Federated Hermes Global Allocation Fund NCSRS Certified semi-annual shareholder report (management investment company)

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form N-CSR

Certified Shareholder Report of Registered Management Investment Companies

811-1

(Investment Company Act File Number)

Federated Stock and Bond Fund, Inc.

_______________________________________________________________

(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)

Date of Fiscal Year End: 11/30/08

Date of Reporting Period: Six months ended 5/31/08

Item 1. Reports to Stockholders

Federated
World-Class Investment Manager

Federated Stock and Bond Fund, Inc.

Established 1934

SEMI-ANNUAL SHAREHOLDER REPORT

May 31, 2008

Class A Shares
Class B Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$19.99
Income From Investment Operations:
Net investment income	0.26
Net realized and unrealized gain (loss) on investments, foreign currency transactions, futures contracts, options and swap contracts	(0.83	)
TOTAL FROM INVESTMENT OPERATIONS	(0.57	)
Less Distributions:
Distributions from net investment income	(0.24	)
Distributions from net realized gain on investments, foreign currency transactions, futures contracts, options and swap contracts	(1.95	)
TOTAL DISTRIBUTIONS	(2.19	)
Net Asset Value, End of Period	$17.23
Total Return³	(3.15	)%

Ratios to Average Net Assets:
Net expenses	1.25	%^6,7
Net investment income	2.87	%⁶
Expense waiver/reimbursement⁸	0.12	%⁶
Supplemental Data:
Net assets, end of period (000 omitted)	$179,448
Portfolio turnover	91	%

1 Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous years were audited by another independent registered public accounting firm.

2 The Fund changed its fiscal year end from October 31 to November 30. This period represents the one-month period from November 1, 2003 to November 30, 2003.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 During the period, the Fund was reimbursed by an affiliated shareholder services provider, which had an impact of 0.01% and 0.02% on the total return for the years ended November 30, 2006 and 2005, respectively.

5 During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return.

6 Computed on an annualized basis.

7 The net expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The net expense ratios are 1.25%, 1.24%, 1.16%, 1.16% and 1.29%, for the six months ended May 31, 2008 and for the years ended November 30, 2007, 2006, 2005 and 2004, respectively, 1.26% for the period ended November 30, 2003 and 1.31% for the year ended October 31, 2003 after taking into account these expense reductions.

8 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

9 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Year Ended November 30,								Period Ended		Year Ended
2007		2006	¹	2005		2004		11/30/2003	²	10/31/2003
$20.55		$18.95		$18.38		$17.38		$17.32		$15.61

0.41		0.38		0.31		0.36		0.02		0.31
1.42		1.93		0.56		1.01		0.11		1.71
1.83		2.31		0.87		1.37		0.13		2.02

(0.40	)	(0.38	)	(0.30	)	(0.37	)	(0.07	)	(0.31	)
(1.99	)	(0.33	)	- --		- --		- --		- --
(2.39	)	(0.71	)	(0.30	)	(0.37	)	(0.07	)	(0.31	)
$19.99		$20.55		$18.95		$18.38		$17.38		$17.32
9.88	%	12.55	%⁴	4.75	%^4,5	7.89	%	0.75	%	13.08	%


1.25	%⁷	1.17	%⁷	1.16	%⁷	1.29	%⁷	1.26	%^6,7	1.31	%⁷
2.07	%	1.90	%	1.63	%	1.72	%	1.64	%⁶	1.89	%
0.10	%	0.12	%	0.08	%	0.01	%	0.01	%⁶	0.00	%⁹

$195,687		$198,289		$234,204		$237,428		$226,701		$224,461
135	%	106	%	50	%	47	%	1	%	74	%

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$19.96
Income From Investment Operations:
Net investment income	0.19
Net realized and unrealized gain (loss) on investments, foreign currency transactions, futures contracts, options and swap contracts	(0.83	)
TOTAL FROM INVESTMENT OPERATIONS	(0.64	)
Less Distributions:
Distributions from net investment income	(0.17	)
Distributions from net realized gain on investments, foreign currency transactions, futures contracts, options and swap contracts	(1.95	)
TOTAL DISTRIBUTIONS	(2.12	)
Net Asset Value, End of Period	$17.20
Total Return³	(3.56	)%

Ratios to Average Net Assets:
Net expenses	2.05	%^5,6
Net investment income	2.10	%⁵
Expense waiver/reimbursement⁷	0.12	%⁵
Supplemental Data:
Net assets, end of period (000 omitted)	$34,402
Portfolio turnover	91	%

1 Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous years were audited by another independent registered public accounting firm.

2 The Fund changed its fiscal year end from October 31 to November 30. This period represents the one-month period from November 1, 2003 to November 30, 2003.

4 During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return.

5 Computed on an annualized basis.

6 The net expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The net expense ratios are 2.05%, 2.03%, 1.98%, 1.95% and 2.04%, for the six months ended May 31, 2008 and for the years ended November 30, 2007, 2006, 2005 and 2004, respectively, 2.01% for the period ended November 30, 2003 and 2.06% for the year ended October 31, 2003 after taking into account these expense reductions.

7 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

8 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Year Ended November 30,								Period Ended		Year Ended
2007		2006	¹	2005		2004		11/30/2003	²	10/31/2003
$20.52		$18.93		$18.36		$17.36		$17.28		$15.58

0.25		0.20		0.14		0.23		0.01		0.19
1.43		1.94		0.58		1.00		0.11		1.70
1.68		2.14		0.72		1.23		0.12		1.89

(0.25	)	(0.22	)	(0.15	)	(0.23	)	(0.04	)	(0.19	)
(1.99	)	(0.33	)	- --		- --		- --		- --
(2.24	)	(0.55	)	(0.15	)	(0.23	)	(0.04	)	(0.19	)
$19.96		$20.52		$18.93		$18.36		$17.36		$17.28
9.05	%	11.59	%	3.95	%⁴	7.08	%	0.68	%	12.22	%


2.03	%⁶	1.99	%⁶	1.95	%⁶	2.04	%⁶	2.01	%^5,6	2.06	%⁶
1.31	%	1.07	%	0.84	%	0.97	%	0.89	%⁵	1.14	%
0.10	%	0.11	%	0.06	%	0.01	%	0.01	%⁵	0.00	%⁸

$41,365		$50,182		$63,151		$73,911		$72,412		$71,836
135	%	106	%	50	%	47	%	1	%	74	%

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$19.90
Income From Investment Operations:
Net investment income	0.19
Net realized and unrealized gain (loss) on investments, foreign currency transactions, futures contracts, options and swap contracts	(0.83	)
TOTAL FROM INVESTMENT OPERATIONS	(0.64	)
Less Distributions:
Distributions from net investment income	(0.18	)
Distributions from net realized gain on investments, foreign currency transactions, futures contracts, options and swap contracts	(1.95	)
TOTAL DISTRIBUTIONS	(2.13	)
Net Asset Value, End of Period	$17.13
Total Return³	(3.59	)%

Ratios to Average Net Assets:
Net expenses	2.04	%^5,6
Net investment income	2.06	%⁵
Expense waiver/reimbursement⁷	0.10	%⁵
Supplemental Data:
Net assets, end of period (000 omitted)	$26,550
Portfolio turnover	91	%

1 Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous years were audited by another independent registered public accounting firm.

2 The Fund changed its fiscal year end from October 31 to November 30. This period represents the one-month period from November 1, 2003 to November 30, 2003.

4 During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return.

5 Computed on an annualized basis.

6 The net expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The net expense ratios are 2.04%, 2.00% 1.95%, 1.93% and 2.02%, for the six months ended May 31, 2008 and for the years ended November 30, 2007, 2006, 2005 and 2004, respectively, 2.01% for the period ended November 30, 2003 and 2.04% for the year ended October 31, 2003 after taking into account these expense reductions.

