed Copy of Custodian Fee Schedule;(9)

+ All exhibits have been filed electronically.

2. 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)

3. 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)

4. 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)

5. 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)

8. 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)

9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed March 26, 1998. (File Nos. 2-75366
and 811-3352)

(h) (i) Conformed copy of Amended and Restated Agreement for Fund
Accounting Services, Administrative
Services, Transfer Agency Services, and
Custody Services Procurement of the
Registrant; +
(ii) The responses described in Item 23(e)(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 23(h)(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);
(i) Conformed copy of the Opinion and Consent of Counsel as to
legality of shares being registered;(6)
(j) Conformed copy of Consent of Independent Public Accountants;(9)
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding; (1)
(m) (i) Conformed copy of Distribution Plan of the
Registrant;(7)
(ii) The responses described in Item 23(e)(ii)
are hereby incorporated by reference.
(n) Copy of Financial Data Schedules;(9)
(o) The Registrant hereby incorporates the conformed copy of
the specimen Multiple Class Plan from
Item 23(o) 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);
(p) (i) Conformed copy of Power of Attorney;(9)
(ii) Conformed copy of Power of Attorney of
Chief Investment Officer of the Registrant; +
(iii) Conformed copy of Power of Attorney of Treasurer of the Registrant; +
(iv) Conformed copy of Power of Attorney of Trustee of the Registrant; +

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

+ All exhibits have been filed electronically.

1. 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)

6. 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)

7. 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)

9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed March 26, 1998. (File Nos. 2-75366 and
811-3352)

<PAGE>

Item 24. Persons Controlled By or Under Common Control with

Registrant:

None

Item 25. Indemnification: (2)

Item 26. Business and Other Connections of the Investment Adviser:

For a description of the other business of the investment adviser, see
the section entitled "Who Manages the Fund?"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 "Who Manages and Provides Service to the
Fund - Board of Trustees." 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: Joseph M. Balestrino

Drew J. Collins

Jonathan C. Conley

Deborah A. Cunningham

Mark E. Durbiano

Sandra L. McInerney

Susan M. Nason

Mary Jo Ochson

Robert J. Ostrowski

Vice Presidents: Todd A. Abraham

J. Scott Albrecht

Arthur J. Barry

Randall S. Bauer

David A. Briggs

Micheal W. Casey

Kenneth J. Cody

Alexandre de Bethmann

Michael P. Donnelly

Linda A. Duessel

Donald T. Ellenberger

Kathleen M. Foody-Malus

Thomas M. Franks

Edward C. Gonzales

James E. Grefenstette

Susan R. Hill

Stephen A. Keen

Robert K. Kinsey

Robert M. Kowit

Jeff A. Kozemchak

Richard J. Lazarchic

Steven Lehman

Marian R. Marinack

Keith J. Sabol

Frank Semack

Aash M. Shah

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

2. 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)

<PAGE>

Christopher Smith

Tracy P. Stouffer

Edward J. Tiedge

Paige M. Wilhelm

Jolanta M. Wysocka

Marc Halperin

Assistant Vice Presidents: Nancy J. Belz

Robert E. Cauley

Lee R. Cunningham, II

B. Anthony Delserone, Jr.

Paul S. Drotch

Salvatore A. Esposito

Donna M. Fabiano

John T. Gentry

William R. Jamison

Constantine Kartsonsas

John C. Kerber

Grant K. McKay

Natalie F. Metz

Joseph M. Natoli

John Sheehy

Michael W. Sirianni

Leonardo A. Vila

Lori A. Wolff

Gary Farwell

Secretary: Stephen A. Keen

Treasurer: Thomas R. Donahue

Assistant Secretaries: Thomas R. Donahue

Richard B. Fisher

Christine I. Newcamp

Assistant Treasurer: Richard B. Fisher

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

<PAGE>

Item 27. Principal Underwriters:

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

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

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

<PAGE>

(b)

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

Richard B. Fisher Director, Chairman, Chief Vice President

Federated Investors Tower Executive Officer, Chief

1001 Liberty Avenue Operating Officer, Asst.

Pittsburgh, PA 15222-3779 Secretary and Asst.

Treasurer, Federated

Securities Corp.

Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, President

1001 Liberty Avenue Federated Securities Corp.

Pittsburgh, PA 15222-3779

Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer

1001 Liberty Avenue Federated Securities Corp.

Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

<PAGE>

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

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

<PAGE>

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

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

<PAGE>

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

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

<PAGE>

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

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

David W. Spears Vice President, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

<PAGE>

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

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Matthew S. Hardin Secretary, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Leslie K. Ross Assistant Secretary, --

Federated Investors Tower Federated Securities Corp.

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Item 28. Location of Accounts and Records:

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

Federated Income Trust
("Registrant") Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(Notices should be sent to the Agent for Service at the above address)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Federated Shareholder Services
Company Federated Investors Tower
("Transfer Agent and Dividend 1001 Liberty Avenue
Disbursing Agent") Pittsburgh, PA 15222-3779

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

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

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

Item 29. Management Services: Not applicable.

