PRESIDENT'S MESSAGE
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
High Yield Trust. The Report covers the six-month period ended August 31,
1996, and includes an Investment Review by the fund's portfolio manager,
followed by the Portfolio of Investments and the Financial Statements.
This mutual fund is managed to pursue the significant opportunities
available in the lower-grade corporate bond market.* At the end of the
period, its highly diversified portfolio included more than 180 bonds issued
by companies that span the business and industrial spectrum. Each holding is
the result of an intensive research process.
During the six-month period ended August 31, 1996, the fund paid dividends
of $0.43 per share and produced a total return of 3.76%.** Total net assets
grew from $673.8 million on the first day of the period to $764 million on
the last day of the period.
Thank you for participating in Federated High Yield Trust. As always, we
welcome your questions and comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
October 15, 1996
* Lower rated bonds involve a higher degree of risk than investment grade
bonds in return for higher yield potential.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
INVESTMENT REVIEW
High yield bonds delivered good performance for the six months ending August
31, 1996, especially on a relative performance basis. For example, the
Lehman Brothers High Yield Bond Index* returned 3.16% for the period
compared to a return of -.02% for the Lehman Brothers Aggregate Bond
Index,** a measure of high quality bond performance. Stronger than expected
growth in the United States' economy continued to be the main focus of fixed
income investors. This growth, which fueled inflationary fears, drove
interest rates higher. For example, the yield on a 10-year United States
treasury security rose approximately 85 basis points during the period.
However, from a high yield bond perspective, the credit enhancing impact of
stronger economic growth offset a substantial portion of the negative
interest rate impact. For example, the yield spread between the First Boston
High Yield Bond Index*** and comparable treasury securities narrowed 51
basis points during the time period.
Federated High Yield Trust had a total return of 3.76% for the period ended
August 31, 1996, outperforming the Lehman Brothers High Yield Bond Index,
which returned 3.16%, and performing in line with the Lipper High Current
Yield Average, which also returned 3.76%. The trust benefited from careful
security selection during the period. Deteriorating credit situations had
minimal impact on the trust. Corporate mergers, stock offerings and tenders
by companies for their high yield debt had a substantial positive impact on
the trust. For example, the trust's positions in Motor Wheel, Pace
Industries, Park Communications, Trans Ocean Container and New World
Communications Group were positively impacted by acquisition activity. In
addition, Doskocil, Allied Waste, OMI Corp. and Waters Technologies tendered
for their outstanding bonds at attractive prices. The trust was negatively
impacted by its exposure to the cable and telecommunications sectors. These
sectors were impacted by securities with relatively long durations in a
rising rate environment as well as substantial new issuance activity near
the end of the period. This resulted in a temporary supply/demand imbalance,
especially in the telecommunication sector.
We continue to like the outlook for high yield bonds. Moderate growth in the
U.S. economy coupled with strong demand for high yield securities should
lead to narrower spreads between high yield bonds and treasury bonds. We
continue to overweight the telecommunication sector despite its recent
weakness. We believe that issuers like Teleport and Brooks Fiber will
benefit from the structural changes in the telecommunication industry being
driven by regulatory reform. We continue to like the cable sector both
domestically and in the United Kingdom. Strong operating fundamentals
coupled with consolidation activity should improve the credit worthiness of
companies like Cablevision Systems and Telewest. We also like the TV and
radio broadcasting sector given strong operating fundamentals, tremendous
franchise value and consolidation being driven by regulatory reform. We
remain underweight in the retail industry given continued difficult industry
conditions and the unattractive franchises of the retailers that issue high
yield bonds. Finally, we have taken and will strive to continue to take
advantage of the relatively strong high yield market to sell positions where
the fundamentals have not met our expectations.
* Lehman Brothers High Yield Bond Index is an unmanaged index comprised of
all fixed income securities having a maximum quality rating of Ba1 by
Moody's Investors Service, Inc. (including defaulted issues). All bonds
included in this index must be dollar-denominated, nonconvertible, have at
least one year remaining to maturity and have an outstanding par value of at
least $100 million; pay-in-kind bonds and Eurobonds are excluded. Actual
investments cannot be made in an index.
** Lehman Brothers Aggregate Bond Index is a total return index measuring
both the capital price changes and income provided by the underlying
universe of securities, weighted by market value outstanding. It is
comprised of the Lehman Brothers Government Bond Index, Corporate Bond
Index, Mortgage-Backed Securities Index and the Yankee Bond Index. This
index is unmanaged, and investments cannot be made in an index.
*** The First Boston High Yield Index is an unmanaged, trader priced
portfolio constructed to mirror the public high yield debt market (revisions
to the index are affected weekly). Actual investments cannot be made in an
index.
Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
Lipper figures represent the average of the total returns reported by all
of the mutual funds designated by Lipper Analytical Services, Inc. as
falling into the respective categories indicated. These figures do not
reflect sales charges.
FEDERATED HIGH YIELD TRUST
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- 90.4%
AEROSPACE & DEFENSE -- 0.7%
$ 4,925,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 $ 5,269,750
AUTOMOTIVE -- 3.2%
4,750,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 5,118,125
1,000,000 Aftermarket Technology Co., Sr. Sub. Note, Series D, 12.00%, 8/1/2004 1,085,000
5,475,000 Collins & Aikman Products Co., Sr. Sub. Note, 11.50%, 4/15/2006 5,639,250
1,325,000 (a)Delco-Remy Corp., Sr. Sub. Note, 10.625%, 8/1/2006 1,354,813
3,250,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 3,298,750
2,500,000 JPS Automotive Products Corp. , Sr. Note, 11.125%, 6/15/2001 2,562,500
5,900,000 Lear Corp., Sub. Note, 9.50%, 7/15/2006 6,032,750
Total 25,091,188
BANKING -- 1.1%
5,825,000 First Nationwide Holdings, Inc., Sr. Note, 12.25%, 5/15/2001 6,189,063
2,000,000 First Nationwide Holdings, Inc., Sr. Note, 12.50%, 4/15/2003 2,065,000
Total 8,254,063
BEVERAGE & TOBACCO -- 1.0%
2,700,000 Dimon, Inc., Sr. Note, 8.875%, 6/1/2006 2,713,500
5,100,000 Dr. Pepper Bottling Holdings Co., Sr. Disc. Note, 0/11.625%, 2/15/2003 4,475,250
Total 7,188,750
BROADCAST RADIO & TV -- 8.1%
1,900,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 1,973,625
2,700,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 3,020,625
2,250,000 Chancellor Broadcasting Co., Sr. Sub. Note, 9.375%, 10/1/2004 2,216,250
2,000,000 Granite Broadcasting Corp., Sr. Sub. Deb., 12.75%, 9/1/2002 2,215,000
3,625,000 Granite Broadcasting Corp., Sr. Sub. Note, 10.375%, 5/15/2005 3,652,188
2,725,000 Granite Broadcasting Corp., Sr. Sub. Note, 9.375%, 12/1/2005 2,609,188
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
BROADCAST RADIO & TV -- CONTINUED
$ 6,100,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 $ 5,825,500
4,000,000 NWCG Holding Corp., Sr. Disc. Note, 13.50%, 6/15/1999 3,160,000
2,600,000 (a)Park Communications, Inc., Sr. Note, 13.75% accrual, 5/15/2004 3,367,000
3,100,000 Pegasus Media, Note, 12.50%, 7/1/2005 3,301,500
5,550,000 SCI Television, Inc., Sr. Secd. Note, 11.00%, 6/30/2005 5,938,500
6,900,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 7,072,500
5,550,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 12/15/2003 5,466,750
3,300,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 3,250,500
750,000 Sullivan Broadcast Holdings Inc., Deb., 13.25%, 12/15/2006 656,250
2,925,000 Sullivan Broadcast Holdings Inc., Sr. Sub. Note, 10.25%, 12/15/2005 2,888,438
1,500,000 Young Broadcasting, Inc., Sr. Sub. Note, 10.125%, 2/15/2005 1,496,250
1,250,000 Young Broadcasting, Inc., Sr. Sub. Note, 11.75%, 11/15/2004 1,337,500
3,000,000 Young Broadcasting, Inc., Sr. Sub. Note, 9.00%, 1/15/2006 2,767,500
Total 62,215,064
BUSINESS EQUIPMENT & SERVICES -- 2.2%
6,000,000 Knoll Inc., Sr. Sub. Note, 10.875%, 3/15/2006 6,255,000
4,300,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 4,665,500
901,300 San Jacinto Holdings, Inc., Sr. Sub. Deb., 12.00%, 12/31/2002 675,975
5,225,000 United Stationers Supply Co., Sr. Sub. Note, 12.75%, 5/1/2005 5,682,188
Total 17,278,663
CABLE TELEVISION -- 12.8%
3,950,000 Australis Media Limited, Unit, 0/14.00%, 5/15/2003 2,271,250
3,050,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.875%, 9/15/2005 2,032,063
1,325,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.95%, 7/15/2004 997,063
3,250,000 CAI Wireless Systems, Inc., Sr. Note, 12.25%, 9/15/2002 3,388,125
4,000,000 CF Cable TV, Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 4,420,000