7 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

8 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Year Ended November 30,								Period Ended		Year Ended
2007		2006	¹	2005		2004		11/30/2003	²	10/31/2003
$20.47		$18.88		$18.31		$17.32		$17.24		$15.54

0.26		0.22		0.17		0.23		0.01		0.19
1.42		1.94		0.56		1.00		0.11		1.70
1.68		2.16		0.73		1.23		0.12		1.89

(0.26	)	(0.24	)	(0.16	)	(0.24	)	(0.04	)	(0.19	)
(1.99	)	(0.33	)	- --		- --		- --		- --
(2.25	)	(0.57	)	(0.16	)	(0.24	)	(0.04	)	(0.19	)
$19.90		$20.47		$18.88		$18.31		$17.32		$17.24
9.05	%	11.69	%	3.98	%⁴	7.09	%	0.68	%	12.25	%


2.00	%⁶	1.95	%⁶	1.93	%⁶	2.02	%⁶	2.01	%^5,6	2.04	%⁶
1.30	%	1.11	%	0.88	%	0.99	%	0.89	%⁵	1.16	%
0.10	%	0.11	%	0.06	%	0.01	%	0.01	%⁵	0.00	%⁸

$26,572		$27,033		$28,922		$26,704		$27,853		$27,731
135	%	106	%	50	%	47	%	1	%	74	%

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$20.02
Income From Investment Operations:
Net investment income	0.22
Net realized and unrealized gain (loss) on investments, foreign currency transactions, futures contracts, options and swap contracts	(0.84	)
TOTAL FROM INVESTMENT OPERATIONS	(0.62	)
Less Distributions:
Distributions from net investment income	(0.20	)
Distributions from net realized gain on investments, foreign currency transactions, futures contracts, options and swap contracts	(1.95	)
TOTAL DISTRIBUTIONS	(2.15	)
Net Asset Value, End of Period	$17.25
Total Return⁴	(3.42	)%

Ratios to Average Net Assets:
Net expenses	1.73	%^6,7
Net investment income	2.34	%⁶
Expense waiver/reimbursement⁸	0.10	%⁶
Supplemental Data:
Net assets, end of period (000 omitted)	$18,066
Portfolio turnover	91	%

1 Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous years were audited by another independent registered public accounting firm.

2 The Fund changed its fiscal year end from October 31 to November 30. This period represents the one-month period from November 1, 2003 to November 30, 2003.

3 Reflects operations for the period from April 8, 2003 (start of performance) to October 31, 2003.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return.

6 Computed on an annualized basis.

7 The net expense ratio is calculated without reduction for fees paid indirectly for directed brokerage arrangements. The net expense ratios are 1.73%, 1.70%, 1.67%, 1.65% and 1.74%, for the six months ended May 31, 2008 and for the years ended November 30, 2007, 2006, 2005 and 2004, respectively, 1.78% and 1.81% for the periods ended November 30, 2003 and October 31, 2003, respectively, after taking into account these expense reductions.

8 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

9 Represents less than 0.01%.

10 Represents less than $1,000.

11 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended October 31, 2003.

See Notes which are an integral part of the Financial Statements

Year Ended November 30,								Period Ended		Period Ended
2007		2006	¹	2005		2004		11/30/2003	²	10/31/2003	³
$20.57		$18.98		$18.40		$17.38		$17.32		$15.61

0.33		0.28		0.25		0.29		0.01		0.10
1.43		1.94		0.53		1.03		0.10		1.71
1.76		2.22		0.78		1.32		0.11		1.81

(0.32	)	(0.30	)	(0.20	)	(0.30	)	(0.05	)	(0.10	)
(1.99	)	(0.33	)	- --		- --		- --		- --
(2.31	)	(0.63	)	(0.20	)	(0.30	)	(0.05	)	(0.10	)
$20.02		$20.57		$18.98		$18.40		$17.38		$17.32
9.44	%	11.98	%	4.27	%⁵	7.64	%	0.64	%	11.64	%


1.70	%⁷	1.68	%⁷	1.65	%⁷	1.74	%⁷	1.78	%^6,7	1.81	%^6,7
1.55	%	1.42	%	1.31	%	2.52	%	1.14	%⁶	1.39	%⁶
0.10	%	0.11	%	0.05	%	0.01	%	0.01	%⁶	0.00	%^6,9

$16,070		$10,234		$1,048		$65		$0	¹⁰	$0	¹⁰
135	%	106	%	50	%	47	%	1	%	74	%¹¹

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2007 to May 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 12/1/2007	Ending Account Value 5/31/2008	Expenses Paid During Period¹
Actual:
Class A Shares	$1,000	$ 968.50	$ 6.15
Class B Shares	$1,000	$ 964.40	$ 10.07
Class C Shares	$1,000	$ 964.10	$ 10.02
Class K Shares	$1,000	$ 965.80	$ 8.50
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.75	$ 6.31
Class B Shares	$1,000	$1,014.75	$10.33
Class C Shares	$1,000	$1,014.80	$10.28
Class K Shares	$1,000	$1,016.35	$ 8.72

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares		1.25%
Class B Shares		2.05%
Class C Shares		2.04%
Class K Shares		1.73%

Portfolio of Investments Summary Tables

At May 31, 2008, the Fund's portfolio composition¹ was as follows:

Sector	Percentage of Total Net Assets
Domestic Equity Securities	51.7	%
Mortgage-Backed Securities	21.9	%
Corporate Debt Securities	11.2	%
International Equity Securities	7.7	%
U.S. Treasury and Agency Securities	3.4	%
Asset-Backed Securities	1.7	%
Foreign Debt Securities	0.5	%
Derivative Contracts^2,3	(0.0	)%
Cash Equivalents⁴	5.0	%
Other Assets and Liabilities--Net⁵	(3.1	)%
TOTAL	100.0	%

1 See the Fund's Prospectus and Statement of Additional Information for a description of the types of securities in which the Fund invests. As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of these tables, the affiliated investment company (other than an affiliated money market fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments.

2 Based upon net unrealized appreciation (depreciation) on and value of the derivative contracts. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its net unrealized appreciation (depreciation) or value may indicate. In many cases, the notional value or notional principal amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this report.

3 Represents less than 0.1%.

4 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

5 Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.

At May 31, 2008, the Fund's sector composition⁶for its equity securities was as follows:

Sector Composition		Percentage of Equity Securities
Information Technology		14.8%
Energy		14.7%
Industrials		14.2%
Consumer Staples		14.1%
Health Care		12.6%
Financials		12.3%
Consumer Discretionary		7.1%
Materials		4.9%
Utilities		2.9%
Telecommunication Services		2.4%
TOTAL		100.0%

6 Sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

Portfolio of Investments

May 31, 2008 (unaudited)