Item 30. Undertakings:

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED INCOME TRUST, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, duly authorized, in the City of Pittsburgh and Commonwealth
of Pennsylvania, on the 28th day of January, 1999.

FEDERATED INCOME TRUST

BY: /s/ Anthony R. Bosch

Anthony R. Bosch, Assistant Secretary

Attorney in Fact for John F. Donahue

January 28, 1999

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 January 28, 1999

ASSISTANT SECRETARY For the Persons

Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee

(Chief Executive Officer)

Glen R. Johnson* President and Trustee

Richard J. Thomas* Treasurer (Principal Financial and

Acccounting Officer)

William D. Dawson, III* Chief Investment Officer

Thomas J. Bigley * Trustee

John T. Conroy, Jr.* Trustee

Nicholas P. Constantakis* Trustee

William J. Copeland* Trustee

James E. Dowd, Esq.* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr., Esq.* Trustee

Peter E. Madden* Trustee

Charles F. Mansfield Jr.* Trustee

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

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney

Exhibit 23 (b) (iv) under Form N-1A
Exhibit 3(ii) under Item 601/Reg. S-K

Federated Income Trust

Amendment #5

to the By-Laws

(effective February 23, 1998)

Section 1. Officers. The Officers of the Trust shall be a President, one or
more Vice Presidents, a Treasurer, and a Secretary. The Board of Trustees,
in its discretion, may also elect or appoint a Chairman of the Board of
Trustees (who must be a Trustee) and other Officers or agents, including
one or more Assistant Vice Presidents, one or more Assistant Secretaries,
and one or more Assistant Treasurers. A Vice President, the Secretary or
the Treasurer may appoint an Assistant Vice President, an Assistant
Secretary or an Assistant Treasurer, respectively, to serve until the next
election of Officers. Two or more offices may be held by a single person
except the offices of President and Vice President may not be held by the
same person concurrently. It shall not be necessary for any Trustee or any
Officer to be a holder of shares in any Series or Class of the Trust.

Section 2. Election of Officers. The Officers shall be elected annually by
the Trustees. Each Officer shall hold office for one year and until the
election and qualification of his successor, or until earlier resignation
or removal. The Chairman of the Board of Trustees, if there is one, shall
be elected annually by and from the Trustees, and serve until a successor
is so elected and qualified, or until earlier resignation or removal.

Section 3. Resignations and Removals and Vacancies. Any Officer of the
Trust may resign at any time by filing a written resignation with the Board
of Trustees (or Chairman of the Trustees, if there is one), with the
President, or with the Secretary. Any such resignation shall take effect at
the time specified therein or, if no time is specified, at the time of
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Any Officer
elected by the Board of Trustees or whose appointment has been ratified by
the Board of Trustees may be removed with or without cause at any time by a
majority vote of all of the Trustees. Any other employee of the Trust may
be removed or dismissed at any time by the President. Any vacancy in any of
the offices, whether by resignation, removal or otherwise, may be filled
for the unexpired portion of the term by the President. A vacancy in the
office of Assistant Vice President may be filled by a Vice President; in
the office of Assistant Secretary by the Secretary; or in the office of
Assistant Treasurer by the Treasurer. Any appointment to fill any vacancy
shall serve subject to ratification by the Board of Trustees at its next
regular meeting.

Exhibit 23 (b)(v) under Form N-1A
Exhibit 3(ii) under Item 601/Reg. S-K

Federated Income Trust

Amendment #6

to the By-Laws

(effective February 27, 1998)

Section 5. Proxies. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person, by telephone, by electronic means
including facsimile, or by proxy, but no proxy which is dated more than six
months before the meeting named therein shall be accepted unless otherwise
provided in the proxy. Every proxy shall be in writing, subscribed by the
shareholder or his duly authorized agent or be in such other form as may be
permitted by law, including documents conveyed by electronic transmission.
Every proxy shall be dated, but need not be sealed, witnessed or
acknowledged. The placing of a shareholder's name on a proxy or authorizing
another to act as the shareholder's agent, pursuant to telephone or
electronically transmitted instructions obtained in accordance with
procedures reasonably designed to verify that such instructions have been
authorized by such shareholder, shall constitute execution of a proxy by or
on behalf of such shareholder. Where Shares are held of record by more than
one person, any co-owner or co-fiduciary may execute the proxy or give
authority to an agent, unless the Secretary of the Trust is notified in
writing by any co-owner or co-fiduciary that the joinder of more than one
is to be required. All proxies shall be filed with and verified by the
Secretary or an Assistant Secretary of the Trust, or the person acting as
Secretary of the Meeting. Unless otherwise specifically limited by their
term, all proxies shall entitle the holders thereof to vote at any
adjournment of such meeting but shall not be valid after the final
adjournment of such meeting.