3,500,000 (a)CS Wireless Systems, Inc., Unit, 0/11.375%, 3/1/2006 1,697,500
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
CABLE TELEVISION -- CONTINUED
$ 4,000,000 Cablevision Systems Corp., Sr. Sub. Deb., 9.875%, 2/15/2013 $ 3,805,000
1,250,000 Cablevision Systems Corp., Sr. Sub. Note, 10.50%, 5/15/2016 1,234,375
2,250,000 Cablevision Systems Corp., Sr. Sub. Note, 9.25%, 11/1/2005 2,157,188
2,500,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 2,468,750
4,500,000 Charter Communications Southeast, L.P., Sr. Note, 11.25%, 3/15/2006 4,500,000
10,475,000 Comcast UK Cable, Deb., 11.20%, 11/15/2007 6,586,156
6,000,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 6,585,000
2,000,000 Diamond Cable Co., Sr. Disc. Note, 0/13.25%, 9/30/2004 1,520,000
6,850,000 EchoStar Satellite Broadcasting Corp., Sr. Disc. Note, 0/13.125%, 3/15/2004 4,315,500
4,250,000 Insight Communication Co., Sr. Sub. Note, 11.25%, 3/1/2000 4,313,750
5,250,000 International Cabletel, Inc., Sr. Defd. Cpn. Note, 0/10.875%, 10/15/2003 3,963,750
6,375,000 International Cabletel, Inc., Sr. Disc. Note, 0/12.75%, 4/15/2005 4,239,375
3,000,000 International Cabletel, Inc., Sr. Note, 11.50%, 2/1/2006 1,777,500
3,100,000 Le Groupe Videotron Ltee, Sr. Note, 10.625%, 2/15/2005 3,340,250
3,500,000 (a)Lenfest Communications Inc., Sr. Sub. Note, 10.50%, 6/15/2006 3,500,000
7,250,000 Peoples Choice TV Corp., Unit, 0/13.125%, 6/1/2004 4,205,000
2,850,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%, 12/1/2007 2,839,313
1,000,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%, 3/15/2005 1,010,000
3,000,000 Rogers Cablesystems Ltd., Sr. Sub. Gtd. Note, 11.00%, 12/1/2015 3,033,750
13,225,000 TeleWest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 8,331,750
8,000,000 (a)UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 4,080,000
3,000,000 Wireless One, Inc., Sr. Note, 13.00%, 10/15/2003 3,030,000
3,000,000 Wireless One, Inc., Unit, 0/13.50%, 8/1/2006 1,552,500
Total 97,194,908
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
CHEMICALS & PLASTICS -- 6.6%
$ 3,800,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 $ 4,156,250
3,250,000 Crain Industries, Inc., Sr. Sub. Note, 13.50%, 8/15/2005 3,501,875
6,000,000 Foamex L.P., Sr. Sub. Deb., 11.875%, 10/1/2004 6,330,000
5,027,000 G-I Holdings, Inc., Sr. Disc. Note, 0/11.375%, 10/1/1998 4,127,215
3,788,000 G-I Holdings, Inc., Sr. Note, 10.00%, 2/15/2006 3,848,758
6,000,000 Harris Chemical North America, Inc., Sr. Note 10.25%, 7/15/2001 6,015,000
3,667,000 Polymer Group, Inc., Sr. Note, 12.25%, 7/15/2002 3,942,025
4,900,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 4,581,500
4,175,000 Sterling Chemicals Holdings, Inc., Unit, 0/13.50%, 8/15/2008 2,348,438
1,350,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 1,393,875
3,400,000 Uniroyal Technology Corp., Sr. Secd. Note, 11.75%, 6/1/2003 3,247,000
2,650,000 Viridian, Inc., Deb., 10.50%, 3/31/2014 2,875,250
3,900,000 Viridian, Inc., Note, 9.75%, 4/1/2003 4,036,500
Total 50,403,686
CLOTHING & TEXTILES -- 1.9%
2,750,000 Dan River Inc., Sr. Sub. Note, 10.125%, 12/15/2003 2,629,688
11,975,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 11,945,063
Total 14,574,751
CONSUMER PRODUCTS -- 3.5%
3,150,000 American Safety Razor Co., Sr. Note, 9.875%, 8/1/2005 3,244,500
2,600,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 2,691,000
3,500,000 Hosiery Corp. of America, Inc., Sr. Sub. Note, 13.75%, 8/1/2002 3,867,500
5,000,000 ICON Health & Fitness, Inc., Sr. Sub. Note, 13.00%, 7/15/2002 5,525,000
7,300,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 7,108,375
4,000,000 (a)Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 3,960,000
Total 26,396,375
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
CONTAINER & GLASS PRODUCTS -- 2.1%
$ 1,260,000 (a)Kane Industries, Inc., Sr. Sub. Disc. Note, 0/8.00%, 2/1/1998* $ 0