Shares					Value in U.S. Dollars
			STOCKS--51.6%
			COMMON STOCKS--51.6%
			Consumer Discretionary--3.4%
	16,400		Best Buy Co., Inc.	$	765,716
	25,000		Home Depot, Inc.		684,000
	142,900		Mattel, Inc.		2,878,006
	49,650		McDonald's Corp.		2,945,238
	43,200		Walt Disney Co.		1,451,520
			TOTAL		8,724,480
			Consumer Staples--7.9%
	27,400		Kellogg Co.		1,419,594
	107,000		Kroger Co.		2,957,480
	6,085		Nestle SA		2,992,144
	32,700	¹	Philip Morris International Inc.		1,721,982
	30,400		Procter & Gamble Co.		2,007,920
	100,378		Unilever N.V., ADR		3,288,383
	105,200		Wal-Mart Stores, Inc.		6,074,248
			TOTAL		20,461,751
			Energy--7.7%
	20,300		Apache Corp.		2,721,418
	46,000		Exxon Mobil Corp.		4,082,960
	22	¹	NRG Energy, Inc.		915
	68,900	¹	Nabors Industries Ltd.		2,896,556
	22,800	¹	Petroleo Brasileiro SA, ADR		1,607,400
	22,800		Schlumberger Ltd.		2,305,764
	66,900	¹	Weatherford International, Inc.		3,052,647
	53,225		XTO Energy, Inc.		3,386,175
			TOTAL		20,053,835
			Financials--5.5%
	16,200		Goldman Sachs Group, Inc.		2,857,842
	36,100		Hartford Financial Services Group, Inc.		2,565,627
	85,300		JPMorgan Chase & Co.		3,667,900
	62,300		Morgan Stanley		2,755,529
	44,600		U.S. Bancorp		1,480,274
	37,800		Wells Fargo & Co.		1,042,146
			TOTAL		14,369,318
Shares					Value in U.S. Dollars
			STOCKS--continued
			COMMON STOCKS--continued
			Health Care--7.3%
	12,300		Abbott Laboratories	$	693,105
	35,800		Baxter International, Inc.		2,187,380
	34,373		Bayer AG		3,048,119
	33,700		Becton, Dickinson & Co.		2,845,965
	25,400	¹	Genentech, Inc.		1,800,098
	27,700		Johnson & Johnson		1,848,698
	28,300	¹	Myriad Genetics, Inc.		1,370,286
	26,000	¹	Waters Corp.		1,599,520
	76,400		Wyeth		3,397,508
			TOTAL		18,790,679
			Industrials--7.5%
	5,100	¹	First Solar, Inc.		1,364,454
	26,800	¹	Foster Wheeler Ltd.		2,041,356
	70,100		General Electric Co.		2,153,472
	31,000		Lockheed Martin Corp.		3,392,640
	59,100		Norfolk Southern Corp.		3,982,158
	41,200		Northrop Grumman Corp.		3,108,952
	18,600		Raytheon Co.		1,187,796
	30,100		United Parcel Service, Inc.		2,137,702
			TOTAL		19,368,530
			Information Technology--8.4%
	25,600	¹	Apple, Inc.		4,832,000
	85,300	¹	Cisco Systems, Inc.		2,279,216
	27,100		Hewlett-Packard Co.		1,275,326
	70,000		Intel Corp.		1,622,600
	161,200		Microsoft Corp.		4,565,184
	5,800		Nintendo Corp. Ltd.		3,191,045
	1,257	¹	Nortel Networks Corp.		10,358
	116,100	¹	Oracle Corp.		2,651,724
	28,100		Qualcomm, Inc.		1,363,974
			TOTAL		21,791,427
			Materials--1.9%
	10,800		Freeport-McMoRan Copper & Gold, Inc.		1,249,668
	16,100		Monsanto Co.		2,051,140
	20,600		Nucor Corp.		1,540,880
			TOTAL		4,841,688
Shares or Principal Amount					Value in U.S. Dollars
			STOCKS--continued
			COMMON STOCKS--continued
			Telecommunication Services--0.8%
	50,900		Verizon Communications	$	1,958,123
			Utilities--1.2%
	40,000		FirstEnergy Corp.		3,148,400
			TOTAL COMMON STOCKS (IDENTIFIED COST $119,622,209)		133,508,231
			ASSET-BACKED SECURITIES--1.7%
$	50,517	^2,3	125 Home Loan Owner Trust 1998-1A B1, 9.76%, 2/15/2029		40,413
	800,000		Banc of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049		793,059
	250,000		Banc of America Commercial Mortgage, Inc. 2007-4 A4, 5.745%, 2/10/2051		248,221
	21,111		Chase Funding Mortgage Loan Asset-Backed Certificates 2003-6 1A3, 3.34%, 5/25/2026		20,266
	800,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007-CD5, 5.886%, 11/15/2044		796,607
	900,000		Credit Suisse Mortgage Capital Certificate 2006-C4 AAB, 5.439%, 9/15/2039		889,822
	350,000		LB-UBS Commercial Mortgage Trust 2008-C1, Series 2008C1, 6.150%, 04/15/2041		357,298
	400,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051		395,558
	400,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051		388,457
	100,000		Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 6.266%, 02/12/2051		96,250
	315,000		Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043		305,384
			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $4,402,928)		4,331,335
			COLLATERALIZED MORTGAGE OBLIGATIONS--0.7%
	550,000		CS First Boston Mortgage Securities Corp. 2005-C6 A2FX, 5.207%, 12/15/2040		550,918
	800,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049		771,331
	250,000		JP Morgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.747%, 2/12/2049		250,474
	6,911	^2,3	SMFC Trust Asset-Backed Certificates, 1997-A B1-4, 7.549%, 1/28/2027		4,492
	310,109		Wells Fargo Mortgage Backed Securities Trust 2003-18 Series 2003-18, Class A1, 5.50%, 12/25/2033		293,359
			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $1,934,580)		1,870,574
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--6.1%
			Basic Industry - Chemicals--0.1%
$	40,000		Du Pont (E.I.) de Nemours & Co., 5.00%, 01/15/2013	$	40,482
	100,000		Praxair, Inc., 4.625%, 03/30/2015		97,201
	50,000		RPM International, Inc., 6.50%, 02/15/2018		50,262
	35,000		Rohm & Haas Co., 6.00%, 09/15/2017		34,496
			TOTAL		222,441
			Basic Industry - Metals & Mining--0.2%
	80,000		Alcan, Inc., 5.00%, 06/01/2015		76,083
	70,000		Alcoa, Inc., Note, 5.55%, 02/01/2017		66,660
	50,000		BHP Finance (USA), Inc., 5.00%, 12/15/2010		50,522
	120,000		Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035		101,997
	100,000	^2,3	Xstrata Finance Canada Ltd., Unsecd. Note, 5.50%, 11/16/2011		99,089
			TOTAL		394,351
			Basic Industry - Paper--0.1%
	200,000		Louisiana-Pacific Corp., 8.875%, 08/15/2010		199,097
	150,000		Pope & Talbot, Inc., 8.375%, 6/1/2013		17,625
	100,000		Weyerhaeuser Co., Deb., 7.375%, 03/15/2032		99,800
			TOTAL		316,522
			Capital Goods - Aerospace & Defense--0.1%
	50,000	^2,3	BAE Systems Holdings, Inc., 5.20%, 08/15/2015		47,617
	25,000		Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013		24,266
	100,000		Raytheon Co., Unsecd. Note, 5.375%, 04/01/2013		102,118
			TOTAL		174,001
			Capital Goods - Diversified Manufacturing--0.2%
	20,000		Dover Corp., Note, 5.45%, 03/15/2018		19,654
	250,000		General Electric Co., Note, 5.00%, 02/01/2013		253,042
	140,000	^2,3	Hutchison Whampoa Ltd., 6.50%, 02/13/2013		145,202
	90,000	^2,3	Textron Financial Corp., Jr. Sub. Note, 6.00%, 02/15/2067		71,487
			TOTAL		489,385
			Capital Goods - Environmental--0.0%
	100,000		Waste Management, Inc., 7.375%, 08/01/2010		104,973
			Capital Goods - Packaging--0.0%
	40,000		Pactiv Corp., 6.40%, 1/15/2018		38,596
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Communications - Media & Cable--0.2%
$	75,000		AT&T Broadband, Company Guarantee, 8.375%, 3/15/2013	$	83,346
	100,000		Comcast Corp., 7.05%, 03/15/2033		103,646
	100,000		Comcast Corp., Company Guarantee, 6.50%, 01/15/2017		102,624
	110,000		Cox Communications, Inc., Unsecd. Note, 4.625%, 01/15/2010		109,205
	50,000		Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017		48,066
			TOTAL		446,887
			Communications - Telecom Wireless--0.2%
	130,000		AT&T Wireless Services, Inc., 8.75%, 03/01/2031		156,920
	75,000		AT&T Wireless Services, Inc., Sr. Note, 7.875%, 03/01/2011		80,454
	90,000		America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015		89,793
	20,000		Vodafone Group PLC, 5.350%, 02/27/2012		20,248
	90,000		Vodafone Group PLC, Note, 5.625%, 02/27/2017		88,882
			TOTAL		436,297
			Communications - Telecom Wirelines--0.1%
	30,000		Embarq Corp., 6.738%, 06/01/2013		29,509
	40,000		Telefonica SA, Company Guarantee, 7.045%, 06/20/2036		42,294
	100,000		Telefonica SA, Sr. Note, 5.855%, 02/04/2013		101,084
	40,000		Verizon Communications, Inc., 6.100%, 04/15/2018		41,107
			TOTAL		213,994
			Consumer Cyclical - Automotive--0.1%
	70,000		DaimlerChrysler North America Holding Corp., 6.50%, 11/15/2013		73,103
	100,000		DaimlerChrysler North America Holding Corp., Note, 4.875%, 06/15/2010		100,600
	130,000	^2,3	Nissan Motor Acceptance Corp., Sr. Unsecd. Note, 5.625%, 03/14/2011		129,257
			TOTAL		302,960
			Consumer Cyclical - Entertainment--0.1%
	80,000		International Speedway Corp., 5.40%, 04/15/2014		78,482
	20,000		International Speedway Corp., 4.20%, 04/15/2009		20,041
	75,000		Time Warner, Inc., 5.50%, 11/15/2011		74,375
	100,000		Walt Disney Co., Note, 5.70%, 07/15/2011		104,237
			TOTAL		277,135
			Consumer Cyclical - Lodging--0.0%
	50,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.00%, 12/01/2016		44,424