Exhibit 23 (b) (vi) under Form N-1A
Exhibit 3(ii) under Item 601/Reg. S-K

Federated Income Trust

Amendment #7
to the By-Laws

(effective May 12, 1998)

Section 3. Place of Meeting. Meetings of the shareholders of the Trust or a
particular Series or Class shall be held at such place within or without
The Commonwealth of Massachusetts as may be fixed from time to time by
resolution of the Trustees.

Section 6. Place of Meeting. Meetings of the Trustees shall be held 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.

Exhibit 23 h(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

AMENDED & RESTATED

AGREEMENT

for

FUND ACCOUNTING SERVICES,

ADMINISTRATIVE SERVICES,

TRANSFER AGENCY SERVICES

and

CUSTODY SERVICES PROCUREMENT

AGREEMENT made as of March 1, 1996, and amended and restated as of
September 1, 1997, by and between those investment companies listed on Exhibit 1
as may be amended from time to time, having their principal office and place of
business at Federated Investors Tower, Pittsburgh, PA 15222-3779 (the
"Investment Company"), on behalf of the portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") of the Investment Company, and
FEDERATED SERVICES COMPANY, a Pennsylvania corporation, having its principal
office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 on behalf of itself and its subsidiaries (the
"Company").

WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares");

WHEREAS, the Investment Company may desire to retain the Company as fund
accountant to provide fund accounting services (as herein defined) including
certain pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so indicated
on Exhibit 1, and the Company desires to accept such appointment;

WHEREAS, the Investment Company may desire to appoint the Company as its
administrator to provide it with administrative services (as herein defined), if
so indicated on Exhibit, and the Company desires to accept such appointment;

WHEREAS, the Investment Company may desire to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer agency
services (as herein defined) if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept such
appointment; and

WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and

NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:

SECTION ONE: Fund Accounting.

Article 1. Appointment.

The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the period
and on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Article 3 of this Section.

Article 2. The Company's Duties.

Subject to the supervision and control of the Investment Company's Board of
Trustees or Directors ("Board"), the Company will assist the Investment Company
with regard to fund accounting for the Investment Company, and/or the Funds,
and/or the Classes, and in connection therewith undertakes to perform the
following specific services;

A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent pricing
services selected by the Company in consultation with the adviser, or
sources selected by the adviser, and reviewed by the board; secondarily, if
a designated pricing service does not provide a price for a security which
the Company believes should be available by market quotation, the Company
may obtain a price by calling brokers designated by the investment adviser
of the fund holding the security, or if the adviser does not supply the
names of such brokers, the Company will attempt on its own to find brokers
to price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will determine a
fair value in good faith. Consistent with Rule 2a-4 of the 40 Act,
estimates may be used where necessary or appropriate. The Company's
obligations with regard to the prices received from outside pricing
services and designated brokers or other outside sources, is to exercise
reasonable care in the supervision of the pricing agent. The Company is not
the guarantor of the securities prices received from such agents and the
Company is not liable to the Fund for potential errors in valuing a Fund's
assets or calculating the net asset value per share of such Fund or Class
when the calculations are based upon such prices. All of the above sources
of prices used as described are deemed by the Company to be authorized
sources of security prices. The Company provides daily to the adviser the
securities prices used in calculating the net asset value of the fund, for
its use in preparing exception reports for those prices on which the
adviser has comment. Further, upon receipt of the exception reports
generated by the adviser, the Company diligently pursues communication
regarding exception reports with the designated pricing agents;

B. Determine the net asset value per share of each Fund and/or Class, at the
time and in the manner from time to time determined by the Board and as set
forth in the Prospectus and Statement of Additional Information
("Prospectus") of each Fund;

C. Calculate the net income of each of the Funds, if any;

D. Calculate realized capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;

E. Maintain the general ledger and other accounts, books and financial records
of the Investment Company, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules thereunder in
connection with the services provided by the Company;

F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records to be maintained by Rule 31a-1 under the 1940 Act in connection
with the services provided by the Company. The Company further agrees that
all such records it maintains for the Investment Company are the property
of the Investment Company and further agrees to surrender promptly to the
Investment Company such records upon the Investment Company's request;

G. At the request of the Investment Company, prepare various reports or other
financial documents in accordance with generally accepted accounting
principles as required by federal, state and other applicable laws and
regulations; and

H. Such other similar services as may be reasonably requested by the
Investment Company.

The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section One,
shall hereafter be referred to as "Fund Accounting Services."

Article 3. Compensation and Allocation of Expenses.

A. The Funds will compensate the Company for Fund Accounting Services in
accordance with the fees agreed upon from time to time between the parties
hereto. Such fees do not include out-of-pocket disbursements of the Company
for which the Funds shall reimburse the Company. Out-of-pocket
disbursements shall include, but shall not be limited to, the items agreed
upon between the parties from time to time.