1,650,000 Owens-Illinois, Inc., Note, 10.00%, 8/1/2002 1,695,375
250,000 Owens-Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 260,938
5,550,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 5,647,125
3,500,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.95%, 10/15/2004 3,622,500
3,350,000 (a)Packaging Resources Inc., Sr. Secd. Note, 11.625%, 5/1/2003 3,417,000
1,000,000 Plastic Containers, Inc., Sr. Secd. Note, 10.75%, 4/1/2001 1,025,000
Total 15,667,938
COSMETICS & TOILETRIES -- 0.3%
200,000 Revlon Consumer Products Corp., Note, 9.375%, 4/1/2001 202,000
2,225,000 Revlon Consumer Products Corp., Sr. Sub. Note, 10.50%, 2/15/2003 2,314,000
Total 2,516,000
ECOLOGICAL SERVICES & EQUIPMENT -- 1.0%
4,250,000 ICF Kaiser International, Inc., Sr. Sub. Note, 13.00%, 12/31/2003 4,058,750
5,350,000 (b)Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%, 2/15/2003 3,450,750
Total 7,509,500
ELECTRONICS -- 0.4%
3,000,000 Advanced Micro Devices, Inc., Sr. Secd. Note, 11.00%, 8/1/2003 3,067,500
FINANCIAL INTERMEDIARIES -- 0.8%
6,000,000 ContiFinancial Corp., Sr. Note, 8.375%, 8/15/2003 5,925,000
FOOD & DRUG RETAILERS -- 2.5%
3,650,000 Carr-Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 3,741,250
2,075,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 1,976,438
6,200,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 6,107,000
3,250,000 Ralph's Grocery Co., Sr. Sub. Note, 11.00%, 6/15/2005 3,168,750
3,975,000 Smith's Food & Drug Centers, Inc., Sr. Sub. Note, 11.25%, 5/15/2007 4,163,813
Total 19,157,251
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
FOOD PRODUCTS -- 2.5%
$ 4,350,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 $ 4,154,250
4,350,000 PMI Acquisition Corp., Sr. Sub. Note, 10.25%, 9/1/2003 4,284,750
6,000,000 Specialty Foods Acquisition Corp., Sr. Secd. Disc. Deb., 0/13.00%, 8/15/2005 2,610,000
1,100,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 1,006,500
3,850,000 Specialty Foods Corp., Sr. Sub. Note, 11.25%, 8/15/2003 3,195,500
3,700,000 Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 4,005,250
Total 19,256,250
FOOD SERVICES -- 1.4%
3,000,000 Americold Corp., Sr. Sub. Note, 12.875%, 5/1/2008 3,090,000
8,800,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 7,766,000
Total 10,856,000
FOREST PRODUCTS -- 3.3%
4,125,000 Container Corp. of America, Sr. Note, 11.25%, 5/1/2004 4,320,938
2,500,000 (a)Four M Corp., Sr. Secd. Note, 12.00%, 6/1/2006 2,593,750
2,300,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%, 4/15/2005 2,213,750
4,925,000 Riverwood International Corp., Sr. Sub. Note, 10.875%, 4/1/2008 4,789,563
5,350,000 S. D. Warren Co., Sr. Sub. Note, 12.00%, 12/15/2004 5,697,750
4,975,000 Stone Container Corp., Sr. Note, 11.50%, 10/1/2004 5,223,750
Total 24,839,501
HEALTHCARE -- 2.2%
5,000,000 (a)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 5,325,000
500,000 Genesis Health Ventures, Inc., Sr. Sub. Note, 9.75%, 6/15/2005 513,750
2,800,000 Paracelsus Healthcare Corp., Sr. Sub. Note, 10.00%, 8/15/2006 2,849,000
1,250,000 (a)Prime Succession Acquisition Corp., Sr. Sub. Note, 10.75%, 8/15/2004 1,296,875
6,150,000 Tenet Healthcare Corp., Sr. Sub. Note, 10.125%, 3/1/2005 6,642,000
Total 16,626,625
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
HOME PRODUCTS & FURNISHINGS -- 0.4%
$ 2,550,000 Triangle Pacific Corp., Sr. Note, 10.50%, 8/1/2003 $ 2,677,500
HOTELS, MOTELS, INNS & CASINOS -- 0.9%
4,900,000 Courtyard by Marriott II LP, Sr. Note, 10.75%, 2/1/2008 4,924,500
2,250,000 Motels of America, Inc., Sr. Sub. Note, 12.00%, 4/15/2004 2,036,250
Total 6,960,750
INDUSTRIAL PRODUCTS & EQUIPMENT -- 1.6%
4,800,000 Cabot Safety Acquisition Corp., Sr. Sub. Note, 12.50%, 7/15/2005 5,316,000
4,000,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%, 7/1/2001 4,030,000