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Consumer Cyclical - Retailers--0.2%
$	208,675	^2,3	CVS Caremark Corp., Pass Thru Cert., 5.298%, 01/11/2027	$	191,537
	60,000		Costco Wholesale Corp., 5.30%, 03/15/2012		61,888
	20,000		JC Penney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018		18,226
	70,000		Target Corp., Note, 5.875%, 07/15/2016		70,710
	40,000		Wal-Mart Stores, Inc., 6.200%, 04/15/2038		39,395
			TOTAL		381,756
			Consumer Non-Cyclical - Food/Beverage--0.2%
	70,000		Bottling Group LLC, Note, 5.50%, 04/01/2016		70,289
	60,000		General Mills, Inc., Note, 5.70%, 02/15/2017		60,596
	125,000		Kraft Foods, Inc., Note, 5.25%, 10/01/2013		122,595
	50,000		PepsiCo, Inc., 4.65%, 2/15/2013		50,635
	90,000	^2,3	SABMiller PLC, Note, 6.20%, 07/01/2011		91,801
			TOTAL		395,916
			Consumer Non-Cyclical - Health Care--0.1%
	60,000		Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010		60,816
	75,000		Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.40%, 07/01/2017		73,914
	50,000		UnitedHealth Group, Inc., Bond, 6.00%, 02/15/2018		48,757
			TOTAL		183,487
			Consumer Non-Cyclical - Pharmaceuticals--0.1%
	40,000		Abbott Laboratories, 5.15%, 11/30/2012		41,088
	110,000		Lilly (Eli) & Co., Bond, 5.200%, 03/15/2017		109,354
	100,000		Genentech, Inc., Note, 4.75%, 07/15/2015		98,624
			TOTAL		249,066
			Consumer Non-Cyclical - Products--0.0%
	45,000		Philips Electronics NV, 5.75%, 03/11/2018		44,446
			Consumer Non-Cyclical - Supermarkets--0.0%
	25,000		Kroger Co., Bond, 6.90%, 04/15/2038		25,719
	50,000		Sysco Corp., Sr. Unsecd. Note, 4.20%, 02/12/2013		48,886
			TOTAL		74,605
			Energy - Independent--0.1%
	120,000		Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.95%, 09/15/2016		121,119
	120,000		Canadian Natural Resources Ltd., 4.90%, 12/01/2014		114,814
	25,000		Pemex Project Funding Master, 5.75%, 12/15/2015		25,948
	55,860	^2,3	Ras Laffan Liquified Nat, 3.437%, 9/15/2009		55,769
	20,000		XTO Energy, Inc., 6.75%, 08/01/2037		20,223
	25,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.25%, 08/01/2017		25,512
			TOTAL		363,385
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Energy - Integrated--0.3%
$	60,000		Conoco, Inc., Sr. Note, 6.95%, 4/15/2029	$	65,689
	100,000		ConocoPhillips Australia Funding Co., 5.50%, 04/15/2013		103,579
	500,000		Husky Oil Ltd., Company Guarantee, 8.90%, 8/15/2028		505,153
	35,000		Petro-Canada, Deb., 7.00%, 11/15/2028		35,069
	66,670	^2,3	Qatar Petroleum, 5.579%, 5/30/2011		67,764
	100,000	^2,3	StatoilHydro ASA, 5.125%, 04/30/2014		99,938
			TOTAL		877,192
			Energy - Oil Field Services--0.1%
	70,000		Enbridge, Inc., Sr. Note, 5.60%, 04/01/2017		67,741
	50,000		Noble Drilling Corp., Sr. Note, 7.50%, 3/15/2019		56,440
	25,000		Weatherford International Ltd., 6.00%, 03/15/2018		25,133
	20,000		Weatherford International Ltd., 7.00%, 03/15/2038		20,787
			TOTAL		170,101
			Financial Institution - Banking--1.2%
	100,000		Bank of America Corp., Sub. Note, 7.40%, 1/15/2011		105,844
	100,000	^2,3	Barclays Bank PLC, 5.926%, 12/31/2049		86,041
	120,000		Capital One Capital IV, 6.745%, 02/17/2037		95,866
	80,000		Citigroup, Inc., Note, 5.125%, 05/05/2014		79,214
	100,000		Credit Suisse First Boston USA, Inc., Sr. Note, 5.50%, 08/16/2011		102,423
	200,000		First Union Institutional, Bond, 8.04%, 12/1/2026		198,458
	100,000		HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035		85,715
	160,000		HSBC Finance Corp., 4.750%, 04/15/2010		160,290
	200,000		HSBC Finance Corp., 5.000%, 06/30/2015		192,224
	60,000		HSBC USA, Inc., Sub. Note, 6.625%, 3/01/2009		61,270
	75,000		Household Finance Corp., Unsecd. Note, 4.75%, 7/15/2013		71,293
	250,000		JPMorgan Chase & Co., Sub. Note, 5.125%, 09/15/2014		246,197
	250,000		Marshall & Ilsley Bank, Milwaukee, Sr. Note, 4.40%, 03/15/2010		249,073
	100,000		Northern Trust Corp., Sr. Note, 5.30%, 08/29/2011		100,987
	100,000		PNC Funding Corp., Sr. Note, 5.125%, 12/14/2010		101,290
	15,000		PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017		14,163
	70,000		Popular North America, Inc., 5.65%, 04/15/2009		68,533
	477,778	^2,3	Regional Diversified Funding, 9.25%, 3/15/2030		528,073
	100,000		Sovereign Bancorp, Inc., Sr. Note, 4.80%, 09/01/2010		93,400
	100,000		U.S. Bank, N.A., 6.30%, 02/04/2014		105,650
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Financial Institution - Banking--continued
$	100,000		Wachovia Bank N.A., Sub. Note, 4.875%, 02/01/2015	$	94,804
	140,000		Wachovia Corp., 5.75%, 02/01/2018		135,703
	200,000		Washington Mutual Bank, 5.125%, 01/15/2015		164,934
	100,000		Zions Bancorp, Sub. Note, 5.50%, 11/16/2015		83,104
			TOTAL		3,224,549
			Financial Institution - Brokerage--0.5%
	220,000		Blackrock, Inc., 6.25%, 09/15/2017		221,125
	40,000		Eaton Vance Corp., 6.50%, 10/02/2017		40,915
	100,000	^2,3	FMR Corp., 4.75%, 03/01/2013		97,976
	50,000		Goldman Sachs Group, Inc., 6.125%, 02/15/2033		45,976
	100,000		Goldman Sachs Group, Inc., 6.60%, 01/15/2012		104,731
	150,000		Goldman Sachs Group, Inc., Sr. Note, 6.15%, 04/01/2018		149,155
	190,000		Invesco Ltd., Note, 4.50%, 12/15/2009		187,761
	25,000		Janus Capital Group, Inc., Sr. Note, 6.25%, 06/15/2012		24,329
	30,000		Janus Capital Group, Inc., Sr. Note, 6.70%, 06/15/2017		28,699
	60,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.50%, 07/19/2017		55,257
	60,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 07/17/2037		52,394
	60,000		Lehman Brothers Holdings, Note, 4.80%, 3/13/2014		54,519
	30,000		Merrill Lynch & Co., Inc., Sr. Unsecd. Note, 6.05%, 08/15/2012		29,808
	100,000		Morgan Stanley Group, Inc., 5.30%, 03/01/2013		99,389
	75,000		Morgan Stanley, Note, 3.875%, 01/15/2009		75,258
	100,000		Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018		99,274
	30,000		Nuveen Investments, 5.500%, 09/15/2015		21,450
	30,000		Nuveen Investments, 5.00%, 9/15/2010		26,400
			TOTAL		1,414,416
			Financial Institution - Finance Noncaptive--0.2%
	100,000		American International Group, Inc., Sr. Note, 4.70%, 10/01/2010		99,359
	100,000		Berkshire Hathaway, Inc., Company Guarantee, 4.85%, 01/15/2015		100,175
	80,000		Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.30%, 05/10/2017		58,792
	50,000		General Electric Capital Corp., 5.625%, 05/01/2018		49,540
	30,000		General Electric Capital Corp., Note, Series MTN, 6.75%, 03/15/2032		30,627
	75,000		General Electric Capital, Note, 6.125%, 2/22/2011		78,497
	30,000		Heller Financial, Inc., Note, 7.375%, 11/01/2009		31,447
	80,000		International Lease Finance Corp., 4.875%, 09/01/2010		79,261
			TOTAL		527,698
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Financial Institution - Insurance - Health--0.0%
$	50,000		CIGNA Corp., 6.35%, 03/15/2018	$	50,079
			Financial Institution - Insurance - Life--0.5%
	100,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		109,291
	300,000	^2,3	Pacific LifeCorp., Bond, 6.60%, 9/15/2033		293,752
	40,000		Prudential Financial, Inc., 6.625%, 12/01/2037		38,913
	750,000	^2,3	Union Central Life Ins Co, Note, 8.20%, 11/1/2026		811,747
			TOTAL		1,253,703
			Financial Institution - Insurance - P&C--0.1%
	80,000		ACE INA Holdings, Inc., Sr. Note, 5.70%, 02/15/2017		78,561
	80,000		CNA Financial Corp., 6.50%, 08/15/2016		78,530
	15,000		Chubb Corp., Sr. Note, 5.75%, 05/15/2018		14,802
	50,000		Horace Mann Educators Corp., Sr. Note, 6.85%, 04/15/2016		52,412
	100,000	^2,3	Liberty Mutual Group, Inc., Unsecd. Note, 5.75%, 03/15/2014		96,525
	10,000		The Travelers Cos., Inc., Sr. Unsecd. Note, 5.50%, 12/01/2015		9,834
			TOTAL		330,664
			Financial Institution - REITs--0.1%
	40,000		Equity One, Inc., Bond, 6.00%, 09/15/2017		34,779
	40,000		Liberty Property LP, 6.625%, 10/01/2017		38,003
	45,000		Mack-Cali Realty Corp., Note, 7.25%, 3/15/2009		45,603
	120,000		Prologis, Sr. Note, 5.50%, 04/01/2012		117,820
	60,000		Simon Property Group, Inc, Note, 7.75%, 1/20/2011		62,476
	50,000		Simon Property Group, Inc., 6.35%, 08/28/2012		51,138
			TOTAL		349,819
			Foreign-Local-Government--0.0%
	50,000		Quebec, Province of, Note, Series MTNA, 7.035%, 3/10/2026		58,770
			Municipal Services--0.1%
	140,000	^2,3	Army Hawaii Family Housing, 5.524%, 6/15/2050		117,524
	100,000	^2,3	Camp Pendleton & Quantico Housing LLC, 5.572%, 10/01/2050		84,997
			TOTAL		202,521