B. The Fund and/or the Class, and not the Company, shall bear the cost of:
custodial expenses; membership dues in the Investment Company Institute or
any similar organization; transfer agency expenses; investment advisory
expenses; Prospectuses, reports and notices; administrative expenses;
interest on borrowed money; brokerage commissions; taxes and fees payable
to federal, state and other governmental agencies; fees of Trustees or
Directors of the Investment Company; independent auditors expenses; legal
and audit department expenses billed to the Company for work performed
related to the Investment Company, the Funds, or the Classes; law firm
expenses; organizational expenses; or other expenses not specified in this
Article 3 which may be properly payable by the Funds and/or Classes.

C. The compensation and out-of-pocket expenses attributable to the Fund shall
be accrued by the Fund and shall be paid to the Company no less frequently
than monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and
out-of-pocket expenses by Fund and Class.

D. Any schedule of compensation agreed to hereunder, as may be adjusted from
time to time, shall be dated and signed by a duly authorized officer of the
Investment Company and/or the Funds and a duly authorized officer of the
Company.

E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the full
month period. Upon any termination of this Agreement before the end of any
month, the fee for such period shall be prorated according to the
proportion which such period bears to the full month period. For purposes
of determining fees payable to the Company, the value of the Fund's net
assets shall be computed at the time and in the manner specified in the
Fund's Prospectus.

F. The Company, in its sole discretion, may from time to time subcontract to,
employ or associate with itself such person or persons as the Company may
believe to be particularly suited to assist it in performing Fund
Accounting Services. Such person or persons may be affiliates of the
Company, third-party service providers, or they may be officers and
employees who are employed by both the Company and the Investment Company;
provided, however, that the Company shall be as fully responsible to each
Fund for the acts and omissions of any such subcontractor as it is for its
own acts and omissions. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf of the
Investment Company, the Funds, or the Classes in such respect.

SECTION TWO: ADMINISTRATIVE SERVICES.

Article 4. Appointment.

The Investment Company hereby appoints the Company as Administrator for the
period on the terms and conditions set forth in this Agreement. The Company
hereby accepts such appointment and agrees to furnish the services set forth in
Article 5 of this Agreement in return for the compensation set forth in Article
9 of this Agreement.

Article 5. The Company's Duties.

As Administrator, and subject to the supervision and control of the Board
and in accordance with Proper Instructions (as defined hereafter) from the
Investment Company, the Company will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Investment Company and each of its portfolios:

A. prepare, file, and maintain the Investment Company's governing documents
and any amendments thereto, including the Charter (which has already been
prepared and filed), the By-laws and minutes of meetings of the Board and
Shareholders;

B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Investment Company and the Investment Company's shares and all
amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other documents
all as may be necessary to enable the Investment Company to make a
continuous offering of its shares;

C. prepare, negotiate, and administer contracts (if any) on behalf of the
Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;

D. calculate performance data of the Investment Company for dissemination
to information services covering the investment company industry;

E. prepare and file the Investment Company's tax returns;

F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;

G. perform internal audit examinations in accordance with a charter to be
adopted by the Company and the Investment Company;

H. assist with the design, development, and operation of the Investment
Company and the Funds;

I. provide individuals reasonably acceptable to the Board for nomination,
appointment, or election as officers of the Investment Company, who
will be responsible for the management of certain of the Investment
Company's affairs as determined by the Investment Company's Board; and

J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.

The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Two,
shall hereafter be referred to as "Administrative Services."

Article 6. Records.

The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Investment Company. The
Investment Company, or the Investment Company's authorized representatives,
shall have access to such books and records at all times during the Company's
normal business hours. Upon the reasonable request of the Investment Company,
copies of any such books and records shall be provided promptly by the Company
to the Investment Company or the Investment Company's authorized
representatives.

Article 7. Duties of the Fund.

The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.

Article 8. Expenses.

The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Administrative Services to the Investment Company, including the compensation of
the Company employees who serve as trustees or directors or officers of the
Investment Company. The Investment Company shall be responsible for all other
expenses incurred by the Company on behalf of the Investment Company, including
without limitation postage and courier expenses, printing expenses, travel
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, or other professional services, organizational expenses,
insurance premiums, fees payable to persons who are not the Company's employees,
trade association dues, and other expenses properly payable by the Funds and/or
the Classes.

Article 9. Compensation.

For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee at an annual rate per
Fund, as specified below.

The compensation and out of pocket expenses attributable to the Fund shall
be accrued by the Fund and paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will maintain
detailed information about the compensation and out of pocket expenses by the
Fund.