3,000,000 Spreckels Industries, Inc., Sr. Secd. Note, 11.50%, 9/1/2000 3,135,000
Total 12,481,000
LEISURE & ENTERTAINMENT -- 3.5%
7,700,000 (a)AMF Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 4,504,500
2,600,000 (a)AMF Group, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 2,606,500
2,150,000 Affinity Group, Inc., Sr. Sub. Note, 11.50%, 10/15/2003 2,187,625
3,550,000 (a)Cobblestone Golf Group, Inc., Sr. Note, 11.50%, 6/1/2003 3,621,000
3,100,000 Premier Parks, Inc., Sr. Note, 12.00%, 8/15/2003 3,301,500
12,700,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 10,826,750
Total 27,047,875
MACHINERY & EQUIPMENT -- 1.6%
4,275,000 Alvey Systems, Inc., Sr. Sub. Note, 11.375%, 1/31/2003 4,467,375
4,800,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 5,220,000
2,725,000 (a)Tokheim Corp., Sr. Sub. Note, 11.50%, 8/1/2006 2,786,313
Total 12,473,688
METALS & MINING -- 0.8%
5,925,000 (a)Royal Oak Mines, Sr. Sub. Note, 11.00%, 8/15/2006 5,939,813
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
OIL & GAS -- 2.8%
$ 4,100,000 Clark USA, Inc., Sr. Note, Series B, 10.875%, 12/1/2005 $ 4,161,500
2,000,000 Falcon Drilling Co., Inc., Sr. Sub. Note, 12.50%, 3/15/2005 2,240,000
2,500,000 Giant Industries, Inc., Sr. Sub. Note, 9.75%, 11/15/2003 2,531,250
2,250,000 HS Resources, Inc., Sr. Sub. Note, 9.875%, 12/1/2003 2,182,500
6,250,000 Mesa Operating Company, Sr. Sub. Disc. Note, 0/11.625%, 7/1/2006 3,890,625
1,975,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 2,058,938
4,000,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 4,240,000
Total 21,304,813
PRINTING & PUBLISHING -- 2.1%
1,000,000 Adams Outdoor Advertising L.P., Sr. Note, 10.75%, 3/15/2006 1,027,500
5,350,000 Affiliated Newspaper, Sr. Disc. Note, 0/13.25%, 7/1/2006 3,985,750
2,975,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 3,183,250
4,800,000 Hollinger International Publishing, Inc., Sr. Sub. Note, 9.25%, 2/1/2006 4,536,000
3,950,000 K-III Communications Corp., Sr. Note, 8.50%, 2/1/2006 3,663,625
Total 16,396,125
REAL ESTATE -- 0.7%
5,300,000 Trizec Finance Ltd., Sr. Note, 10.875%, 10/15/2005 5,525,250
RETAILERS -- 0.7%
5,250,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 5,197,500
SERVICES -- 0.8%
6,043,625 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 6,391,133
STEEL -- 3.2%
5,400,000 Acme Metals, Inc., Sr. Secd. Disc. Note, 0/13.50%, 8/1/2004 5,049,000
1,800,000 Bar Technologies, Inc., Sr. Note, 13.50%, 4/1/2001 1,764,000
3,500,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 3,342,500
6,000,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 5,670,000
5,900,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 6,106,500
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
STEEL -- CONTINUED
$ 2,750,000 Republic Engineered Steel, Inc., 1st Mtg. Note, 9.875%, 12/15/2001 $ 2,585,000
Total 24,517,000
SURFACE TRANSPORTATION -- 3.7%
3,450,000 AmeriTruck Distribution Corp., Sr. Sub. Note, 12.25%, 11/15/2005 3,363,750
4,000,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 4,260,000
4,225,000 Great Dane Holdings, Inc., Sr. Sub. Deb., 12.75%, 8/1/2001 4,140,500
4,600,000 Sea Containers Ltd., Sr. Note, 9.50%, 7/1/2003 4,577,000
775,000 Sea Containers Ltd., Sr. Sub. Deb., Series B, 12.50%, 12/1/2004 844,750
5,400,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 5,454,000
2,125,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 2,491,563
3,100,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 2,945,000
Total 28,076,563
TELECOMMUNICATIONS & CELLULAR -- 8.1%
5,650,000 American Communications Services Inc., Sr. Disc. Note,
0/12.75%, 4/1/2006 2,952,125
1,700,000 Arch Communications Group, Inc., Sr. Disc. Note,
0/10.875%, 3/15/2008 909,500
7,750,000 Brooks Fiber Properties, Inc., Sr. Disc. Note, 0/10.875%, 3/1/2006 4,417,500
6,325,000 Cellular Communications International, Inc., Sr. Disc. Note,
13.25% accrual, 8/15/2000 3,953,125
1,400,000 Fonorola, Inc., Sr. Secd. Note, 12.50%, 8/15/2002 1,522,500
4,500,000 Intermedia Communications of Florida, Inc., Sr. Disc. Note,
0/12.50%, 5/15/2006 2,677,500
7,350,000 (a)Millicom International Cellular S. A., Sr. Sub. Disc. Note,
0/13.50%, 6/1/2006 3,969,000
800,000 MobileMedia Communications, Inc., Sr. Sub. Note, 9.375%, 11/1/2007 700,000
3,000,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 2,040,000
4,300,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%, 8/15/2004 2,558,500
5,400,000 (a)Nextlink Communications, L.L.C., Sr. Note, 12.50%, 4/15/2006 5,373,000
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
TELECOMMUNICATIONS & CELLULAR -- CONTINUED
$ 4,000,000 Paging Network, Inc., Sr. Sub. Note, 10.125%, 8/1/2007 $ 4,040,000
7,600,000 PanAmSat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 6,802,000
4,000,000 ProNet, Inc., Sr. Sub. Note, 11.875%, 6/15/2005 3,720,000
8,325,000 Teleport Communications Group, Inc., Sr. Disc. Note,
0/11.125%, 7/1/2007 5,119,875
1,400,000 Teleport Communications Group, Inc., Sr. Note, 9.875%, 7/1/2006 1,407,000
4,325,000 USA Mobile Communications, Inc., Sr. Note, 9.50%, 2/1/2004 3,957,375
6,125,000 Vanguard Cellular Systems, Inc., Deb., 9.375%, 4/15/2006 6,017,813
Total 62,136,813
UTILITIES -- 1.9%
9,000,000 California Energy Co., Inc., Sr. Disc. Note, 0/10.25%, 1/15/2004 9,045,000
5,500,000 El Paso Electric Co., 1st Mtg. Note, 9.40%, 5/1/2011 5,442,580
Total 14,487,580
TOTAL CORPORATE BONDS (IDENTIFIED COST $692,061,106) 690,902,166
COMMON STOCKS -- 0.7%
BROADCAST RADIO & TV -- 0.1%
310 (a)Pegasus Media, Class B 186,000
12,000 Sullivan Broadcast Holdings Inc., Class B 120,000
Total 306,000
BUILDING & DEVELOPMENT -- 0.0%
3,080 Atlantic Gulf Communities Corp. 17,710
BUSINESS EQUIPMENT & SERVICES -- 0.0%
6,177 (a)San Jacinto Holdings, Inc. 26,253
CABLE TELEVISION -- 0.0%
9,000 Wireless One, Inc., Warrants 45,000
CHEMICALS & PLASTICS -- 0.0%
27,500 Uniroyal Technology Corp., Warrants 49,844
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 0.7%
CONGLOMERATES -- 0.4%
722,871 Triton Group Ltd. $ 496,974
181,487 (b)Walter Industries, Inc. 2,427,389
Total 2,924,363
CONSUMER PRODUCTS -- 0.0%
3,000 Hosiery Corp. of America, Inc. 12,000
5,000 (a)IHF Capital, Inc., Warrants 125,000
Total 137,000
CONTAINER & GLASS PRODUCTS -- 0.0%
53,400 (a)(b)Kane Industries, Inc., Warrants* 0
FOOD & DRUG RETAILERS -- 0.1%
150,231 Grand Union Co. 873,218
INDUSTRIAL PRODUCTS & EQUIPMENT -- 0.1%
33,045 Spreckels Industries, Inc., Class A 772,427
PRINTING & PUBLISHING -- 0.0%
5,350 Affiliated Newspaper 160,500
STEEL -- 0.0%
1,800 (a)Bar Technologies, Inc., Warrants 90,900
TELECOMMUNICATIONS & CELLULAR -- 0.0%
6,325 Cellular Communications International, Inc., Warrants 55,344
TOTAL COMMON STOCKS (IDENTIFIED COST $18,295,278) 5,458,559
PREFERRED STOCKS -- 1.0%
PRINTING & PUBLISHING -- 0.6%
43,728 K-III Communications Corp., Cumulative PIK Pfd., Series B, 11.625% 4,350,936
TELECOMMUNICATIONS & CELLULAR -- 0.4%
2,626 PanAmSat Corp., PIK Pfd., 12.75% 3,059,290
TOTAL PREFERRED STOCKS (IDENTIFIED COST $6,708,376) 7,410,226
</TABLE>
FEDERATED HIGH YIELD TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY -- 4.7%
TREASURY NOTES -- 4.7%
$ 25,000,000 United States Treasury Note, 5.75%, 8/15/2003 $ 23,493,250
12,000,000 United States Treasury Note, 7.875%, 8/15/2001 12,569,040
TOTAL U.S. TREASURY (IDENTIFIED COST $36,544,219) 36,062,290
(C)REPURCHASE AGREEMENT -- 2.3%
BT Securities Corporation, 5.27%, dated 8/30/1996, due 9/3/1996 17,505,000
TOTAL INVESTMENTS (IDENTIFIED COST $771,113,979)(D) $757,338,241
</TABLE>
(a) Denotes a private placement security. At August 31, 1996, these
securities amounted to $59,820,217 which represents 7.8% of total net
assets.
(b) Non-income producing security. Mid-American Waste Systems, Inc.: On
February 15, 1996 and August 15, 1996, Mid-American failed to make its
scheduled interest payments. The company is in discussion with its senior
lending group and has hired an investment bank to evaluate financing
options.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to
$771,113,979. The net unrealized depreciation of investments on a federal
tax basis amounts to $(13,775,738) which is comprised of $18,040,576
appreciation and $31,816,314 depreciation at August 31, 1996.
* On March 18, 1994, Kane Industries, Inc., along with two of its
affiliates, Kane, Inc. and Alford Industries, Inc., filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. The Trust's investment adviser
is unable to predict the outcome or timing of these proceedings.
Note: The categories of investments are shown as a percentage of net assets
($763,952,797) at August 31, 1996.
The following acronyms are used throughout this portfolio:
GTD -- Guaranty
LLC -- Limited Liability Corporation
LP -- Limited Partnership
PIK -- Payment in Kind
PLC -- Public Limited Company
PP -- Principal Payment
TRANs -- Tax and Revenue Anticipation Notes
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $771,113,979) $757,338,241
Cash 656
Income receivable 14,774,928
Receivable for shares sold 280,873
Total assets 772,394,698
LIABILITIES:
Payable for investments purchased $1,568,268
Payable for shares redeemed 532,544
Income distribution payable 6,164,027
Payable for taxes withheld 10,045
Accrued expenses 167,017
Total liabilities 8,441,901
NET ASSETS for 84,969,959 shares outstanding $763,952,797
NET ASSETS CONSIST OF:
Paid in capital $798,837,484
Net unrealized depreciation of investments and translations of
assets and liabilities in foreign currency (13,775,738)
Accumulated net realized loss on investments and foreign currency transactions (20,752,747)
Accumulated distributions in excess of net investment income (356,202)
Total Net Assets $763,952,797
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$763,952,797 O 84,969,959 shares outstanding $8.99
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 306,856
Interest (net of foreign taxes withheld of $10,156) 35,248,524
Total income 35,555,380
EXPENSES:
Investment advisory fee $2,548,282
Administrative personnel and services fee 256,867
Custodian fees 49,915
Transfer and dividend disbursing agent fees and expenses 78,528
Directors'/Trustees' fees 7,464
Auditing fees 12,082
Legal fees 2,934
Portfolio accounting fees 66,819
Shareholder services fee 849,427
Share registration costs 58,112
Printing and postage 25,208
Insurance premiums 5,150
Taxes 3,102
Miscellaneous 4,308
Total expenses 3,968,198
Waivers--
Waiver of investment advisory fee $(798,134)
Waiver of shareholder services fee (169,885)
Total waivers (968,019)
Net expenses 3,000,179
Net investment income 32,555,201
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments and foreign currency transactions 3,174,234
Net change in unrealized depreciation of investments and translation of assets and
liabilities in foreign currency (9,632,785)
Net realized and unrealized loss on investments and foreign currency (6,458,551)
Change in net assets resulting from operations $26,096,650
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
(UNAUDITED) FEBRUARY 29,
AUGUST 31, 1996 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 32,555,201 $53,662,657
Net realized gain on investments and foreign currency transactions
($3,174,234 and $796,412, respectively, as computed for federal
tax purposes) 3,174,234 4,263,986
Net change in unrealized appreciation (depreciation) of investments
and translation of assets and liabilities in foreign currency (9,632,785) 27,446,647
Change in net assets resulting from operations 26,096,650 85,373,290
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (32,722,907) (53,311,137)
SHARE TRANSACTIONS--
Proceeds from sale of shares 462,346,120 836,596,356
Net asset value of shares issued to shareholders in payment of
distributions declared 19,709,791 37,254,443
Cost of shares redeemed (385,255,858) (696,738,256)
Change in net assets resulting from share transactions 96,800,053 177,112,543
Change in net assets 90,173,796 209,174,696
NET ASSETS:
Beginning of period 673,779,001 464,604,305
End of period $ 763,952,797 $673,779,001
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
AUGUST 31, YEAR ENDED FEBRUARY 28 OR 29,
1996 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 9.09 $ 8.57 $ 9.48 $ 9.10 $ 8.91 $ 6.99 $ 8.02 $9.96 $10.21 $11.25
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.43 0.85 0.84 0.84 0.93 1.03 1.04 1.30 1.30 1.26
Net realized and
unrealized gain
(loss)
on investments
and foreign
currency (0.10) 0.51 (0.90) 0.40 0.19 1.90 (0.92) (1.96) (0.25) (0.98)
Total from
investment
operations 0.33 1.36 (0.06) 1.24 1.12 2.93 0.12 (0.66) 1.05 0.28
LESS DISTRIBUTIONS
Distributions
from net
investment
income (0.43) (0.84) (0.84) (0.86) (0.93) (1.01) (1.06) (1.28) (1.30) (1.26)
Distributions in
excess
of net
investment
income(a) -- -- (0.01) -- -- -- (0.09) -- -- --
Distributions
from net
realized gain on
investments -- -- -- -- -- -- -- -- -- (0.06)
Total
distributions (0.43) (0.84) (0.85) (0.86) (0.93) (1.01) (1.15) (1.28) (1.30) (1.32)
NET ASSET
VALUE, END
OF PERIOD $ 8.99 $ 9.09 $ 8.57 $ 9.48 $ 9.10 $ 8.91 $ 6.99 $ 8.02 $ 9.96 $10.21
TOTAL RETURN(B) 3.76% 16.47% (0.32)% 14.16% 13.28% 44.15% 3.12% (7.50)% 10.92% 3.08%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.88%* 0.88% 0.85% 0.83% 0.77% 0.76% 0.78% 0.76% 0.75% 0.75%
Net investment
income 9.58%* 9.53% 9.70% 9.17% 10.54% 12.73% 14.82% 13.87% 12.89% 12.25%
Expense waiver/
reimbursement(c) 0.28%* 0.30% 0.22% 0.13% 0.22% 0.33% 0.49% 0.33% 0.32% 0.24%
SUPPLEMENTAL DATA
Net assets, end
of period (000
omitted) $763,953 $673,779 $464,604 $432,045 $354,383 $222,937 $103,647 $134,242 $235,208 $246,745
Portfolio
turnover 49% 87% 99% 112% 93% 61% 31% 24% 51% 73%
</TABLE>
* Computed on an annualized basis.
(a) Distributions in excess of net investment income for the periods ended
February 28, 1995 and 1991 were a result of certain book and tax timing
differences. These distributions do not represent a return of capital for
federal income tax purposes.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 (UNAUDITED)
1. ORGANIZATION
Federated High Yield Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end
management investment company. The Trust's objective is to obtain high
current income by investing in fixed income securities. The Trust's
portfolio of investments consists primarily of lower rated corporate debt
obligations. These lower rated debt obligations may be more susceptible to
real or perceived adverse economic conditions than investment grade bonds.
These lower rated debt obligations are regarded as predominantly speculative
with respect to each issuer's continuing ability to make interest and
principal payments (i.e., the obligations are subject to the risk of
default).
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- Listed corporate bonds, other fixed income and
asset-backed securities, and unlisted securities and private placement
securities are generally valued at the mean of the latest bid and asked
price as furnished by an independent pricing service. Listed equity
securities are valued at the last sale price reported on a national
securities exchange. Short-term securities are valued at the prices provided
by an independent pricing service. However, short-term securities with
remaining maturities of sixty days or less at the time of purchase may be
valued at amortized cost, which approximates fair market value.
REPURCHASE AGREEMENTS -- It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System, or to have segregated within the custodian bank's
vault, all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the "Code").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES -- It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At February 29, 1996, the Trust, for federal tax purposes, had a capital
loss carryforward of $23,577,832, which will reduce the Trust's taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve
the Trust of any liability for federal tax. Pursuant to the Code, such
capital loss carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
1998 $ 4,279,066
1999 $11,012,464
2000 $ 6,829,698
2003 $ 1,456,604
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the rate
of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1996 FEBRUARY 29,1996
<S> <C> <C>
Shares sold 51,694,182 94,114,448
Shares issued to shareholders in payment of
distributions declared 2,204,375 4,184,045
Shares redeemed (43,063,875) (78,383,729)
Net change resulting from share transactions 10,834,682 19,914,764
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Management, the Trust's investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.75% of the Trust's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS to 0.25% of daily average net assets of the Trust for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntarily waiver at
any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Trust. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers
and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended August 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $426,839,027
SALES $320,647,858
</TABLE>
<TABLE>
<S> <S>
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President, Treasurer,
Wesley W. Posvar and Secretary
Marjorie P. Smuts Richard B. Fisher
Vice President
J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
FEDERATED HIGH
YIELD TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
AUGUST 31, 1996
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 314197104
8092705 (10/96)