			Sovereign--0.1%
	100,000		Corp Andina De Fomento, Bond, 7.375%, 01/18/2011		107,145
	30,000		United Mexican States, Series MTNA, 6.75%, 09/27/2034		32,430
			TOTAL		139,575
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Technology--0.2%
$	50,000		Cisco Systems, Inc., Note, 5.25%, 02/22/2011	$	51,422
	20,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016		20,245
	40,000		Dell Computer Corp., Deb., 7.10%, 04/15/2028		41,184
	60,000		Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.50%, 03/15/2011		59,630
	80,000		Fiserv, Inc., Sr. Note, 6.80%, 11/20/2017		80,604
	50,000		Harris Corp., 5.95%, 12/01/2017		49,391
	50,000		Hewlett-Packard Co., Note, 5.40%, 03/01/2017		49,574
	100,000		Oracle Corp., Sr. Unsecd. Note, Series WI, 5.00%, 01/15/2011		102,134
			TOTAL		454,184
			Transportation - Airlines--0.0%
	100,000		Southwest Airlines Co., Deb., 7.375%, 03/01/2027		101,014
			Transportation - Railroads--0.1%
	100,000		Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015		94,544
	50,000		Norfolk Southern Corp., Note, 6.75%, 02/15/2011		51,974
	50,000		Union Pacific Corp., 4.875%, 01/15/2015		47,999
	45,000		Union Pacific Corp., Bond, 6.625%, 2/01/2029		45,199
			TOTAL		239,716
			Transportation - Services--0.0%
	75,000	^2,3	Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017		67,884
			Utility - Electric--0.3%
	50,000		Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.95%, 12/15/2036		42,882
	50,000		Commonwealth Edison Co., 1st Mtg. Bond, 5.80%, 03/15/2018		49,170
	40,000		Consolidated Edison Co., Sr. Unsecd. Note, 5.50%, 09/15/2016		40,190
	100,000		Duke Capital Corp., Sr. Note, 6.25%, 02/15/2013		101,670
	100,000		Exelon Generation Co. LLC, 6.95%, 06/15/2011		104,116
	110,000	^2,3	Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017		107,758
	120,000		MidAmerican Energy Co., 4.65%, 10/01/2014		115,997
	30,000		Northern States Power Co., MN, 1st Mtg. Bond, 5.25%, 3/01/2018		29,713
	60,000		PPL Energy Supply LLC, Sr. Unsecd. Note, 6.00%, 12/15/2036		49,381
	100,000		Union Electric Co., 6.00%, 04/01/2018		99,071
	80,000		Virginia Electric & Power Co., Sr. Unsecd. Note, 5.10%, 11/30/2012		80,845
			TOTAL		820,793
			Utility - Natural Gas Distributor--0.1%
	210,000		Atmos Energy Corp., 4.00%, 10/15/2009		207,752
Principal Amount					Value in U.S. Dollars
			CORPORATE BONDS--continued
			Utility - Natural Gas Pipelines--0.1%
$	60,000		Kinder Morgan Energy Partners LP, 6.75%, 3/15/2011	$	62,239
	100,000		Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.80%, 03/15/2035		87,524
			TOTAL		149,763
			TOTAL CORPORATE BONDS (IDENTIFIED COST $16,181,882)		15,794,820
			CORPORATE NOTES--2.4%
	6,000,000	^2,3	Merrill Lynch & Co., Inc., Commodity-Linked Note, 3.11%, 09/11/2008		6,003,420
	125,000		Telecom Italia Capital, Note, 4.875%, 10/01/2010		124,402
			TOTAL CORPORATE NOTES (IDENTIFIED COST $6,124,978)		6,127,822
			GOVERNMENT AGENCIES--2.8%
	2,550,000	⁴	Federal Home Loan Mortgage Corp., 4.625%, 10/25/2012		2,612,290
	415,000		Federal Home Loan Mortgage Corp., 6.250%, 7/15/2032		468,940
	4,000,000		Federal National Mortgage Association, 2.750%, 4/11/2011		3,917,344
	100,000		Federal National Mortgage Association, 4.500%, 6/1/2010		102,444
	40,000		Federal National Mortgage Association, 7.125%, 1/15/2030		49,389
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $7,173,772)		7,150,407
			GOVERNMENTS/AGENCIES--0.0%
			Sovereign--0.0%
	75,000		United Mexican States, 6.625%, 03/03/2015 (IDENTIFIED COST $76,869)		81,109
			MORTGAGE-BACKED SECURITIES--0.5%
	11,847		Federal Home Loan Mortgage Corp. Pool C00592, 7.000%, 3/1/2028		12,481
	9,475		Federal Home Loan Mortgage Corp. Pool C00896, 7.500%, 12/1/2029		10,028
	22,970		Federal Home Loan Mortgage Corp. Pool C17281, 6.500%, 11/1/2028		23,938
	20,912		Federal Home Loan Mortgage Corp. Pool C19588, 6.500%, 12/1/2028		21,793
	7,932		Federal Home Loan Mortgage Corp. Pool C25621, 6.500%, 5/1/2029		8,266
	33,936		Federal Home Loan Mortgage Corp. Pool C76361, 6.000%, 2/1/2033		34,649
	96,356		Federal Home Loan Mortgage Corp. Pool E01545, 5.000%, 15 Year, 1/1/2019		96,505
	16,303		Federal Home Loan Mortgage Corp. Pool E20252, 7.000%, 15 Year, 7/1/2011		16,726
	2,144		Federal Home Loan Mortgage Corp. Pool E77591, 6.500%, 7/1/2014		2,229
	24,223		Federal Home Loan Mortgage Corp. Pool E99510, 5.500%, 9/1/2018		24,648
	27,996		Federal Home Loan Mortgage Corp. Pool G01444, 6.500%, 8/1/2032		29,141
	37,864		Federal Home Loan Mortgage Corp. Pool M90876, 4.000%, 11/1/2008		37,865
	19,163		Federal National Mortgage Association Pool 251697, 6.500%, 30 Year, 5/1/2028		19,807
Principal Amount					Value in U.S. Dollars
			MORTGAGE-BACKED SECURITIES--continued
$	42,119		Federal National Mortgage Association Pool 252334, 6.500%, 30 Year, 2/1/2029	$	43,303
	106,827		Federal National Mortgage Association Pool 254720, 4.500%, 5/1/2018		105,003
	102,567		Federal National Mortgage Association Pool 254802, 4.500%, 7/1/2018		100,816
	44,234		Federal National Mortgage Association Pool 254905, 6.000%, 10/1/2033		45,092
	91,977		Federal National Mortgage Association Pool 255075, 5.500%, 2/1/2024		92,044
	108,644		Federal National Mortgage Association Pool 255079, 5.000%, 2/1/2019		108,879
	4,279		Federal National Mortgage Association Pool 303168, 9.500%, 30 Year, 2/1/2025		4,798
	2,307		Federal National Mortgage Association Pool 323159, 7.500%, 4/1/2028		2,435
	19,029		Federal National Mortgage Association Pool 323640, 7.500%, 4/1/2029		20,090
	1,090		Federal National Mortgage Association Pool 323970, 7.000%, 15 Year, 10/1/2014		1,131
	48,896		Federal National Mortgage Association Pool 428865, 7.000%, 6/1/2028		51,452
	4,663		Federal National Mortgage Association Pool 443215, 6.000%, 10/1/2028		4,768
	1,579		Federal National Mortgage Association Pool 511365, 7.000%, 8/1/2029		1,662
	471		Federal National Mortgage Association Pool 514184, 7.500%, 9/1/2029		498
	94,793		Federal National Mortgage Association Pool 545993, 6.000%, 11/1/2032		96,691
	37,349		Federal National Mortgage Association Pool 555272, 6.000%, 3/1/2033		38,097
	83,702		Federal National Mortgage Association Pool 713974, 5.500%, 7/1/2033		83,445
	110,311		Federal National Mortgage Association Pool 721502, 5.000%, 7/1/2033		106,954
	1,691		Government National Mortgage Association Pool 352214, 7.000%, 4/15/2023		1,786
	9,147		Government National Mortgage Association Pool 451522, 7.500%, 30 Year, 10/15/2027		9,773
	20,465		Government National Mortgage Association Pool 462556, 6.500%, 2/15/2028		21,193
	507		Government National Mortgage Association Pool 462739, 7.500%, 5/15/2028		542
	1,237		Government National Mortgage Association Pool 464835, 6.500%, 9/15/2028		1,281
	12,537		Government National Mortgage Association Pool 469699, 7.000%, 11/15/2028		13,305
	16,322		Government National Mortgage Association Pool 486760, 6.500%, 12/15/2028		16,903
	2,910		Government National Mortgage Association Pool 780339, 8.000%, 30 Year, 12/15/2023		3,105
	20,965		Government National Mortgage Association Pool 780453, 7.500%, 30 Year, 12/15/2025		22,244
	18,242		Government National Mortgage Association Pool 780584, 7.000%, 30 Year, 6/15/2027		19,360
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $1,355,570)		1,354,726
Principal Amount or Shares					Value in U.S. Dollars
			U.S. TREASURY--0.6%
$	465,093		U.S. Treasury Inflation Protected Note, 2.500%, 7/15/2016	$	504,553
	1,000,000		United States Treasury Note, 3.875%, 9/15/2010		1,025,624
			TOTAL U.S. TREASURY (IDENTIFIED COST $1,494,087)		1,530,177
			EXCHANGE-TRADED MUTUAL FUND--0.5%
	8,778		iShares MSCI Emerging Market (IDENTIFIED COST $1,310,590)		1,326,970
			MUTUAL FUNDS--33.6%⁵
	62,987		Emerging Markets Fixed Income Core Fund		1,389,873
	293,895		Federated InterContinental Fund, Institutional Shares		19,170,767
	5,360,629		Federated Mortgage Core Portfolio		52,963,017
	822,405		High Yield Bond Portfolio		5,329,183
	7,946,445	⁶	Prime Value Obligations Fund, Institutional Shares, 2.70%		7,946,445
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $85,285,839)		86,799,285
			TOTAL INVESTMENTS--100.5% (IDENTIFIED COST $244,963,258)⁷		259,875,456
			OTHER ASSETS AND LIABILITIES - NET--(0.5)%⁸		(1,408,872	)
			TOTAL NET ASSETS--100%	$	258,466,584