Max. Admin. Average Daily Net Assets

Fee of the Funds

.150% on the first $250 million

.125% on the next $250 million

.100% on the next $250 million

.075% on assets in excess of $750 million

(Average Daily Net Asset break-points are on a complex-wide basis)

However, in no event shall the administrative fee received during any year
of the Agreement be less than, or be paid at a rate less than would aggregate
$125,000 per Fund and $30,000 per Class. The minimum fee set forth above in this
Article 9 may increase annually upon each March 1 anniversary of this Agreement
over the minimum fee during the prior 12 months, as calculated under this
agreement, in an amount equal to the increase in Pennsylvania Consumer Price
Index (not to exceed 6% annually) as last reported by the U.S. Bureau of Labor
Statistics for the twelve months immediately preceding such anniversary.

Article 10. Responsibility of Administrator.

A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
The Company shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Investment Company) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Any person, even though also
an officer, director, trustee, partner, employee or agent of the
Company, who may be or become an officer, director, trustee, partner,
employee or agent of the Investment Company, shall be deemed, when
rendering services to the Investment Company or acting on any business
of the Investment Company (other than services or business in
connection with the duties of the Company hereunder) to be rendering
such services to or acting solely for the Investment Company and not
as an officer, director, trustee, partner, employee or agent or one
under the control or direction of the Company even though paid by the
Company.

B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in
performing the Administrative Services in accordance with the above
standards. In order that the indemnification provisions contained in
this Article 10 shall apply, however, it is understood that if in any
case the Investment Company may be asked to indemnify or hold the
Company harmless, the Investment Company shall be fully and promptly
advised of all pertinent facts concerning the situation in question,
and it is further understood that the Company will use all reasonable
care to identify and notify the Investment Company promptly concerning
any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Investment
Company. The Investment Company shall have the option to defend the
Company against any claim which may be the subject of this
indemnification. In the event that the Investment Company so elects,
it will so notify the Company and thereupon the Investment Company
shall take over complete defense of the claim, and the Company shall
in such situation initiate no further legal or other expenses for
which it shall seek indemnification under this Article. The Company
shall in no case confess any claim or make any compromise in any case
in which the Investment Company will be asked to indemnify the Company
except with the Investment Company's written consent.

SECTION THREE: Transfer Agency Services.

Article 11. Terms of Appointment.

Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company agrees
to act as, transfer agent and dividend disbursing agent for each Fund's Shares,
and agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholder(s)"), including without
limitation any periodic investment plan or periodic withdrawal program.

Article 12. Duties of the Company.

The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Investment Company as
to any Fund:

A. Purchases

(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate documentation
therefore to the custodian of the relevant Fund, (the "Custodian").
The Company shall notify the Fund and the Custodian on a daily basis
of the total amount of orders and payments so delivered.

(2) Pursuant to purchase orders and in accordance with the Fund's current
Prospectus, the Company shall compute and issue the appropriate number
of Shares of each Fund and/or Class and hold such Shares in the
appropriate Shareholder accounts.

(3) In the event that any check or other order for the purchase of Shares
of the Fund and/or Class is returned unpaid for any reason, the
Company shall debit the Share account of the Shareholder by the number
of Shares that had been credited to its account upon receipt of the
check or other order, promptly mail a debit advice to the Shareholder,
and notify the Fund and/or Class of its action. In the event that the
amount paid for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to such
Shares, the Fund and/the Class or its distributor will reimburse the
Company on the amount of such excess.

B. Distribution

(1) Upon notification by the Funds of the declaration of any distribution
to Shareholders, the Company shall act as Dividend Disbursing Agent
for the Funds in accordance with the provisions of its governing
document and the then-current Prospectus of the Fund. The Company
shall prepare and mail or credit income, capital gain, or any other
payments to Shareholders. As the Dividend Disbursing Agent, the
Company shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay any
portion of said distribution which is payable in cash and request the
Custodian to make available sufficient funds for the cash amount to be
paid out. The Company shall reconcile the amounts so requested and the
amounts actually received with the Custodian on a daily basis. If a
Shareholder is entitled to receive additional Shares by virtue of any
such distribution or dividend, appropriate credits shall be made to
the Shareholder's account; and

(2) The Company shall maintain records of account for each Fund and Class
and advise the Investment Company, each Fund and Class and its
Shareholders as to the foregoing.

C. Redemptions and Transfers

(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the procedures
as may be described in the Fund Prospectus or set forth in Proper
Instructions, deliver the appropriate instructions therefor to the
Custodian. The Company shall notify the Funds on a daily basis of the
total amount of redemption requests processed and monies paid to the
Company by the Custodian for redemptions.

(2) At the appropriate time upon receiving redemption proceeds from the
Custodian with respect to any redemption, the Company shall pay or
cause to be paid the redemption proceeds in the manner instructed by
the redeeming Shareholders, pursuant to procedures described in the
then-current Prospectus of the Fund.

(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption approved
by the Fund, the Company shall promptly notify the Shareholder of such
fact, together with the reason therefor, and shall effect such
redemption at the price applicable to the date and time of receipt of
documents complying with said procedures.

(4) The Company shall effect transfers of Shares by the registered owners
thereof.

(5) The Company shall identify and process abandoned accounts and uncashed
checks for state escheat requirements on an annual basis and report
such actions to the Fund.

D. Recordkeeping

(1) The Company shall record the issuance of Shares of each Fund, and/or
Class, and maintain pursuant to applicable rules of the Securities and
Exchange Commission ("SEC") a record of the total number of Shares of
the Fund and/or Class which are authorized, based upon data provided
to it by the Fund, and issued and outstanding. The Company shall also
provide the Fund on a regular basis or upon reasonable request with
the total number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the issuance
of Shares, except as otherwise set forth herein, to monitor the
issuance of such Shares or to take cognizance of any laws relating to
the issue or sale of such Shares, which functions shall be the sole
responsibility of the Funds.

(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be performed
hereunder in the form and manner as agreed to by the Investment
Company or the Fund to include a record for each Shareholder's account
of the following:

(a) Name, address and tax identification number (and whether such number
has been certified);

(b) Number of Shares held;

(d) Any stop or restraining order placed against the account;

(e) Information with respect to withholding in the case of a foreign
account or an account for which withholding is required by the
Internal Revenue Code;

(f) Any dividend reinvestment order, plan application, dividend address
and correspondence relating to the current maintenance of the
account;

(g) Certificate numbers and denominations for any Shareholder holding
certificates;

(h) Any information required in order for the Company to perform the
calculations contemplated or required by this Agreement.

(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such record
retention shall be at the expense of the Company, and such
records may be inspected by the Fund at reasonable times. The
Company may, at its option at any time, and shall forthwith upon
the Fund's demand, turn over to the Fund and cease to retain in
the Company's files, records and documents created and maintained
by the Company pursuant to this Agreement, which are no longer
needed by the Company in performance of its services or for its
protection. If not so turned over to the Fund, such records and
documents will be retained by the Company for six years from the
year of creation, during the first two of which such documents
will be in readily accessible form. At the end of the six year
period, such records and documents will either be turned over to
the Fund or destroyed in accordance with Proper Instructions.

E. Confirmations/Reports

(1) The Company shall furnish to the Fund periodically the following
information:

(a) A copy of the transaction register;

(b) Dividend and reinvestment blotters;

(c) The total number of Shares issued and outstanding in
each state for "blue sky" purposes as determined
according to Proper Instructions delivered from time to
time by the Fund to the Company;

(d) Shareholder lists and statistical information;

(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption
fees, or other transaction- or sales-related payments;

(f) Such other information as may be agreed upon from time
to time.

(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting dividends
and distributions paid as are required to be so filed and mailed and
shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.

(3) In addition to and not in lieu of the services set forth above, the
Company shall:

(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan
or periodic withdrawal program), including but not limited
to: maintaining all Shareholder accounts, mailing
Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and
providing Shareholder account information; and

(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state ("blue sky reporting"). The Fund shall by Proper
Instructions (i) identify to the Company those transactions
and assets to be treated as exempt from the blue sky
reporting for each state and (ii) verify the classification
of transactions for each state on the system prior to
activation and thereafter monitor the daily activity for
each state. The responsibility of the Company for each
Fund's (and/or Class's) state blue sky registration status
is limited solely to the recording of the initial
classification of transactions or accounts with regard to
blue sky compliance and the reporting of such transactions
and accounts to the Fund as provided above.

F. Other Duties

(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence as
may from time to time be addressed to the Company;

(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in connection
with Shareholder meetings of each Fund; receive, examine and
tabulate returned proxies, and certify the vote of the
Shareholders;

(3) The Company shall establish and maintain faclities and procedures
for safekeeping of check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping
account of, such forms and devices.

The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Three,
shall hereafter be referred to as "Transfer Agency Services."

Article 13. Duties of the Investment Company.

A. Compliance

The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of the Securities
Act of 1933, as amended (the "1933 Act"), the 1940 Act and any laws, rules and
regulations of government authorities having jurisdiction.

B. Distributions

The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.

Article 14. Compensation and Expenses.

A. Annual Fee

For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as
agreed upon between the parties and as may be added to or amended from
time to time. Such fees may be changed from time to time subject to
written agreement between the Investment Company and the Company.
Pursuant to information in the Fund Prospectus or other information or
instructions from the Fund, the Company may sub-divide any Fund into
Classes or other sub-components for recordkeeping purposes. The
Company will charge the Fund the same fees for each such Class or
sub-component the same as if each were a Fund.

B. Reimbursements

In addition to the fee paid under Article 7A above, the
Investment Company and/or Fund agree to reimburse the Company for
out-of-pocket expenses or advances incurred by the Company for
the items agreed upon between the parties, as may be added to or
amended from time to time. In addition, any other expenses
incurred by the Company at the request or with the consent of the
Investment Company and/or the Fund, will be reimbursed by the
appropriate Fund.

C. Payment

The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.

D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.

SECTION FOUR: Custody Services Procurement.

Article 15. Appointment.