At May 31, 2008, the Fund had the following outstanding foreign exchange contract:

Settlement Date	Foreign Currency Units to Deliver/Receive	In Exchange For	Contracts at Value	Unrealized Appreciation
Contract Purchased:
6/2/2008	114,586 Swiss Franc	$109,536	$109,941	$405

At May 31, 2008, the Fund had the following outstanding futures contracts:

	Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation/ (Depreciation)
¹	U.S. Treasury Notes 5-Year Long Futures	65	$7,145,938	September 2008	$(78,435	)
¹	U.S. Treasury Notes 10-Year Long Futures	50	$5,620,313	September 2008	$(91,194	)
¹	U.S. Treasury Bonds Long Futures	20	$2,270,000	September 2008	$(51,165	)
¹	U.S. Treasury Notes 2-Year Short Futures	65	$13,690,625	September 2008	$41,409
	NET UNREALIZED DEPRECIATION ON FUTURES CONTRACTS				$(179,385	)

At May 31, 2008, the Fund had the following open swap contracts:

Credit
Default Swap Counterparty

Reference Entity

Buy/Sell

Pay/Receive
Fixed Rate

Expiration
Date

Notional
Amount

Value

Merrill Lynch⁹

Series 9 Investment
Grade Index

Sell

0.60%

12/20/2012

$10,000,000

$(181,034

)

Lehman Brothers⁹

Series 10 Investment
Grade Index

Buy

1.55%

6/20/2013

$ 5,000,000

$ 132,696

TOTAL VALUE OF CREDIT DEFAULT SWAPS

$ (48,338

)

Net Unrealized Appreciation/Depreciation on the Foreign Exchange Contract, Futures Contracts and Value of Swap Contracts is included in "Other Assets and Liabilities - Net."

1 Non-income producing security.

2 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At May 31, 2008, these restricted securities amounted to $9,340,063, which represented 3.6% of total net assets.

3 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Directors (the "Directors"). At May 31, 2008, these liquid restricted securities amounted to $9,340,063, which represented 3.6% of total net assets.

4 Pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts.

5 Affiliated companies.

6 7-Day net yield.

7 The cost of investments for federal tax purposes amounts to $244,974,212.

8 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

9 Net premiums received by the Fund amount to $135,575.

Note: The categories of investments are shown as a percentage of total net assets at May 31, 2008.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1 - quoted prices in active markets for identical securities

Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of May 31, 2008, in valuing the Fund's assets carried at fair value:

Valuation Inputs	Investments in Securities	Other Financial Instruments*
Level 1 - Quoted Prices	$221,634,486	$(178,980	)
Level 2 - Other Significant Observable Inputs	38,240,970	(48,338	)
Level 3 - Significant Unobservable Inputs	- --	- --
TOTAL	$259,875,456	$(227,318	)

* Other Financial Instruments include a foreign exchange contract, futures contracts and swap contracts.

The following acronyms are used throughout this portfolio:

ADR	- --American Depositary Receipt
MTN	- --Medium Term Note
REITs	- --Real Estate Investment Trusts

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

May 31, 2008 (unaudited)

Assets:
Total investments in securities, at value including $86,799,285 of investments in affiliated issuers (Note 5) (identified cost $244,963,258)			$	259,875,456
Cash				51
Income receivable				621,570
Receivable for daily variation margin				20,781
Receivable for investments sold				7,665,843
Receivable for shares sold				195,048
Receivable for foreign exchange contracts				405
TOTAL ASSETS				268,379,154
Liabilities:
Payable for investments purchased	$	9,310,547
Payable for shares redeemed		300,516
Income distribution payable		63,448
Swaps, at value (premium received of $135,575)		48,338
Payable for Directors'/Trustees' fees		370
Payable for distribution services fee (Note 5)		46,414
Payable for shareholder services fee (Note 5)		48,146
Accrued expenses		94,791
TOTAL LIABILITIES				9,912,570
Net assets for 15,012,738 shares outstanding			$	258,466,584
Net Assets Consist of:
Paid-in capital			$	246,998,886
Net unrealized appreciation of investments, translation of assets and liabilities in foreign currency, futures contracts and swap contracts				14,794,871
Accumulated net realized loss on investments, foreign currency transactions, futures contracts, options and swap contracts				(3,763,891	)
Undistributed net investment income				436,718
TOTAL NET ASSETS			$	258,466,584

Statement of Assets and Liabilities-continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Class A Shares:
Net asset value per share ($179,447,903 ÷ 10,415,754 shares outstanding), $0.001 par value, 750,000,000 shares authorized						$17.23
Offering price per share (100/94.50 of $17.23)¹						$18.23
Redemption proceeds per share						$17.23
Class B Shares:
Net asset value per share ($34,402,097 ÷ 2,000,228 shares outstanding), $0.001 par value, 500,000,000 shares authorized						$17.20
Offering price per share						$17.20
Redemption proceeds per share (94.50/100 of $17.20)¹						$16.25
Class C Shares:
Net asset value per share ($26,550,450 ÷ 1,549,556 shares outstanding), $0.001 par value, 500,000,000 shares authorized						$17.13
Offering price per share						$17.13
Redemption proceeds per share (99.00/100 of $17.13)¹						$16.96
Class K Shares:
Net asset value per share ($18,066,134 ÷ 1,047,200 shares outstanding), $0.001 par value, 250,000,000 shares authorized						$17.25
Offering price per share						$17.25
Redemption proceeds per share						$17.25