The Investment Company hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by the
Board as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.

Article 16. The Company and Its Duties.

Subject to the review, supervision and control of the Board, the
Company shall:

A. evaluate and obtain custody services from a financial institution that
meets the criteria established in Section 17(f) of the 1940 Act and
has been approved by the Board as being eligible for selection by the
Company as an Eligible Custodian;

B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a
party to each such agreement. The Company may, as paying agent, be a
party to any agreement with any such Eligible Custodian;

C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;

D. monitor and evaluate the nature and the quality of services provided
by Eligible Custodians;

E. periodically provide to the Investment Company (i) written reports on
the activities and services of Eligible Custodians; (ii) the nature
and amount of disbursements made on account of the each Fund with
respect to each custodial agreement; and (iii) such other information
as the Board shall reasonably request to enable it to fulfill its
duties and obligations under Sections 17(f) and 36(b) of the 1940 Act
and other duties and obligations thereof;

F. periodically provide recommendations to the Board to enhance Eligible
Custodian's customer services capabilities and improve upon fees being
charged to the Fund by Eligible Custodian; and

The foregoing, along with any additional services that Company shall agree
in writing to perform for the Fund under this Section Four, shall hereafter be
referred to as "Custody Services Procurement."

Article 17. Fees and Expenses.

A. Annual Fee

For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with the
fees agreed upon from time to time.

B. Reimbursements

In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed upon
between the parties, as may be added to or amended from time to time.
In addition, any other expenses incurred by the Company at the request
or with the consent of the Investment Company and/or the Fund, will be
reimbursed by the appropriate Fund.

C. Payment

D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Investment Company and/or the Funds and a
duly authorized officer of the Company.

Article 18. Representations.

The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter into
this arrangement and to provide the services contemplated in Section Four of
this Agreement.

SECTION FIVE: General Provisions.

Article 19. Proper Instructions.

As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Company reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give such
instructions with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral instructions to
be confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Investment Company, or the Fund, and the Company are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Proper Instructions
may only be amended in writing.

Article 20. Assignment.

Except as provided below, neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by either party without the
written consent of the other party.

A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract for
the performance of Transfer Agency Services with

(1) its subsidiary, Federated Shareholder Service Company, a Delaware
business trust, which is duly registered as a transfer agent
pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended, or any succeeding statute ("Section
17A(c)(1)"); or

(2) such other provider of services duly registered as a transfer
agent under Section 17A(c)(1) as Company shall select.

The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.

C. With regard to Fund Accounting Services, Administrative Services
and Custody Procurement Services, the Company may without further
consent on the part of the Investment Company subcontract for the
performance of such services with Federated Administrative
Services, a wholly-owned subsidiary of the Company.

D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement
with an Agent selected by the Investment Company, other than as
described in B. and C. above; provided, however, that the Company
shall in no way be responsible to the Investment Company for the
acts and omissions of the Agent.

Article 21. Documents.

A. In connection with the appointment of the Company under this Agreement, the
Investment Company shall file with the Company the following documents:

(1) A copy of the Charter and By-Laws of the Investment Company and
all amendments thereto;

(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;

(3) Printed documentation from the recordkeeping system representing
outstanding Share certificates of the Investment Company or the
Funds;

(4) All account application forms and other documents relating to
Shareholders accounts; and

(5) A copy of the current Prospectus for each Fund.

B. The Fund will also furnish from time to time the following documents:

(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or Class's
Shares;

(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to the
sale of Shares of any Fund, and/or Class;

(3) A certified copy of each amendment to the governing document and
the By-Laws of the Investment Company;

(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;

(5) Such other certifications, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate in
the proper performance of its duties; and

(6) Revisions to the Prospectus of each Fund.

Article 22. Representations and Warranties.

A. Representations and Warranties of the Company

The Company represents and warrants to the Fund that:

(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;

(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;

(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;

(4) all requisite corporate proceedings have been taken to authorize
it to enter into and perform its obligations under this
Agreement;

(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;

(6) it is in compliance with federal securities law requirements and
in good standing as an administrator and fund accountant; and

B. Representations and Warranties of the Investment Company

The Investment Company represents and warrants to the Company that:

(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;

(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;

(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;

(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and

(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each Fund
being offered for sale.

Article 23. Standard of Care and Indemnification.

A. Standard of Care

With regard to Sections One, Three and Four, the Company shall be held
to a standard of reasonable care in carrying out the provisions of
this Contract. The Company shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Investment Company)
on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.

B. Indemnification by Investment Company

The Company shall not be responsible for and the Investment Company or
Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents, employees and affiliates,
harmless against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or
attributable to:

(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund,

(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which

(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of
the Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;

(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of
the Funds; or

(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the
Investment Company of Fund for use in the performance
of services under this Agreement;

(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.

(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Investment Company or the Fund.

(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such
Shares in such state.