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended May 31, 2008 (unaudited)

Investment Income:
Dividends (including $2,900,038 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $18,167)			$	4,515,357
Interest				843,909
Investment income allocated from affiliated partnership (Note 5)				57,413
TOTAL INCOME				5,416,679
Expenses:
Investment adviser fee (Note 5)	$	934,939
Administrative personnel and services fee (Note 5)		134,999
Custodian fees		17,056
Transfer and dividend disbursing agent fees and expenses--Class A Shares		158,653
Transfer and dividend disbursing agent fees and expenses--Class B Shares		39,194
Transfer and dividend disbursing agent fees and expenses--Class C Shares		23,751
Transfer and dividend disbursing agent fees and expenses--Class K Shares		30,303
Directors'/Trustees' fees		7,266
Auditing fees		12,835
Legal fees		9,829
Portfolio accounting fees		60,169
Distribution services fee--Class B Shares (Note 5)		138,622
Distribution services fee--Class C Shares (Note 5)		96,436
Distribution services fee--Class K Shares (Note 5)		41,595
Shareholder services fee--Class A Shares (Note 5)		219,338
Shareholder services fee--Class B Shares (Note 5)		46,207
Shareholder services fee--Class C Shares (Note 5)		31,273
Account administration--Class A Shares		2,379
Share registration costs		33,031
Printing and postage		33,899
Insurance premiums		2,463
Taxes		10,177
Miscellaneous		4,880
Expenses before allocation		2,089,294
Expenses allocated from affiliated partnership		468
TOTAL EXPENSES		2,089,762

Statement of Operations-continued

Waivers, Reimbursements and Expense Reduction (Note 5):
Waiver/reimbursement of investment adviser fee	$	(101,835	)
Waiver of administrative personnel and services fee		(26,185	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares		(20,066	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class B Shares		(3,731	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares		(145	)
Fees paid indirectly from directed brokerage arrangements		(3,146	)
TOTAL WAIVERS, REIMBURSEMENTS AND EXPENSE REDUCTION				$	(155,108	)
Net expenses							$	1,934,654
Net investment income								3,482,025
Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions, Futures Contracts and Swap Contracts:
Net realized loss on investments and foreign currency transactions (including realized loss of $870,056 on sales of investments in affiliated issuers (Note 5)								(659,252	)
Net realized loss on futures contracts								(6,743	)
Net realized loss on swap contracts								(1,510,241	)
Net realized loss allocated from partnership								(2,283	)
Realized gain distributions from affiliated investment company shares								3,037,079
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								(13,516,292	)
Net change in unrealized appreciation on futures contracts								(190,287	)
Net change in unrealized depreciation of swap contracts								163,498
Net realized and unrealized loss on investments, foreign currency transactions, futures contracts and swap contracts								(12,684,521	)
Change in net assets resulting from operations							$	(9,202,496	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 5/31/2008			Year Ended 11/30/2007
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	3,482,025		$	5,180,723
Net realized gain (loss) on investments, including allocation from partnership, foreign currency transactions, futures contracts and swap contracts		(2,178,519	)		26,300,316
Realized gain distributions from affiliated investment company shares		3,037,079			969,148
Net change in unrealized appreciation/depreciation of investments, translation of assets and liabilities in foreign currency, futures contracts and swap contracts		(13,543,081	)		(6,633,044	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(9,202,496	)		25,817,143
Distributions to Shareholders:
Distributions from net investment income
Class A Shares		(2,460,066	)		(3,993,440	)
Class B Shares		(351,180	)		(574,648	)
Class C Shares		(248,757	)		(344,061	)
Class K Shares		(183,582	)		(213,036	)
Distributions from net realized gains on investments and foreign currency transactions and swap contracts
Class A Shares		(18,997,902	)		(19,147,426	)
Class B Shares		(3,970,711	)		(4,766,903	)
Class C Shares		(2,615,521	)		(2,577,998	)
Class K Shares		(1,610,546	)		(1,017,268	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(30,438,265	)		(32,634,780	)
Share Transactions:
Proceeds from sale of shares		30,568,372			52,577,275
Net asset value of shares issued to shareholders in payment of distributions declared		28,639,153			30,402,512
Cost of shares redeemed		(40,793,776	)		(82,206,153	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		18,413,749			773,634
Change in net assets		(21,227,012	)		(6,004,003	)
Net Assets:
Beginning of period		279,693,596			285,737,599
End of period (including undistributed net investment income of $436,718 and $198,278, respectively)	$	258,466,584		$	279,693,596

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

May 31, 2008 (unaudited)

1. ORGANIZATION

Federated Stock and Bond Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund offers four classes of shares: Class A Shares, Class B Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The primary investment objective of the Fund is to provide relative safety of capital with the possibility of long-term growth of capital and income. Consideration is also given to current income.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Directors.
Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
Shares of other mutual funds are valued based upon their reported NAVs.
Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Directors.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Directors have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Directors.

The Directors also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Directors have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Directors.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Inflation adjustments on Treasury Inflation-Protected Securities are included in interest income. Distributions of net investment income are declared and paid quarterly. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class B Shares, Class C Shares and Class K Shares may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. The Fund may also invest in Emerging Markets Fixed Income Core Fund (EMCORE), a portfolio of Federated Core Trust II, L.P., which is a limited partnership established under the laws of the state of Delaware. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gains and Losses

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on December 1, 2007. As of and during the six months ended May 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of May 31, 2008, tax years 2004 through 2007 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America, the state of Maryland and the Commonwealth of Pennsylvania.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

Other Taxes

As an open-end management investment company incorporated in the state of Maryland but domiciled in Pennsylvania, the Fund is subject to the Pennsylvania Franchise Tax. This franchise tax is assessed annually on the value of the Fund, as represented by average net assets for the tax year.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund 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. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Swap Contracts

Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or "swapped" between parties are generally calculated with respect to a "notional amount" for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, foreign exchange and other swap agreements. Total return swap agreements involve the commitment to pay or receive an amount generally determined by reference to an interest rate in exchange for a specific market-linked return, based on notional amounts. To the extent that the total return of the security or index underlying the transactions exceeds or falls short of the offsetting interest rate based obligation, the Fund receives or makes a payment to the counterparty. The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value," of the reference obligation in exchange for the reference obligation. The Fund may be either the buyer or seller in a credit default swap transaction. The maximum amount of the payment that may occur, as a result of a credit event payable by the protection seller, is equal to the notional amount of the underlying index or security. The Fund's maximum exposure to loss of the notional value of credit default swaps outstanding at May 31, 2008 is $10,000,000.

Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in Swaps, at value on the Statement of Assets and Liabilities, and periodic payments are reported as Net realized gain (loss) on swap contracts in the Statement of Operations. For the six months ended May 31, 2008, the Fund had net realized losses on swap contracts of $1,510,241.

Swap contracts outstanding at period end are listed after the Fund's portfolio of investments.

Futures Contracts

The Fund purchases and sells financial futures contracts to manage cashflows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. For the six months ended May 31, 2008, the Fund had net realized losses on futures contracts of $6,743.

Futures contracts outstanding at period end are listed after the Fund's portfolio of investments.

Foreign Exchange Contracts

The Fund may enter into foreign exchange contracts for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

Foreign exchange contracts outstanding at period end are listed after the Fund's portfolio of investments.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates 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. 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.

Restricted Securities

Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Directors. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in accordance with procedures established by and under the general supervision of the Directors.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis.

3. CAPITAL STOCK

The following tables summarize capital stock activity:

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	956,477		$	16,729,294		1,580,674		$	30,902,949
Shares issued to shareholders in payment of distributions declared	1,132,736			20,233,569		1,152,486			21,607,700
Shares redeemed	(1,460,381	)		(25,535,635	)	(2,594,906	)		(50,350,695	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	628,832		$	11,427,228		138,254		$	2,159,954

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	173,953		$	3,067,557		296,020		$	5,773,666
Shares issued to shareholders in payment of distributions declared	228,712			4,083,749		266,434			4,971,550
Shares redeemed	(474,539	)		(8,279,639	)	(935,354	)		(18,128,500	)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(71,874	)	$	(1,128,333	)	(372,900	)	$	(7,383,284	)

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	318,612		$	5,493,472		404,964		$	7,827,822
Shares issued to shareholders in payment of distributions declared	142,200			2,528,310		139,389			2,593,829
Shares redeemed	(246,546	)		(4,244,681	)	(529,929	)		(10,294,215	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	214,266		$	3,777,101		14,424		$	127,436

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	303,255		$	5,278,049		416,417		$	8,072,838
Shares issued to shareholders in payment of distributions declared	100,225			1,793,525		65,500			1,229,433
Shares redeemed	(158,955	)		(2,733,821	)	(176,680	)		(3,432,743	)
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	244,525		$	4,337,753		305,237		$	5,869,528
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,015,749		$	18,413,749		85,015		$	773,634

4. FEDERAL TAX INFORMATION

At May 31, 2008, the cost of investments for federal tax purposes was $244,974,212. The net unrealized appreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from changes in foreign currency exchange rates, futures contracts and swap contracts was $14,901,244. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $17,451,964 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,550,720.

At November 30, 2007, the Fund had a capital loss carryforward of $2,372,592 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2009		$1,127,965
2010		$1,244,627

As a result of the tax-free transfer of assets from Vintage Balanced Fund, certain capital loss carryforwards listed above may be limited.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Global Investment Management Corp. is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to: (a) a maximum of 0.55% of the average daily net assets of the Fund; and (b) 4.50% of the gross income of the Fund, excluding gains or losses. Subject to the terms described in the Expense Limitation note, 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. For the six months ended May 31, 2008, the Adviser voluntarily waived $7,788 of its fee. In addition, an affiliate of the adviser reimbursed $23,942 of transfer and dividend disbursing agent fees and expenses.

Prior to August 17, 2007, the Fund's investment adviser was Federated Equity Management Company of Pennsylvania (FEMCOPA). The advisory agreement between the Fund and FEMCOPA provided for an annual fee equal to: (a) a maximum of 0.55% of the average daily net assets of the Fund; and (b) 4.50% of the gross income of the Fund, excluding gains or losses.

Certain of the Fund's assets are managed by Federated Investment Management Company (FIMCO) and FEMCOPA (the "Sub-Advisers"). Under the terms of a sub-adviser agreement between the Adviser and the Sub-Advisers, the Sub-Advisers receive an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the period ended May 31, 2008, FIMCO and FEMCOPA earned fees of $126,008 and $290,217, respectively.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee		Average Aggregate Daily Net Assets of the Federated Funds
0.150%		on the first $5 billion
0.125%		on the next $5 billion
0.100%		on the next $10 billion
0.075%		on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended May 31, 2008, the net fee paid to FAS was 0.083% of average daily net assets of the Fund. FAS waived $26,185 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class B Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name		Percentage of Average Daily Net Assets of Class
Class B Shares		0.75%
Class C Shares		0.75%
Class K Shares		0.50%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended May 31, 2008, FSC retained $9,272 of fees paid by the Fund.

Sales Charges

For the six months ended May 31, 2008, FSC retained $6,730 in sales charges from the sale of Class A Shares. FSC also retained $773 relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $850 of Service Fees for the six months ended May 31, 2008. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended May 31, 2008, FSSC received $20,016 of fees paid by the Fund.

Expense Reduction

The Fund directs portfolio trades to a broker that in turn pays a portion of the Fund's operating expenses. For the six months ended May 31, 2008, the Fund's expenses were reduced by $3,146 under these arrangements.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights, but excluding expenses allocated from affiliated partnerships) paid by the Fund's Class A Shares, Class B Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 2.05%, 2.05% and 1.75%, respectively, for the fiscal year ending November 30, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through January 31, 2009.

General

Certain of the Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the six months ended May 31, 2008, the Adviser reimbursed $94,047. Transactions with affiliated companies during the six months ended May 31, 2008 were as follows:

Affiliates	Balance of Shares Held 11/30/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 5/31/2008	Value	Dividend Income/ Allocated Investment Income
Emerging Markets Fixed Income Core Fund	53,583	51,285	41,881	62,987	$1,389,873	$57,413
Federated InterContinental Fund, Institutional Shares	107,198	398,312	211,615	293,895	19,170,767	100,583
Federated International Capital Appreciation Fund, Class A Shares	1,482,445	- --	1,482,445	- --	- --	934,311
Federated Mortgage Core Portfolio	4,796,682	1,551,050	987,103	5,360,629	52,963,017	1,421,107
High Yield Bond Portfolio	349,707	651,598	178,900	822,405	5,329,183	201,116
Prime Value Obligations Fund, Institutional Shares	5,528,188	116,727,873	114,309,616	7,946,445	7,946,445	242,921
TOTAL OF AFFILIATED TRANSACTIONS					$86,799,285	$2,957,451

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended May 31, 2008, were as follows:

Purchases		$	214,034,689
Sales		$	223,163,741

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of May 31, 2008, there were no outstanding loans. During the six months ended May 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of May 31, 2008, there were no outstanding loans. During the six months ended May 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated"), and various Federated funds ("Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Funds retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel have been defending this litigation, and none of the Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS 161"). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED STOCK AND BOND FUND, INC. (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory and subadvisory contracts at meetings held in May 2008. The Board's decision regarding these contracts reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory and subadvisory contracts.

During its review of these contracts, the Board considered compensation and benefits received by the Adviser and subadviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser and subadviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory and subadvisory contracts to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory and subadvisory contracts occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory and subadvisory contracts included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's and subadviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees.

For both the one- and three-year periods ending December 31, 2007, the Fund's performance was above the median of the relevant peer group.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory and subadvisory contracts. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory and subadvisory contracts on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

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 the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund intends to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund or its agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 313911109
Cusip 313911208
Cusip 313911307
Cusip 313911406

8080105 (7/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Item 2. Code of Ethics

Not Applicable

Item 3. Audit Committee Financial Expert

Not Applicable

Item 4. Principal Accountant Fees and Services

Not Applicable

Item 5. Audit Committee of Listed Registrants

Not Applicable

Item 6. Schedule of Investments

Not Applicable

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not Applicable

Item 8.

Portfolio Managers of Closed-End Management Investment Companies

Not Applicable

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not Applicable

Item 10. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 11. Controls and Procedures

(a) The registrant’s President and Treasurer have concluded that the

registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant	Federated Stock and Bond Fund, Inc.

By	/S/ Richard A. Novak
	Richard A. Novak
	Principal Financial Officer

Date	July 22, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/S/ J. Christopher Donahue
	J. Christopher Donahue
	Principal Executive Officer

Date	July 21, 2008


By	/S/ Richard A. Novak
	Richard A. Novak
	Principal Financial Officer

Date	July 22, 2008

Federated Hermes Global Allocation Fund (SBFIX) N-CSRSCertified semi-annual shareholder report (management investment company)

FederatedWorld-Class Investment Manager

Federated Stock and Bond Fund, Inc.

SEMI-ANNUAL SHAREHOLDER REPORT

Class A SharesClass B SharesClass C SharesClass K Shares

Financial Highlights - Class A Shares

Financial Highlights - Class B Shares

Financial Highlights - Class C Shares

Financial Highlights - Class K Shares

Shareholder Expense Example

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

Portfolio of Investments Summary Tables

Portfolio of Investments

Statement of Assets and Liabilities

Statement of Assets and Liabilities-continued

Statement of Operations

Statement of Operations-continued

Statement of Changes in Net Assets

Notes to Financial Statements

1. ORGANIZATION

2. SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Fair Valuation and Significant Events Procedures

Repurchase Agreements

Investment Income, Gains and Losses, Expenses and Distributions

Premium and Discount Amortization/Paydown Gains and Losses

Federal Taxes

Other Taxes

When-Issued and Delayed Delivery Transactions

Swap Contracts

Futures Contracts

Foreign Exchange Contracts

Foreign Currency Translation

Restricted Securities

Use of Estimates

Other

3. CAPITAL STOCK

4. FEDERAL TAX INFORMATION

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

Sales Charges

Shareholder Services Fee

Expense Reduction

Expense Limitation

General

Transactions with Affiliated Companies

6. INVESTMENT TRANSACTIONS

7. LINE OF CREDIT

8. INTERFUND LENDING

9. LEGAL PROCEEDINGS

10. RECENT ACCOUNTING PRONOUNCEMENTS

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED STOCK AND BOND FUND, INC. (THE "FUND")

Voting Proxies on Fund Portfolio Securities

Quarterly Portfolio Schedule

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

Federated
World-Class Investment Manager

Class A Shares
Class B Shares
Class C Shares
Class K Shares