Provided, however, that the Company shall not be protected by
this Article 23.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to meet
the standard of care set forth in 23.A. above.

C. Reliance

At any time the Company may apply to any officer of the
Investment Company or Fund for instructions, and may consult with
legal counsel with respect to any matter arising in connection
with the services to be performed by the Company under this
Agreement, and the Company and its agents or subcontractors shall
not be liable and shall be indemnified by the Investment Company
or the appropriate Fund for any action reasonably taken or
omitted by it in reliance upon such instructions or upon the
opinion of such counsel provided such action is not in violation
of applicable federal or state laws or regulations. The Company,
its agents and subcontractors shall be protected and indemnified
in recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signatures of the officers
of the Investment Company or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of
a co-transfer agent or co-registrar.

D. Notification

In order that the indemnification provisions contained in this
Article 23 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who
may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other
party's prior written consent.

Article 24. Term and Termination of Agreement.

This Agreement shall be effective from September 1, 1997, and shall
continue until February 28, 2003 (`Term"). Thereafter, the Agreement will
continue for 18 month terms. The Agreement can be terminated by either party
upon 18 months notice to be effective as of the end of such 18 month period. In
the event, however, of willful misfeasance, bad faith, negligence or reckless
disregard of its duties by the Company, the Investment Company has the right to
terminate the Agreement upon 60 days written notice, if Company has not cured
such willful misfeasance, bad faith, negligence or reckless disregard of its
duties within 60 days. The termination date for all original or after-added
Investment companies which are, or become, a party to this Agreement. shall be
coterminous. Investment Companies that merge or dissolve during the Term, shall
cease to be a party on the effective date of such merger or dissolution.

Should the Investment Company exercise its rights to terminate, all
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund. Additionally,
the Company reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Articles 10 and 23 shall
survive the termination of this Agreement.

Article 25. Amendment.

This Agreement may be amended or modified by a written agreement executed
by both parties.

Article 26. Interpretive and Additional Provisions.

In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.

Article 27. Governing Law.

This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts

Article 28. Notices.

Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, PA 15222-3779, or to the Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such
other address as the Investment Company or the Company may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.

Article 29. Counterparts.

This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.

Article 30. Limitations of Liability of Trustees and Shareholders of the
Company.

The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, and
the obligations of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the appropriate property of the Fund,
or Class, as provided in the Declaration of Trust.

Article 31. Merger of Agreement.

This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.

Article 32. Successor Agent.

If a successor agent for the Investment Company shall be appointed by the
Investment Company, the Company shall upon termination of this Agreement deliver
to such successor agent at the office of the Company all properties of the
Investment Company held by it hereunder. If no such successor agent shall be
appointed, the Company shall at its office upon receipt of Proper Instructions
deliver such properties in accordance with such instructions.

In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Company on or before the date when
such termination shall become effective, then the Company shall have the right
to deliver to a bank or trust company, which is a "bank" as defined in the 1940
Act, of its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $2,000,000, all
properties held by the Company under this Agreement. Thereafter, such bank or
trust company shall be the successor of the Company under this Agreement.

Article 33. Force Majeure.

The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage, power
or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.

Article 34. Assignment; Successors.

This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all of
or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party. Nothing in
this Article 34 shall prevent the Company from delegating its responsibilities
to another entity to the extent provided herein.

Article 35. Severability.

In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.

Article 36. Limitations of Liability of Trustees and Shareholders of the
Investment Company.

The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any of
the Trustees or Shareholders of the Investment Company, but bind only the
property of the Fund, or Class, as provided in the Declaration of Trust.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.

INVESTMENT COMPANIES
(listed on Exhibit 1)

By: /s/ S. Elliott Cohan
Name: S. Elliott Cohan
Title: Assistant Secretary

FEDERATED SERVICES COMPANY

By: /s/ Thomas J. Ward
Name: Thomas J. Ward

Title: Secretary
<PAGE>

EXHIBIT 1

Federated Income Trust
Institutional Shares
Institutional Service Shares

Exhibit 23(p)(ii) 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 Investors, 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/William D. Dawson, III Chief Investment Officer January 12, 1999
- --------------------------------

William D. Dawson, III

Sworn to and subscribed before me this 12 day of January, 1999

/s/Cheri S. Good

Cheri S. Good
Notarial Seal

Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries

Exhibit 23(p)(iii) 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 Investors, 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/Richard J. Thomas Treasurer
Richard J. Thomas (Principal Financial and 12/11/98
Accounting Officer)

Sworn to and subscribed before me this 11 day of December, 1998

/s/Cheri S. Good
Cheri S. Good
Notarial Seal

Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries

Exhibit 23(p)(iv) 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 Investors, 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/Charles F. Mansfield, Jr. Trustee January 13, 1999
- -------------------------------------------------
Charles F. Mansfield, Jr.

Sworn to and subscribed before me this 13 day of January, 1999

/s/Cheri S. Good
Cheri S. Good
Notarial Seal

Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries