Federated Income Securities Trust NCSR Certified 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




                                    811-4577

                      (Investment Company Act File Number)


                        Federated Income Securities Trust
              _______________________________________________________________

               (Exact Name of Registrant as Specified in Charter)


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


                                 (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: 4/30/03


               Date of Reporting Period: Fiscal year ended 4/30/03





Item 1.     Reports to Stockholders

Federated Investors
World-Class Investment Manager

Federated Intermediate Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

April 30, 2003

FINANCIAL HIGHLIGHTS

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

FINANCIAL STATEMENTS

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

BOARD OF TRUSTEES AND FUND OFFICERS

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

Financial Highlights--Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2003			2002			2001			2000			1999
Net Asset Value, Beginning of Period	$ 9.88			$9.86			$9.45			$10.07			$10.17
Income From Investment Operations:
Net investment income	0.60			0.62	¹		0.65			0.62			0.60
Net realized and unrealized gain (loss) on investments	0.46			0.02	¹		0.41			(0.60	)		(0.10)

TOTAL FROM INVESTMENT OPERATIONS	1.06			0.64			1.06			0.02			0.50

Less Distributions:
Distributions from net investment income	(0.60	)		(0.62	)		(0.65	)		(0.62	)		(0.60	)
Distributions from net realized gain on investments	--			--			--			(0.02	)		(0.00	)²

TOTAL DISTRIBUTIONS	(0.60	)		(0.62	)		(0.65	)		(0.64	)		(0.60	)

Net Asset Value, End of Period	$10.34			$9.88			$9.86			$ 9.45			$10.07

Total Return³	11.08	%		6.55	%		11.54	%		0.30	%		5.03	%


Ratios to Average Net Assets:

Expenses	0.55	%		0.55	%		0.55	%		0.55	%		0.55	%

Net investment income	5.97	%		6.16	%¹		6.72	%		6.48	%		5.87	%

Expense waiver/reimbursement⁴	0.38	%		0.37	%		0.35	%		0.37	%		0.43	%

Supplemental Data:

Net assets, end of period (000 omitted)	$241,837		$293,262			$300,289			$294,644			$219,824

Portfolio turnover	52	%		45	%		43	%		54	%		41	%

1 Effective May 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began accreting discounts/amortizing premium on long-term debt securities. For the fiscal year ended April 30, 2002, this change had no effect on the net investment income per share, net realized and unrealized gain (loss) on investments per share or the ratio of net investment income to average net assets. Per share, ratios and supplemental data for the periods prior to May 1, 2001 have not been restated to reflect this change in presentation.

2 Represents less than $0.01 per share.

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

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

See Notes which are an integral part of the Financial Statements

Financial Highlights--Institutional Service Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2003		2002		2001		2000		1999
Net Asset Value, Beginning of Period	$ 9.88		$9.86		$9.45		$10.07		$10.17
Income From Investment Operations:
Net investment income	0.58		0.59	¹	0.63		0.60		0.58
Net realized and unrealized gain (loss) on investments	0.46		0.02	¹	0.41		(0.60	)	(0.10	)

TOTAL FROM INVESTMENT OPERATIONS	1.04		0.61		1.04		0.00		0.48

Less Distributions:
Distributions from net investment income	(0.58	)	(0.59	)	(0.63	)	(0.60	)	(0.58	)
Distributions from net realized gain on investments	--		--		--		(0.02	)	(0.00	)²

TOTAL DISTRIBUTIONS	(0.58	)	(0.59	)	(0.63	)	(0.62	)	(0.58	)

Net Asset Value, End of Period	$10.34		$9.88		$9.86		$ 9.45		$10.07

Total Return³	10.81	%	6.29	%	11.26	%	0.05	%	4.77	%


Ratios to Average Net Assets:

Expenses	0.80	%	0.80	%	0.81	%	0.80	%	0.80	%

Net investment income	5.69	%	5.91	%¹	6.46	%	6.24	%	5.64	%

Expense waiver/reimbursement⁴	0.38	%	0.37	%	0.34	%	0.37	%	0.43	%

Supplemental Data:

Net assets, end of period (000 omitted)	$56,080		$43,461		$36,206		$18,159		$13,204

Portfolio turnover	52	%	45	%	43	%	54	%	41	%

1 Effective May 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discounts/amortizing premium on long-term debt securities. For the fiscal year ended April 30, 2002, this change had no effect on the net investment income per share, net realized and unrealized gain (loss) on investments per share or the ratio of net investment income to average net assets. Per share, ratios and supplemental data for the periods prior to May 1, 2001 have not been restated to reflect this change in presentation.

2 Represents less than $0.01 per share.

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

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

See Notes which are an integral part of the Financial Statements

Management's Discussion of Fund Performance

The fiscal year ended April 30, 2003, was one of extremes from significant corporate accounting scandals, to a continually struggling business environment, to the build-up and ultimate war with Iraq. The 12-month reporting period began with a large corporate debt downgrade and the WorldCom bankruptcy scandal. The summer months of 2002 exhibited a massive investor flight to quality, as demand for the relative safety of U.S. government debt securities rose dramatically. Correspondingly, the equity markets suffered a combination of investor cash outflows in conjunction with falling prices. Corporate bonds, being somewhat correlated to the equity market, at least in terms of investor confidence, dramatically underperformed U.S. government debt securities over the summer months.

The latter part of 2002 and the first four months of 2003 brought about a massive investor preference change, with increased demand for higher-yielding debt securities. Interest rates fell to low levels not experienced in decades necessitating greater attention to the corporate bond market. The business spending and employment situations, however, remained in a long slump, which had the effect of keeping inflation rates very low. Thus, over the entire fiscal year period, shareholders were in a position to benefit from falling interest rates and a rebounding corporate bond market.

For the 12-month reporting period ended April 30, 2003, the fund's Institutional Shares generated an 11.08% total return to shareholders, while the Institutional Service Shares produced a total return of 10.81%.¹ Interest rates fell significantly across the entire maturity spectrum ranging from a decline of 83 basis points for the 30-year Treasury to a decline of 186 basis points for the 3-year Treasury. The corporate bond rebound in the latter half of the fiscal year period significantly enhanced fund performance, as the portfolio gradually increased its exposure above the neutral position for corporate debt securities.

Over the coming months, it is anticipated that overall economic activity will remain subdued, but not to the point of exhibiting a "double-dip" recession scenario. With the dramatic drop in interest rates, fund management has taken a neutral to slightly defensive duration posture along with a continued overweight in the investment grade corporate bond sector, and thereby substituting interest rate exposure for corporate credit exposure.²

1 Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance information is available at our website www.federatedinvestors.com or by calling 1-800-341-7400.

2 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE INCOME FUND--INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated Intermediate Income Fund (Institutional Shares) (the "Fund") from December 20, 1993 (start of performance) to April 30, 2003, compared to the Lehman Brothers Government/Credit Index (LBGC),² Lehman Brothers Credit Bond Index (LBCB),² Lehman Brothers Intermediate Government/Credit Index (LBIGC)² and the Lipper Intermediate-Term Investment Grade Debt Funds Average (LIIGDFA).³

Average Annual Total Return for the Period Ended 4/30/2003
1 Year		11.08%
5 Years		6.82%
Start of Performance (12/20/1993)		7.00%

Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $25,000 in the Fund. The Fund's performance assumes the reinvestment of all dividends and distributions. The LBGC, LBCB, LBIGC and the LIIGDFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and average.

2 The LBGC, LBCB and LBIGC are not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The indexes are unmanaged.

3 The LIIGDFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling in the respective category, and is not adjusted to reflect sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in a fund's performance.

GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE INCOME FUND--INSTITUTIONAL SERVICE SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated Intermediate Income Fund (Institutional Service Shares) (the "Fund") from December 20, 1993 (start of performance) to April 30, 2003, compared to the Lehman Brothers Government/Credit Index (LBGC),² Lehman Brothers Credit Bond Index (LBCB),² Lehman Brothers Intermediate Government/Credit Index (LBIGC)²and the Lipper Intermediate-Term Investment Grade Debt Funds Average (LIIGDFA).³

Average Annual Total Return for the Period Ended 4/30/2003
1 Year		10.81%
5 Years		6.55%
Start of Performance (12/20/1993)		6.73%

2 The LBGC, LBCB and LBIGC are not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the Fund's performance. These indexes are unmanaged.

Portfolio of Investments

April 30, 2003

Principal Amount				Value
			ASSET-BACKED SECURITIES--2.5%
			Asset-Backed Securities--0.2%
$	500,000		Discover Card Trust 1996-3, Class B, 6.25%, 8/18/2008	$	539,310

			Credit Card--0.5%
	1,500,000		Prime Credit Card Master Trust 2000-1, Class A, 6.70%, 10/15/2009		1,640,595

			Financial Inst. - Brokerage--0.3%
	810,350	¹	World Financial, Class B, 6.91%, 9/1/2013		898,227

			Home Equity Loan--0.6%
	982,300	¹	125 Home Loan Owner Trust 1998-1A, Class M2, 7.75%, 2/15/2029		1,032,181
	836,089		New Century Home Equity Loan Trust 1997-NC5, Class M2, 7.24%, 10/25/2028		887,909

			TOTAL		1,920,090

			Manufactured Housing--0.1%
	1,350,000		Green Tree Financial Corp. 1999-5, Class B1, 9.20%, 4/1/2031		227,961

			Utilities--0.8%
	2,000,000		California Infrastructure & Economic Development Bank Special Purpose Trust PG&E-1, Series 1997-1, Class A8, 6.48%, 12/26/2009		2,260,400

			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $7,967,326)		7,486,583

			COLLATERALIZED MORTGAGE OBLIGATIONS--1.4%
			Federal Home Loan Mortgage Corporation--0.7%
	623,736		Federal Home Loan Mortgage Corp., Series 1228H, 7.00%, 2/15/2022		647,537
	1,470,000		Federal Home Loan Mortgage Corp., Series 1468M, 7.00%, 1/15/2010		1,546,984

			TOTAL		2,194,521

			Federal National Mortgage Association--0.5%
	405,510		Federal National Mortgage Association, Series 1992-124, Class D, 7.00%, 4/25/2010		408,555
	1,000,000		Federal National Mortgage Association, Series 1996-68, Class VC, 6.50%, 9/18/2010		1,030,400

			TOTAL		1,438,955

			Structured Product (Asset Backed Securities)--0.2%
	261,095		Residential Funding Corp. 1993-S26, Class A10, 7.50%, 7/25/2023		261,698
	300,000		Residential Funding Corp. 1993-S31, Class A7, 7.00%, 9/25/2023		304,440

			TOTAL		566,138

			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $4,078,753)		4,199,614

			CORPORATE BONDS--72.1%
			Basic Industry - Chemicals--0.1%
	750,000	¹	Fertinitro Finance, Company Guarantee, 8.29%, 4/1/2020		290,625

Principal Amount				Value
			CORPORATE BONDS--continued
			Basic Industry - Metals & Mining--3.4%
$	650,000		BHP Finance (USA), Ltd., 4.80%, 4/15/2013	$	662,876
	500,000		Barrick Gold Corp., Deb., 7.50%, 5/1/2007		571,205
	2,922,000		Inco Ltd., Note, 9.60%, 6/15/2022		3,085,194
	2,405,000		Noranda, Inc., Deb., 8.125%, 6/15/2004		2,515,293
	4,125,000		Normandy Yandal Operations Ltd., Sr. Note, 8.875%, 4/1/2008		2,495,625
	750,000		Placer Dome, Inc., Bond, 8.50%, 12/31/2045		870,210

			TOTAL		10,200,403

			Capital Goods - Diversified Manufacturing--0.2%
	500,000		Kennametal, Inc., Sr. Note, 7.20%, 6/15/2012		526,625

			Capital Goods - Environmental--2.4%
	500,000		Republic Services, Inc., Note, 7.125%, 5/15/2009		578,230
	900,000		Republic Services, Inc., Sr. Note, 6.75%, 8/15/2011		1,014,138
	2,500,000		USA Waste Services, Inc., Sr. Note, 7.00%, 10/1/2004		2,668,050
	425,000		USA Waste Services, Inc., Sr. Note, 7.125%, 10/1/2007		482,928
	2,000,000		Waste Management, Inc., Deb., 8.75%, 5/1/2018		2,385,940

			TOTAL		7,129,286

			Capital Goods- Aerospace & Defense--1.8%
	1,500,000		Boeing Capital Corp., 6.50%, 2/15/2012		1,620,945
	1,000,000		Boeing Capital Corp., 6.68%, 12/1/2003		1,024,930
	1,500,000		Raytheon Co., Note, 6.30%, 3/15/2005		1,608,945
	1,000,000		Raytheon Co., Note, 8.20%, 3/1/2006		1,134,810

			TOTAL		5,389,630

			Chemicals & Plastics--0.0%
	10,000		Air Products & Chemicals, Inc., Note, 7.375%, 5/1/2005		10,950
	40,000		Du Pont (E.I.) de Nemours & Co., Note, 8.125%, 3/15/2004		42,302
	30,000		PPG Industries, Inc., Note, 6.50%, 11/1/2007		33,296

			TOTAL		86,548

			Communications - Media & Cable--3.1%
	400,000		Comcast Corp., 7.05%, 3/15/2033		434,768
	3,500,000		Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013		4,140,080
	2,250,000		Cox Communications, Inc., MTN, 6.69%, 9/20/2004		2,373,232
	2,200,000		Grupo Televisa S.A., Note, 8.00%, 9/13/2011		2,370,500

			TOTAL		9,318,580

			Communications - Media Noncable--3.3%
	1,100,000		Clear Channel Communications, Inc., Sr. Note, 7.65%, 9/15/2010		1,293,897
	1,500,000		News America Holdings, Inc., Company Guarantee, 9.25%, 2/1/2013		1,929,450
	2,700,000		Reed Elsevier Capital, Inc., Company Guarantee, 6.75%, 8/1/2011		3,100,842
	3,000,000		Univision Communications, Inc., 7.85%, 7/15/2011		3,498,780

			TOTAL		9,822,969

Principal Amount				Value
			CORPORATE BONDS--continued
			Communications - Telecom Wirelines--3.9%
$	3,100,000		CenturyTel, Inc., 8.375%, 10/15/2010	$	3,814,240
	1,350,000		Citizens Communications Co., Note, 9.25%, 5/15/2011		1,699,313
	2,700,000		Sprint Capital Corp., Company Guarantee, 7.625%, 1/30/2011		2,868,750
	3,125,000		Telecom de Puerto Rico, Note, 6.65%, 5/15/2006		3,361,937

			TOTAL		11,744,240

			Conglomerates--0.3%
	850,000	¹	Hutchison Whampoa International Ltd., 6.50%, 2/13/2013		869,771

			Consumer Cyclical - Automotive--1.7%
	1,600,000		Delphi Auto Systems Corp., 6.125%, 5/1/2004		1,655,184
	45,000		Ford Motor Co., Unsecd. Note, 7.45%, 7/16/2031		40,440
	3,400,000		Hertz Corp., Jr. Sub. Note, 7.00%, 7/15/2003		3,416,184

			TOTAL		5,111,808

			Consumer Cyclical - Entertainment--2.3%
	1,000,000		AOL Time Warner, Inc., Company Guarantee, 5.625%, 5/1/2005		1,052,550
	1,500,000		AOL Time Warner, Inc., Bond, 7.625%, 4/15/2031		1,665,525
	3,900,000		International Speedway Corp., 7.875%, 10/15/2004		4,171,557

			TOTAL		6,889,632

			Consumer Cyclical - Retailers--1.1%
	1,050,000		CVS Corp., 5.625%, 3/15/2006		1,142,820
	750,000		Loews Corp., Deb., 8.875%, 4/15/2011		901,170
	850,000		Target Corp., 5.875%, 3/1/2012		937,729
	200,000		Wal-Mart Stores, Inc., Unsecd. Note, 6.50%, 6/1/2003		200,882

			TOTAL		3,182,601

			Consumer Cyclical -- Services--0.2%
	500,000		Olsten Corp., Sr. Note, 7.00%, 3/15/2006		537,305

			Consumer Non -- Cyclical Consumer Products--0.9%
	2,250,000		Alberto-Culver Co., Unsecd. Note, 8.25%, 11/1/2005		2,566,417

			Consumer Non -- Cyclical Health Care--1.1%
	1,125,000		Becton, Dickinson & Co., 4.55%, 4/15/2013		1,140,244
	2,000,000		UnitedHealth Group, Inc., 7.50%, 11/15/2005		2,254,500

			TOTAL		3,394,744

			Education--0.8%
	2,025,000		Boston University, MTN, 7.625%, 7/15/2097		2,405,214

			Electronics--0.7%
	1,500,000		General Electric Financial Services, Inc., MTN, 9.18%, 12/30/2008		1,901,325
	15,000		Rockwell International Corp., Unsecd. Note, 6.625%, 6/1/2005		16,177

			TOTAL		1,917,502

Principal Amount				Value
			CORPORATE BONDS--continued
			Federal National Mortgage Association--0.9%
$	2,000,000		Federal National Mortgage Association, Bond, 7.25%, 5/15/2030	$	2,569,760

			Finance - Automotive--3.7%
	100,000		Ford Motor Credit Co., Note, 6.625%, 6/30/2003		100,629
	3,000,000		Ford Motor Credit Co., Note, 6.875%, 2/1/2006		3,099,840
	250,000		Ford Motor Credit Co., Note, 7.50%, 4/25/2011		251,255
	35,000		Ford Motor Credit Co., Note, 7.75%, 3/15/2005		36,958
	3,560,000		General Motors Acceptance Corp., Bond, 8.00%, 11/1/2031		3,708,381
	1,000,000		General Motors Acceptance Corp., Note, 6.875%, 8/28/2012		1,024,300
	1,500,000		General Motors Acceptance Corp., Note, 7.50%, 7/15/2005		1,611,105
	1,170,000		General Motors Acceptance Corp., Sr. Note, 5.75%, 11/10/2003		1,193,143

			TOTAL		11,025,611

			Financial Institution - Banking--8.0%
	1,250,000		ABN AMRO Bank NV, Chicago, Sub. Deb., 7.30%, 12/1/2026		1,368,638
	1,200,000		Astoria Financial Corp., Note, 5.75%, 10/15/2012		1,236,108
	100,000		Bank One Corp., Sub. Deb., 7.25%, 8/15/2004		107,417
	750,000	¹	Barclays Bank PLC, Bond, 8.55%, 9/29/2049		934,050
	1,000,000		Chase Manhattan Corp., Sub. Note, 6.375%, 2/15/2008		1,117,730
	2,000,000		City National Bank, Sub. Note, 6.375%, 1/15/2008		2,204,220
	40,000		Corestates Capital Corp., Sub. Note, 5.875%, 10/15/2003		40,810
	1,300,000		Crestar Financial Corp., Sub. Note, 8.75%, 11/15/2004		1,442,870
	1,500,000		FirstBank Puerto Rico, Sub. Note, 7.625%, 12/20/2005		1,584,135
	1,200,000		Hudson United Bank, Sub. Note, 7.00%, 5/15/2012		1,368,792
	15,000		NationsBank Corp., Sub. Note, 7.625%, 4/15/2005		16,384
	750,000		Northern Trust Corp., Note, 4.60%, 2/1/2013		762,945
	1,000,000		PNC Funding Corp., Company Guarantee, 7.50%, 11/1/2009		1,180,570
	715,000		PNC Funding Corp., Sub. Note, 6.875%, 7/15/2007		807,936
	3,928,672	¹	Regional Diversified Funding, 9.25%, 3/15/2030		4,629,862
	200,000		SunTrust Bank Inc., Central Florida, Sub. Note, 6.90%, 7/1/2007		230,138
	15,000		SunTrust Banks, Inc., Sub. Note, 6.125%, 2/15/2004		15,552
	1,000,000	¹	Swedbank, Sub., 7.50%, 11/29/2049		1,136,774
	2,000,000		U.S. Bank N.A., Sub. Note, 6.30%, 2/4/2014		2,296,640
	1,200,000		Washington Mutual, Inc., Sub. Note, 6.875%, 6/15/2011		1,385,976

			TOTAL		23,867,547

			Financial Institution - Finance Noncaptive--0.4%
	100,000		Household Finance Corp., Note, 6.125%, 8/15/2003		101,097
	1,000,000		Household Finance Corp., Note, 6.375%, 10/15/2011		1,100,530

			TOTAL		1,201,627

Principal Amount				Value
			CORPORATE BONDS--continued
			Financial Intermediaries--4.4%
$	900,000		Amvescap PLC, Sr. Note, 6.60%, 5/15/2005	$	971,586
	3,000,000	¹	Fidelity Investments, 4.75%, 3/1/2013		3,028,590
	1,200,000		Goldman Sachs Group, Inc., 6.125%, 2/15/2033		1,229,580
	900,000		Goldman Sachs Group, Inc., 6.60%, 1/15/2012		1,015,560
	175,000		Lehman Brothers Holdings, Inc., Bond, 7.00%, 5/15/2003		175,380
	1,575,000		Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007		1,779,939
	1,325,000		Marsh & McLennan Cos., Inc., Sr. Note, 7.125%, 6/15/2009		1,560,386
	15,000		Merrill Lynch & Co., Inc., Note, 7.375%, 5/15/2006		16,928
	700,000		Morgan Stanley Group, Inc., Note, 5.30%, 3/1/2013		723,919
	5,000		Salomon, Inc., Note, 6.375%, 10/1/2004		5,322
	10,000		Salomon, Inc., Note, 6.625%, 11/15/2003		10,291
	100,000		Salomon Smith Barney Holdings, Inc., Unsecd. Note, Series MTNG, 6.35%, 1/15/2004		103,315
	2,250,000		Waddell & Reed Financial, Inc., Note, 7.50%, 1/18/2006		2,465,933

			TOTAL		13,086,729

			Financial Services--1.3%
	500,000		Franklin Resources, Inc., 3.70%, 4/15/2008		499,945
	1,000,000		MBNA Corp., Sr. Note, 7.50%, 3/15/2012		1,110,400
	2,000,000		SLM Corp., MTN, 5.625%, 4/10/2007		2,192,980
	100,000		U.S. Leasing International, Unsecd. Note, 6.625%, 5/15/2003		100,161

			TOTAL		3,903,486

			Food & Drug Retailers--0.2%
	500,000		Meyer (Fred), Inc., Company Guarantee, 7.45%, 3/1/2008		574,705

			Food Products--1.7%
	1,750,000		General Mills, Inc., Note, 6.00%, 2/15/2012		1,926,453
	5,000		Grand Metropolitan Investment Corp., 9.00%, 8/15/2011		6,525
	100,000		Hershey Foods Corp., Note, 6.70%, 10/1/2005		110,812
	2,550,000		Kellogg Co., 6.60%, 4/1/2011		2,917,684

			TOTAL		4,961,474

			Forest Products--1.1%
	25,000		Union Camp Corp., Note, 6.50%, 11/15/2007		27,883
	1,000,000		Westvaco Corp., Deb., 7.50%, 6/15/2027		1,096,750
	300,000		Westvaco Corp., Deb., 7.65%, 3/15/2027		334,377
	450,000		Weyerhaeuser Co., Deb., 7.375%, 3/15/2032		512,330
	1,250,000		Weyerhaeuser Co., Note, 6.125%, 3/15/2007		1,366,300

			TOTAL		3,337,640

			Healthcare--0.9%
	2,450,000		HCA, Inc., 6.95%, 5/1/2012		2,633,015

Principal Amount				Value
			CORPORATE BONDS--continued
			Health Services--0.2%
$	440,000		Guidant Corp., 6.15%, 2/15/2006	$	478,804

			Industrial Products & Equipment--0.1%
	25,000		Ingersoll-Rand Co., Note, 6.51%, 12/1/2004		26,516
	300,000		Tyco International Group S.A., Note, 4.95%, 8/1/2003		301,125

			TOTAL		327,641

			Insurance--3.5%
	250,000		Allstate Corp., Sr. Note, 6.125%, 12/15/2032		264,612
	1,100,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		1,322,640
	2,000,000		Delphi Financial Group, Inc., Note, 8.00%, 10/1/2003		2,034,260
	2,000,000	¹	Equitable Life, Note, 7.70%, 12/1/2015		2,334,260
	2,000,000		Reinsurance Group of America, Sr. Note, 7.25%, 4/1/2006		2,162,480
	1,000,000		St. Paul Cos., Inc., MTN, Series MTNB, 7.29%, 8/28/2007		1,101,050
	1,150,000	¹	Union Central Life Insurance Co., Note, 8.20%, 11/1/2026		1,211,180

			TOTAL		10,430,482

			Oil & Gas--4.6%
	10,000		Atlantic Richfield Co., Deb., 9.125%, 3/1/2011		12,915
	1,000,000		Conoco, Inc., 6.35%, 10/15/2011		1,135,010
	400,000		Conoco, Inc., 7.25%, 10/15/2031		486,472
	1,300,000		Devon Financing Corp., 7.875%, 9/30/2031		1,612,364
	1,500,000	¹	EOG Co. of Canada, Company Guarantee, 7.00%, 12/1/2011		1,658,700
	1,000,000		Global Marine, Inc., Sr. Note, 7.125%, 9/1/2007		1,137,560
	3,300,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		4,112,691
	750,000		Husky Oil Ltd., Sr. Note, 7.125%, 11/15/2006		833,362
	1,350,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		1,623,375
	1,000,000		Union Pacific Resources Group, Inc., Unsecd. Note, 7.00%, 10/15/2006		1,126,490

			TOTAL		13,738,939

			Real Estate--1.1%
	2,000,000		Archstone-Smith Trust, Note, 5.00%, 8/15/2007		2,051,180
	1,250,000	¹	Simon Property Group LP, Note, 6.35%, 8/28/2012		1,348,650

			TOTAL		3,399,830

			Sovereign--0.5%
	1,000,000		Sweden, Government of, Deb., 10.25%, 11/1/2015		1,340,470

			State/Provincial--0.6%
	1,650,000		Ontario, Province of, Note, 4.375%, 2/15/2013		1,669,206

			Supranational--0.8%
	2,100,000		Corp. Andina De Fomento, Bond, 7.375%, 1/18/2011		2,264,535

Principal Amount				Value
			CORPORATE BONDS--continued
			Technology--2.7%
$	1,500,000		Computer Sciences Corp., Note, 7.375%, 6/15/2011	$	1,769,445
	1,200,000		Dell Computer Corp., Deb., 7.10%, 4/15/2028		1,389,816
	2,400,000	²	International Business Machines Corp., Note, 6.45%, 8/1/2007		2,712,504
	2,000,000		Unisys Corp., Sr. Note, 8.125%, 6/1/2006		2,155,000

			TOTAL		8,026,765

			Telecommunications & Cellular--0.5%
	800,000		AT&T Wireless Services, Inc., Sr. Note, 7.875%, 3/1/2011		919,288
	250,000		Bell Atlantic-New Jersey, Deb., 5.875%, 2/1/2004		256,777
	100,000		GTE Southwest, Inc., Deb., 6.54%, 12/1/2005		110,609
	100,000		New York Telephone Co., Unsecd. Note, 6.25%, 2/15/2004		103,161
	115,000		Ohio Bell Telephone Co., Unsecd. Note, 6.125%, 5/15/2003		115,224

			TOTAL		1,505,059

			Transportation - Airlines--1.4%
	197,356		Continental Airlines, Inc., Pass Thru Cert., 7.73%, 3/15/2011		99,665
	1,300,000		Delta Air Lines, Inc., Pass Thru Cert., Series 2000-1B, 7.92%, 11/18/2010		939,250
	830,488		Northwest Airlines Corp., Equip. Trust, 8.072%, 10/1/2019		873,208
	425,000		Southwest Airlines Co., Deb., 7.375%, 3/1/2027		447,916
	1,000,000		Southwest Airlines Co., Note, 6.50%, 3/1/2012		1,066,480
	1,150,000		United Air Lines, Pass Thru Cert., 7.73%, 7/1/2010		784,875

			TOTAL		4,211,394

			Transportation - Railroads--0.8%
	892,017		Burlington Northern Santa Fe, Pass Thru Cert., 7.57%, 1/2/2021		1,092,721
	1,250,000		Canadian Pacific RR, Bond, 6.25%, 10/15/2011		1,398,550

			TOTAL		2,491,271

			Utilities--5.4%
	1,000,000		Alabama Power Co., Deb., 5.70%, 2/15/2033		1,012,490
	250,000		Consolidated Edison Co., Deb., Series 92B, 7.625%, 3/1/2004		261,662
	1,600,000		Duke Energy Corp., Note, 6.25%, 1/15/2012		1,758,848
	760,000		Emerson Electric Co., 4.50%, 5/1/2013		761,224
	1,250,000		Enersis S.A., Note, 7.40%, 12/1/2016		1,017,187
	1,000,000		Gulf States Utilities, 1st Mtg. Bond, Series 2005B, 6.77%, 8/1/2005		1,069,970
	1,600,000		Homer City Funding LLC, Sr. Secd. Note, 8.734%, 10/1/2026		1,604,000
	350,000	¹	Israel Electric Corp. Ltd., 7.95%, 5/30/2011		373,226
	1,500,000	¹	Israel Electric Corp. Ltd., Sr. Note, 7.875%, 12/15/2026		1,385,025
	30,000		Michigan Consolidated Gas, 1st Mtg. Bond, 6.80%, 6/15/2003		30,195
	1,350,000		MidAmerican Energy Co., Unsecd. Note, 6.75%, 12/30/2031		1,535,557
	180,000		Minnesota Power and Light Co., 1st Mtg. Bond, 7.75%, 6/1/2007		182,254
Principal Amount				Value
			Corporate Bonds--continued
			Utilities--continued
$	300,000		Oncor Electric Delivery, 6.375%, 5/1/2012	$	337,170
	1,500,000		Oncor Electric Delivery, Deb., 7.00%, 9/1/2022		1,659,225
	2,000,000		PSEG Power LLC, Company Guarantee, 7.75%, 4/15/2011		2,368,620
	1,000,000	¹	Tenaga Nasional Berhad, Deb., 7.50%, 1/15/2096		838,810

			TOTAL		16,195,463

			TOTAL CORPORATE BONDS (IDENTIFIED COST $199,584,641)		214,625,353

			GOVERNMENT AGENCIES--5.3%
	100,000		Federal Home Loan Bank System, 6.00%, 6/30/2003		100,815
	1,500,000		Federal Home Loan Bank System, Bond, 7.00%, 7/16/2009		1,590,465
	10,000,000		Federal Home Loan Mortgage Corp., Note, 4.875%, 3/15/2007		10,835,900
	3,000,000		Federal Home Loan Mortgage Corp., Note, 6.875%, 1/15/2005		3,272,640

			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $14,532,194)		15,799,820

			MUNICIPALS--3.0%
			Education--0.4%
	1,100,000		Harvard University, Revenue Bonds, 8.125% Bonds, 4/15/2007		1,302,235

			Municipal Services--2.6%
	1,250,000		Atlanta & Fulton County, GA Recreation Authority, Taxable Revenue Bonds, Series 1997, 7.00% Bonds (Downtown Arena Project)/(FSA INS), 12/1/2028		1,405,450
	825,000		Kansas City, MO Redevelopment Authority, 7.65% Bonds (Auditorium Project), (FSA. LOC), 11/1/2018		902,517
	2,000,000		McKeesport, PA, Taxable GO, Series B 1997, 7.30% Bonds (MBIA INS), 3/1/2020		2,147,340
	1,000,000		Miami Florida Revenue Pension Obligation, 7.20% Bonds (AMBAC LOC), 12/1/2025		1,055,640
	1,000,000		Pittsburgh, PA Urban Redevelopment Authority, 9.07% Bonds (CGIC GTD), 9/1/2014		1,114,040
	1,000,000		St. Johns County, FL Convention Center, Taxable Municipal Revenue Bonds, 8.00% Bonds (FSA INS), 1/1/2026		1,106,250

			TOTAL		7,731,237

			TOTAL MUNICIPALS (IDENTIFIED COST $8,202,934)		9,033,472

			PREFERRED STOCKS--1.3%
			Financial Institution - Brokerage--1.3%
	70,000		Citigroup, Inc., Cumulative Pfd., Series F (IDENTIFIED COST $3,343,620)		3,742,816

			U.S. TREASURY--2.9%
			Treasury Securities--2.9%
	8,113,600		U.S. Treasury Note -- TIPS Series C-2012 3.00% 7/15/2012 (IDENTIFIED COST $8,674,339)		8,720,822

Shares				Value
			MUTUAL FUNDS--10.7%
	346,906		Federated Mortgage Core Portfolio	$	3,576,606
	27,257,609		Prime Value Obligations Fund, Class IS		27,257,609
	960,520		Prime Value Obligations Fund, Class IS (held as collateral for securities lending)		960,520

			TOTAL MUTUAL FUNDS (IDENTIFIED COST $31,745,238)		31,794,735

			TOTAL INVESTMENTS--99.2% (IDENTIFIED COST $278,129,045)³		295,403,215

			OTHER ASSETS AND LIABILITIES-NET--0.8%		2,514,182

			TOTAL NET ASSETS--100%	$	297,917,397

1 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. These securities have been deemed liquid based upon criteria approved by the Fund's Board of Trustees. At April 30, 2003, these securities amounted to $21,969,931 which represents 7.4% of total net assets.

2 Certain principal amounts temporarily on loan to unaffiliated broker/dealers.

3 The cost of investments for federal tax purposes amounts to $278,167,861.

Note: The categories of investments are shown as a percentage of total net assets at April 30, 2003.

The following acronyms are used throughout this portfolio:

AMBAC	- --American Municipal Bond Assurance Corporation
CGIC	- --Capital Guaranty Insurance Corporation
FSA	- --Financial Security Assurance
GO	- --General Obligation
GTD	- --Guaranteed
INS	- --Insured
LOC	- --Letter of Credit
MBIA	- --Municipal Bond Investors Assurance
MTN	- --Medium Term Note
REIT	- --Real Estate Investment Trust
TIPS	- --Treasury Inflation-Protected Securities

See Notes which are an integral part of the Financial Statements.

Statement of Assets and Liabilities

April 30, 2003

Assets:
Total investments in securities, at value including $941,609 of securities loaned (identified cost $278,129,045)			$	295,403,215
Income receivable				4,324,439
Receivable for investments sold				2,879,175
Receivable for shares sold				619,911

TOTAL ASSETS				303,226,740

Liabilities:
Payable for shares redeemed	$	3,450,024
Payable on collateral due to broker		960,520
Payable to bank		93,649
Income distribution payable		776,888
Accrued expenses		28,262

TOTAL LIABILITIES				5,309,343

Net assets for 28,803,926 shares outstanding			$	297,917,397

Net Assets Consist of:
Paid in capital			$	289,998,280
Net unrealized appreciation of investments				17,274,170
Accumulated net realized loss on investments				(9,409,456	)
Undistributed net investment income				54,403

TOTAL NET ASSETS			$	297,917,397

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$241,837,007 ÷23,381,803 shares outstanding				$10.34

Institutional Service Shares:
$56,080,390 ÷ 5,422,123 shares outstanding				$10.34

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended April 30, 2003

Investment Income:
Dividends							$	460,809
Interest (including income on securities loaned of $13,354)								19,872,101

TOTAL INCOME								20,332,910

Expenses:
Investment adviser fee				$	1,559,267
Administrative personnel and services fee					234,514
Custodian fees					18,999
Transfer and dividend disbursing agent fees and expenses					136,834
Directors'/Trustees' fees					7,732
Auditing fees					15,582
Legal fees					5,048
Portfolio accounting fees					99,332
Distribution services fee--Institutional Service Shares					134,845
Shareholder services fee--Institutional Shares					644,789
Shareholder services fee--Institutional Service Shares					134,845
Share registration costs					36,340
Printing and postage					24,757
Insurance premiums					1,657
Miscellaneous					6,710

TOTAL EXPENSES					3,061,251

Waivers and Reimbursement:
Waiver of investment adviser fee	$	(400,970	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,775	)
Waiver of distribution services fee--Institutional Service Shares		(134,845	)
Waiver of shareholder services fee--Institutional Shares		(644,789	)
Reimbursement of investment adviser fee		(1,553	)

TOTAL WAIVERS AND REIMBURSEMENT					(1,195,932	)

Net expenses								1,865,319

Net investment income								18,467,591

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(886,047	)
Net change in unrealized appreciation of investments								14,467,377

Net realized and unrealized gain on investments								13,581,330

Change in net assets resulting from operations							$	32,048,921

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended April 30		2003			2002
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	18,467,591		$	21,010,257
Net realized loss on investments		(886,047	)		(1,093,530	)
Net change in unrealized appreciation/depreciation of investments		14,467,377			1,561,000

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		32,048,921			21,477,727

Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(15,478,344	)		(18,487,427	)
Institutional Service Shares		(3,084,704	)		(2,530,433	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(18,563,048	)		(21,017,860	)

Share Transactions:
Proceeds from sale of shares		162,292,576			108,568,339
Net asset value of shares issued to shareholders in payment of distributions declared		6,975,089			6,622,690
Cost of shares redeemed		(221,559,343	)		(115,423,165	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(52,291,678	)		(232,136	)

Change in net assets		(38,805,805	)		227,731

Net Assets:
Beginning of period		336,723,202			336,495,471

End of period (including undistributed net investment income of $54,403 and $14, respectively)	$	297,917,397		$	336,723,202

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

April 30, 2003

ORGANIZATION

Federated Income Securities Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of four portfolios. The financial statements included herein are only those of Federated Intermediate Income Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is to provide current income.

SIGNIFICATION 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").

Investment Valuation

U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end registered investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

It is the policy of the Fund to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Fund to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement.

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Trustees. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities. The Trust along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value. The Fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, without distinction between share classes. 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. Gains and losses realized on principal payment of mortgaged 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 tax is necessary.

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.

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. Collateral for securities loaned is invested in an affiliated money market fund. Collateral is maintained at a minimum level of 102% of the market value on investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the custodian securities lending agent, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of April 30, 2003, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$941,609		$960,520

Restricted Securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities 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 restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Trustees. 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 good faith using methods approved by the Trustees.

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.

CHANGE IN ACCOUNTING POLICY

Effective May 1, 2001, the Fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). For financial statement purposes, the revised Guide requires the Fund to amortize premium and discount on all fixed income securities and to classify gains and losses realized on principal payments received on mortgage backed securities (paydown gains and losses) as part of investment income.

Upon initial adoption, the Fund adjusted its cost of fixed income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding with a corresponding reclassification between unrealized appreciation/depreciation on investments and undistributed net investment income. Adoption of these accounting principles does not affect the Fund's net asset value or distributions, but changes the classification of certain amounts between investment income and realized and unrealized gain/loss on the Statement of Operations. The cumulative effect to the Fund resulting from the adoption of premium and discount amortization and recognition of paydown gains and losses as part of investment income on the financial statements is as follows:

	As of 5/1/2001						For the Year Ended 4/30/2002
	Cost of Investments		Undistributed Net Investment Income		Net Investment Income			Net Unrealized Appreciation/ Depreciation	Net Realized Loss
Increase (Decrease)	$(19,795	)	$(19,795	)	$(7,615	)		$9,069	$(1,454	)

The Statement of Changes in Net Assets and Financial Highlights for the prior periods have not been restated to reflect this change in presentation.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares.

Transactions in shares were as follows:

Year Ended April 30	2003					2002
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	8,602,675		$	86,827,734		7,637,368		$	76,235,821
Shares issued to shareholders in payment of distributions declared	408,809			4,128,629		425,557			4,252,781
Shares redeemed	(15,322,926	)		(153,704,384	)	(8,829,700	)		(88,026,244	)

NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(6,311,442	)	$	(62,748,021	)	(766,775	)	$	(7,537,642	)


Year Ended April 30	2003					2002
Institutional Service Shares:	Shares			Amount		Shares			Amount
Shares sold	7,420,692		$	75,464,842		3,238,016		$	32,332,518
Shares issued to shareholders in payment of distributions declared	281,599			2,846,460		237,208			2,369,909
Shares redeemed	(6,680,715	)		(67,854,959	)	(2,747,206	)		(27,396,921	)

NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS	1,021,576		$	10,456,343		728,018		$	7,305,506

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(5,289,866	)	$	(52,291,678	)	(38,757	)	$	(232,136	)

FEDERAL TAX INFORMATION

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for deferral of losses from wash sales, post-October losses and expired capital loss carryforward.

For the year ended April 30, 2003, permanent differences identified and reclassified among the components of net assets were as follows:

Paid In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains (Losses)
$(1,706,190)	$149,846	$1,556,344

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

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended April 30, 2003 and 2002, was as follows:

	2003	2002
Ordinary income¹	$18,563,048	$21,017,860

1 For tax purposes short-term capital gain distributions are considered ordinary income.

As of April 30, 2003, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income		$ 815,666

Unrealized appreciation		$17,235,354

Capital loss carryforward		$ 7,759,017

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributed to the tax deferral of losses on wash sales and amortization and accretion of fixed income securities.

At April 30, 2003, the cost of investments for federal tax purposes was $278,167,861. The unrealized appreciation of investments for federal tax purposes was $17,235,354. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $21,479,829 and net unrealized depreciation from investments for those securities having an excess of cost over value of $4,244,475.

At April 30, 2003, the Fund had a capital loss carryforward of $7,759,017, 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 the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2007		$ 135,079

2008		$1,141,628

2009		$4,425,490

2011		$2,056,820

Under current tax regulations, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of April 30, 2003, for federal tax purposes, post-October losses of $1,595,998 were deferred to May 1, 2003.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in Prime Value Obligations Fund, which is managed by the Fund's Adviser. The Adviser has agreed to reimburse certain investment adviser fees as a result of these transactions.

Administrative Fee

Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on a scale that ranges from 0.150% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.

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 net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Service Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of average daily net assets of the Institutional Service Shares, annually, to compensate FSC. 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.

Shareholder Services Fee

Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.

Transfer and Dividend Disbursing Agent Fees and Expenses

FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type and number of accounts and transactions made by shareholders. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.

Portfolio Accounting Fees

FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses.

General

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

Investment Transactions

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations (and in-kind contributions), for the year ended April 30, 2003, were as follows:

Purchases	$	87,823,591

Sales	$	129,035,865

Purchases and sales of long-term U.S. government securities for the year ended April 30, 2003, were as follows:

Purchases	$	69,349,409

Sales	$	104,777,048

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

For the fiscal year ended April 30, 2003 certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Complete information will be reported in conjunction with your 2003 Form 1099-DIV.

Report of Ernst & Young LLP, Independent Auditors

TO THE BOARD OF TRUSTEES OF FEDERATED INCOME SECURITIES TRUST AND SHAREHOLDERS OF FEDERATED INTERMEDIATE INCOME FUND:

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Intermediate Income Fund, one of the portfolios constituting Federated Income Securities Trust, (the "Trust"), as of April 30, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2003, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated Intermediate Income Fund, a portfolio of Federated Income Securities Trust, at April 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Ernst & Young LLP

Boston, Massachusetts
June 10, 2003

Board of Trustees and Fund Officers (Unaudited)

The following table gives information about each Board member and the senior officers of the Fund. The tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA. The Federated Fund Complex consists of 138 investment company portfolios. Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member: oversees all portfolios in the Federated Fund Complex; serves for an indefinite term; and also serves as a Board member of the following investment company complexes: Banknorth Funds--four portfolios; CCMI Funds--two portfolios; Golden Oak® Family of Funds--seven portfolios; Regions Morgan Keegan Select Funds--nine portfolios; Riggs Funds--eight portfolios; and WesMark Funds--five portfolios. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND



Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 CHAIRMAN AND TRUSTEE Began serving: January 1986		Principal Occupations: Chairman and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.


J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: January 2000		Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.


Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 1987		Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is "interested" because his son-in-law is employed by the Fund's principal underwriter, Federated Securities Corp.

INDEPENDENT TRUSTEES BACKGROUND



Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: October 1995		Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.


John T. Conroy, Jr. Birth Date: June 23, 1937 Grubb & Ellis/Investment Properties Corporation 3201 Tamiami Trail North Naples, FL TRUSTEE Began serving: November 1991		Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.


Nicholas P. Constantakis Birth Date: September 3, 1939 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: February 1998		Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.


John F. Cunningham Birth Date: March 5, 1943 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: January 1999		Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.


Peter E. Madden Birth Date: March 16, 1942 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL TRUSTEE Began serving: November 1991		Principal Occupation: Director or Trustee of the Federated Fund Complex; Management Consultant. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 80 South Road Westhampton Beach, NY TRUSTEE Began serving: January 2000		Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant; Executive Vice President, DVC Group, Inc. (marketing communications and technology) (prior to 9/1/00). Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University.


John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 Chancellor, Duquesne University Pittsburgh, PA TRUSTEE Began serving: February 1995		Principal Occupations: Director or Trustee of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Consulting Partner, Mollica & Murray. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.


Marjorie P. Smuts Birth Date: June 21, 1935 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: January 1986		Principal Occupations: Director or Trustee of the Federated Fund Complex; Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.


John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN TRUSTEE Began serving: January 2000		Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.

OFFICERS



Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) and Previous Position(s)
Edward C. Gonzales Birth Date: October 22, 1930 EXECUTIVE VICE PRESIDENT Began serving: July 1995		Principal Occupations: Executive Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Trustee, Federated Administrative Services. Previous Positions: President and Trustee or Director of some of the Funds in the Federated Fund Complex; CEO and Chairman, Federated Administrative Services.


John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Began serving: January 1986		Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc.


Richard J. Thomas Birth Date: June 17, 1954 TREASURER Began serving: November 1998		Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services.


Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Began serving: January 1986		Principal Occupations: Vice Chairman or President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc. and Director and Chief Executive Officer, Federated Securities Corp.


William D. Dawson III Birth Date: March 3, 1949 CHIEF INVESTMENT OFFICER Began serving: November 1998		Principal Occupations: Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company and Passport Research, Ltd. Previous Positions: Executive Vice President and Senior Vice President, Federated Investment Counseling Institutional Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.




Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) and Previous Position(s)
Joseph M. Balestrino Birth Date: November 3, 1954 VICE PRESIDENT Began serving: November 1998		Joseph M. Balestrino has been the Fund's Portfolio Manager since January 1994. He is Vice President of the Trust. Mr. Balestrino joined Federated in 1986 and has been a Senior Portfolio Manager and Senior Vice President of the Fund's Adviser since 1998. He was a Portfolio Manager and a Vice President of the Fund's Adviser from 1995 to 1998. Mr. Balestrino served as a Portfolio Manager and an Assistant Vice President of the Adviser from 1993 to 1995. Mr. Balestrino is a Chartered Financial Analyst and received his Master's Degree in Urban and Regional Planning from the University of Pittsburgh.


Randall S. Bauer Birth Date: November 16, 1957 VICE PRESIDENT Began serving: November 1998		Randall S. Bauer is Vice President of the Trust. Mr. Bauer joined Federated in 1989 and has been a Portfolio Manager and a Vice President of the Fund's Adviser since 1994. Mr. Bauer is a Chartered Financial Analyst and received his M.B.A. in Finance from Pennsylvania State University.

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.

Federated Investors
World-Class Investment Manager

Federated Intermediate Income Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com

Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact

Federated Securities Corp., Distributor

Cusip 31420C407
Cusip 31420C506

Federated is a registered mark of Federated Investors, Inc. 2003 ©Federated Investors, Inc.

G00715-02 (6/03)

Federated Investors
World-Class Investment Manager

Federated Short-Term Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

April 30, 2003

FINANCIAL HIGHLIGHTS

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

FINANCIAL STATEMENTS

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

BOARD OF TRUSTEES AND FUND OFFICERS

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

Financial Highlights -- Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2003			2002			2001			2000			1999
Net Asset Value, Beginning of Period	$8.70			$8.74			$8.52			$8.67			$8.74
Income From Investment Operations:
Net investment income	0.35			0.47	¹		0.56			0.53			0.52
Net realized and unrealized gain (loss) on investments	(0.14	)		(0.05	)¹		0.22			(0.15	)		(0.07	)

TOTAL FROM INVESTMENT OPERATIONS	0.21			0.42			0.78			0.38			0.45

Less Distributions:
Distributions from net investment income	(0.35	)		(0.46	)		(0.56	)		(0.53	)		(0.52	)

Net Asset Value, End of Period	$8.56			$8.70			$8.74			$8.52			$8.67

Total Return²	2.46	%		4.90	%		9.39	%		4.52	%		5.25	%


Ratios to Average Net Assets:

Expenses	0.56	%		0.57	%		0.56	%		0.56	%		0.56	%

Net investment income	3.96	%		5.30	%¹		6.41	%		6.23	%		5.88	%

Expense waiver/reimbursement³	0.26	%		0.28	%		0.29	%		0.28	%		0.28	%

Supplemental Data:

Net assets, end of period (000 omitted)	$236,394		$236,307			$193,030			$189,395			$188,773

Portfolio turnover	69	%		29	%		43	%		44	%		54	%

1 Effective May 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. For the year ended April 30, 2002, this change had no effect on the net investment income per share or the net realized and unrealized gain (loss) on investments per share, but decreased the ratio of net investment income to average net assets from 5.32% to 5.30%. Per share, ratios and supplemental data for periods prior to May 1, 2001 have not been restated to reflect this change in presentation.

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

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

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Institutional Service Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2003			2002			2001			2000			1999
Net Asset Value, Beginning of Period	$8.70			$8.74			$8.52			$8.67			$8.74
Income From Investment Operations:
Net investment income	0.33			0.45	¹		0.53			0.51			0.50
Net realized and unrealized gain (loss) on investments	(0.14	)		(0.05	)¹		0.22			(0.15	)		(0.07	)

TOTAL FROM INVESTMENT OPERATIONS	0.19			0.40			0.75			0.36			0.43

Less Distributions:
Distributions from net investment income	(0.33	)		(0.44	)		(0.53	)		(0.51	)		(0.50	)

Net Asset Value, End of Period	$8.56			$8.70			$8.74			$8.52			$8.67

Total Return²	2.21	%		4.64	%		9.12	%		4.26	%		4.99	%


Ratios to Average Net Assets:

Expenses	0.81	%		0.82	%		0.81	%		0.81	%		0.81	%

Net investment income	3.71	%		5.05	%¹		6.16	%		5.94	%		5.63	%

Expense waiver/reimbursement³	0.26	%		0.28	%		0.29	%		0.28	%		0.28	%

Supplemental Data:

Net assets, end of period (000 omitted)	$34,864		$24,121			$18,145			$13,999			$24,783

Portfolio turnover	69	%		29	%		43	%		44	%		54	%

1 Effective May 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. For the year ended April 30, 2002, this change had no effect on the net investment income per share or the net realized and unrealized gain (loss) on investments per share, but decreased the ratio of net investment income to average net assets from 5.07% to 5.05%. Per share, ratios and supplemental data for periods prior to May 1, 2001 have not been restated to reflect this change in presentation.

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

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

See Notes which are an integral part of the Financial Statements

Management's Discussion of Fund Performance

Federated Short-Term Income Fund represents a high-quality, fixed income portfolio combining various fixed income asset classes. Investments are concentrated in U.S. Treasury, government agency, and high-quality corporate debt securities. The investment objective of the fund is to seek to provide current income. To the extent consistent with this objective, the fund will strive to minimize fluctuation in principal value through a portfolio with an effective average life of no greater than three years, but generally having an effective modified duration of no greater than two years.¹

The reporting period under review was characterized by a fairly steady decline in interest rates in both the short and long ends of the Treasury yield curve. After 11 reductions in the Federal funds target rate during 2001, the Federal Reserve Board (the "Fed") moved yet again midway through the fund's fiscal year, reducing the Federal funds target rate to a meager 1.25%. The possibility exists that the Fed will have to yet again lower the Federal funds target rate. All of this activity stems from the inability of the U.S. economy to generate any significant momentum. While growth continues to be positive, the pace of that growth is clearly lackluster.

The lack of meaningful recovery has some market participants (as well as the Fed) concerned about the potential of deflation, and there is no doubt this fear is behind the recent drive to new, and in some cases, unprecedented, lows in Treasury yields. On the other hand, investors should note that there has been some marked improvement in certain areas of the economy (one notable spot being the overall financial health of the corporate sector), and that recent price and spread action in both the equity and corporate bond markets appear to indicate that more robust economic activity may be on the horizon. With inflation seemingly well under control, it appears the Fed might not have to worry about tightening monetary policy until at least 2004. In such an environment, money market yields might remain low for some time even if economic activity does in fact trend upward from here.² With the income advantage offered by a short move out the yield curve, short-term bond yields could even rise somewhat and still allow for a total return advantage versus stable net asset value or other short-term products. This is why products like the Federated Short-Term Income Fund may provide an attractive haven between the extremely low yields available on cash alternatives and the volatile world of higher risk investments like equities in the year to come.

1 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

2 Unlike money market funds, which seek to maintain a $1.00 share price, this fund's shares will fluctuate in value.

The fund's total returns for the year of 2.46% for Institutional Shares and 2.21% for Institutional Service Shares,³ respectively, lagged that of its Lipper Short Investment Grade Debt Funds category peer group (which returned 5.00%),⁴ but still comfortably exceeded that of money market funds and other stable net asset value alternatives.

In light of the views articulated above, the fund's current posture would be considered slightly defensive with regard to interest rate exposure, though constructive with regard to credit exposure. As the markets appear to signal better economic times ahead, fund management is positioning the portfolio in anticipation of an eventual increase in short-term interest rates. As a result, duration is currently being maintained at approximately 1.6 years. On the credit side, while portfolio quality remains quite high, marginal assets have been deployed in single-A and BBB-rated corporate bonds to take advantage of continued spread tightening as the economy begins to move toward a more sustained recovery. At the end of the reporting period, AAA-rated securities comprised 66% of fund assets, AA-rated securities accounted for 8%, A-rated securities accounted for 15% and BBB-rated securities accounted for 11%.⁵ Fund management has allocated more assets into the corporate sector, which accounted for over 26% of fund assets, versus only 17% of fund assets at April 30, 2002. Government exposure accounted for 20% of the portfolio. AAA-rated asset-backed securities (ABS) (22% of fund assets at April 30, 2003) continue to remain a significant fund allocation, providing both current yield and a high degree of safety to the fund's investor. Conversely, subordinate ABS exposure (BBB-rated) has been reduced to less than 4% of fund assets in the belief that the corporate sector offers better opportunity in like-rated exposure. An additional 3% in ABS exposure is rated either AA or A. Exposure is rounded out with mortgage backed securities at 23% of the portfolio.

3 Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance information is available at our website www.federatedinvestors.com or by calling 1-800-341-7400.

4 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do no reflect sales charges.

5 Credit ratings pertain only to the securities in the portfolio and do not protect fund shares against market risk.

GROWTH OF $25,000 INVESTED IN FEDERATED SHORT-TERM INCOME FUND--INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated Short-Term Income Fund (Institutional Shares) (the "Fund") from April 30, 1993 to April 30, 2003, compared to the Merrill Lynch 1-3 Year Short-Term Corporate Index (ML1-3STC),² and the Lipper Short Investment Grade Debt Funds Average (LSIGDFA).³

Average Annual Total Return for the Period Ended 4/30/2003
1 Year		2.46%
5 Years		5.28%
10 Years		5.28%
Start of Performance (7/1/1986)		6.23%

Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $25,000 in the Fund. The Fund's performance assumes the reinvestment of all dividends and distributions. The ML1-3STC and the LSIGDFA have been adjusted to reflect reinvestment of dividends on securities in the index and average.

2 The ML1-3STC is not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged.

3 The LSIGDFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling in the respective category indicated, and is not adjusted to reflect sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in a fund's performance.

GROWTH OF $25,000 INVESTED IN FEDERATED SHORT-TERM INCOME FUND--INSTITUTIONAL SERVICE SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated Short-Term Income Fund (Institutional Service Shares) (the "Fund") from April 30, 1993 to April 30, 2003, compared to the Merrill Lynch 1-3 Year Short-Term Corporate Index (ML1-3STC),² and the Lipper Short Investment Grade Debt Funds Average (LSIGDFA).³

Average Annual Total Return for the Period Ended 4/30/2003
1 Year		2.21%
5 Years		5.02%
10 Years		5.02%
Start of Performance (1/24/1992)		5.23%

Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

2 The ML1-3STC is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged.

Portfolio of Investments

April 30, 2003

Principal Amount				Value
			ASSET-BACKED SECURITIES--27.5%
			Automotive--9.7%
$	3,000,000		Americredit Automobile Receivables Trust 2001-B, Class A4, 5.37%, 6/12/2008	$	3,130,658
	4,000,000	¹	Americredit Automobile Receivables Trust 2002-A, Class A3, 1.50%, 10/12/2006		4,002,096
	154,928		AmSouth Auto Trust 2000-1, Class A3, 6.67%, 7/15/2004		155,886
	2,000,000	¹	DaimlerChrysler Master Owner Trust 2002-A, Class A, 1.37%, 5/15/2007		1,998,780
	1,834,470	²	First Tennessee Financial Auto Securitization Trust 2002-A, Class A, 3.55%, 7/15/2008		1,867,729
	3,694,985		Ford Credit Auto Owner Trust 2001-D, Class A3, 4.31%, 6/15/2005		3,742,835
	1,500,000		Honda Auto Receivables Owner Trust 2002-1, Class A3, 3.50%, 10/17/2005		1,522,005
	3,000,000	^2,3	Hyundai Auto Receivables Trust 2002-A, Class A3, 2.80%, 2/15/2007		3,049,224
	1,372,479		Isuzu Auto Owner Trust 2001-1, Class A3, 4.88%, 11/22/2004		1,378,655
	164,366		Key Auto Finance Trust 1999-1, Class C, 7.08%, 1/15/2007		166,061
	1,500,000		M&I Auto Loan Trust 2001-1, Class B, 5.88%, 6/20/2008		1,571,970
	1,000,000		MMCA Automobile Trust 2000-2, Class B, 7.42%, 8/15/2005		1,040,625
	457,384		Mellon Auto Grantor Trust 2000-1, Class B, 7.43%, 10/15/2006		473,247
	972,197		Navistar Financial Corp. Owner Trust 2001-A, Class A3, 4.99%, 8/15/2005		979,440
	817,682		Navistar Financial Corp. Owner Trust 2002-A, Class B, 4.95%, 4/15/2009		846,153
	454,716		The CIT Group Securitization Corp. II, Class B, 6.45%, 6/15/2018		477,124

			TOTAL		26,402,488

			Credit Card--3.0%
	456,030	²	Banco Nacional de Mexico S.A., Credit Card Merchant Voucher Receivables Master Trust, Series 1996-A, Class A1, 6.25%, 12/1/2003		457,384
	3,000,000	¹	Citibank Credit Card Issuance Trust 2000-C2, Class C2, 1.94%, 10/15/2007		2,982,390
	2,208,147		Fingerhut Master Trust 1998-2, Class A, 6.23%, 2/15/2007		2,230,626
	2,500,000	²	First USA Credit Card Master Trust 1999-1, Class C, 6.42%, 10/19/2006		2,574,975

			TOTAL		8,245,375

			Equipment Leasing--0.5%
	1,176,319	²	Great America Leasing Receivables 2002-1, Class C, 4.91%, 7/15/2007		1,210,692

			Home Equity Loan--8.1%
	982,300	^2,3	125 Home Loan Owner Trust 1998-1A, Class M2, 7.75%, 2/15/2029		1,032,181
	17,000,387		ACE Securities Corp. 2001-HE1, Class AIO, 6.00%, 8/20/2004		944,201
	710,259	²	AQ Finance NIM Trust 2002-1, Class Note, 9.50%, 6/25/2032		700,493
	1,620,089		AQ Finance NIM Trust 2002-N6, Class Note, 1.97%, 12/25/2007		1,614,094
	17,500,000		Ameriquest Mortgage Securities, Inc. 2002-3, Class S, 6.00%, 8/25/2032		1,525,825
	1,854,895		Ameriquest Mortgage Securities, Inc. 2002-5, Class AV1, 1.84%, 2/25/2033		1,858,419
	19,729,667		Centex Home Equity 2002-C, Class AIO, 6.00%, 8/25/2004		924,927
	1,191,389		Chase Funding Loan Acquisition Trust 2001-C2, Class IA2, 5.673%, 5/25/2022		1,197,560
Principal Amount				Value
			ASSET-BACKED SECURITIES--continued
			Home Equity Loan--continued
$	346,381	¹	Chase Funding Mortgage Loan Asset-Backed Certificates 1999-1, Class IIB, 4.07%, 6/25/2028	$	348,736
	371,599		Cityscape Home Equity Loan Trust 1997-1, Class A4, 7.23%, 3/25/2018		373,903
	175,397	¹	ContiMortgage Home Equity Loan Trust 1996-4, Class A10, 1.55%, 1/15/2028		175,257
	1,963,928		Ditech Home Loan Owner Trust 1997-1, Class A4, 7.36%, 1/15/2024		2,041,327
	1,441,491		EQCC Home Equity Loan Trust 1999-2, Class A3F, 6.347%, 8/25/2022		1,470,768
	1,970,226		IMC Home Equity Loan Trust 1998-1, Class A6, 6.52%, 6/20/2029		2,092,616
	721,300		Mellon Bank Home Equity Installment Loan Trust 1998-1, Class B, 6.95%, 3/25/2015		760,388
	987,839		New Century Home Equity Loan Trust 1997-NC5, Class M2, 7.24%, 10/25/2028		1,049,065
	20,251,000		Residential Asset Mortgage Products, Inc., Series 2002-RS1, Class AII, 5.50%, 7/25/2004		769,335
	1,984,020		Residential Asset Mortgage Products, Inc., Series 2002-RZ1, Class A2, 4.30%, 4/25/2023		1,997,194
	240,467	¹	Saxon Asset Securities Trust 2000-2, Class AV1, 1.58%, 7/25/2030		241,131
	22,415,483		Saxon Asset Securities Trust 2001-3, Class AIO, 6.25%, 4/25/2004		950,865

			TOTAL		22,068,285

			Manufactured Housing--2.0%
	1,228,181		Green Tree Financial Corp. 1993-2, Class A4, 6.90%, 7/15/2018		1,256,761
	1,069,862		Green Tree Financial Corp. 1993-4, Class A4, 6.60%, 1/15/2019		1,077,115
	2,000,000		Green Tree Financial Corp. 1996-2, Class B-1, 7.55%, 4/15/2027		541,460
	1,302,399		Green Tree Financial Corp. 1997-1, Class A5, 6.86%, 3/15/2028		1,334,308
	4,000,000	²	Merit Securities Corp. 12, Class 1B, 7.98%, 7/28/2033		1,200,000

			TOTAL		5,409,644

			Other--2.1%
	2,040,978	¹	CapitalSource Commercial Loan Trust 2002-2A, Class A, 1.88%, 9/20/2010		2,039,064
	1,246,349		Caterpillar Financial Asset Trust 2001-A, Class A3, 4.85%, 4/25/2007		1,274,895
	5,284,354		FMAC Loan Receivables Trust 1997-A, Class A-X, 2.77%, 4/15/2019		237,796
	2,000,000	¹	Mellon Bank Premium Finance Loan Master Trust 2002-1, Class A, 1.56%, 12/17/2007		2,002,260

			TOTAL		5,554,015

			Rate Reduction Bond--2.1%
	1,883,159		CPL Transition Funding LLC 2002-1, Class A1, 3.54%, 1/15/2007		1,918,487
	2,000,000		California Infrastructure & Economic Development Bank Special Purpose Trust SCE-1, Series 1997-1, Class A6, 6.38%, 9/25/2008		2,173,780
	1,500,000		California Infrastructure & Economic Development Bank Special Purpose Trust SDG&E-1, Series 1997-1, Class A6, 6.31%, 9/25/2008		1,628,370

			TOTAL		5,720,637

			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $78,646,694)		74,611,136

Principal Amount				Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--13.3%
			Commercial Mortgage--0.1%
$	6,842,134		First Union Lehman Brothers Commercial Mortgage Trust, Series 1997-C1, Class IO, 1.29%, 4/18/2029	$	301,703

			Federal Home Loan Mortgage Corporation--2.9%
	5,000,000		Federal Home Loan Mortgage Corp. Structured Pass Through, Class A3, 2.29%, 2/15/2010		4,982,800
	3,000,000		Federal Home Loan Mortgage Corp., Series 2603, Class A2, 2.00%, 12/15/2008		2,994,390

			TOTAL		7,977,190

			Non-Agency Mortgage--10.3%
	1,543,838	²	Bayview Financial Acquisition Trust 1998-1, Class MI1, 7.52%, 5/25/2029		1,688,738
	582,917	^1,2	Bayview Financial Acquisition Trust 1998-1, Class MII2, 2.07%, 5/25/2029		552,407
	659,823	^1,2	Bayview Financial Acquisition Trust 1998-1, Class MII2, 2.17%, 5/25/2029		591,571
	1,920,642	^1,2	Credit-Based Asset Servicing And Securitization 1997-1, Class A1, 4.54%, 2/1/2017		1,911,038
	2,893,605		GE Capital Mortgage Services, Inc. 1998-16, Class A3, 6.50%, 10/25/2013		3,013,921
	1,168,497	²	Greenwich Capital Acceptance 1991-4, Class B1A, 6.34%, 7/1/2019		1,143,305
	1,204,784	¹	Greenwich Capital Acceptance 1993-AFCI, Class B1, 3.99%, 8/25/2023		1,204,410
	254,485		GSR Mortgage Loan Trust 2002-9, Class A2B, 3.419%, 10/25/2032		256,136
	3,500,000		GSR Mortgage Loan Trust 2002-10, Class A2B, 3.322%, 11/25/2032		3,564,805
	3,770,148	¹	Impac CMB Trust 2002-7, Class A, 1.75%, 11/25/2032		3,781,119
	54,081		PNC Mortgage Securities Corp. 1999-5, Class 2A-1, 6.75%, 7/25/2029		54,013
	381,572		Prudential Home Mortgage Securities 1992-5, Class A-6, 7.50%, 4/25/2007		394,385
	996,152	^1,2,3	RESI Finance LP 2002-A, Class B3, 2.925%, 10/10/2034		998,025
	32,500,000		Residential Asset Securitization Trust 2002-A4, Class AIO, 2.50%, 9/25/2004		907,725
	50,000,000		Residential Asset Securitization Trust 2002-A11, Class AIO, 2.50%, 3/25/2005		1,282,150
	454,785		Residential Funding Mortgage Securities I 1994-S13, Class M1, 7.00%, 5/25/2024		459,579
	1,050,491		Structured Asset Securities Corp. 1999-ALS2, Class A2, 6.75%, 7/25/2029		1,054,124
	3,000,000		Washington Mutual 2003-AR1, Class A2, 2.92%, 3/25/2033		3,031,823
	2,000,000		Washington Mutual 2003-AR3, Class A2, 2.828%, 4/25/2033		1,998,220

			TOTAL		27,887,494

			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $36,143,221)		36,166,387

			CORPORATE BONDS--26.4%
			Basic Industry - Paper--0.8%
	2,000,000		Weyerhaeuser Co., Note, 5.50%, 3/15/2005		2,114,420

			Beverage & Tobacco--0.4%
	1,100,000		Diageo Capital PLC, 3.375%, 3/20/2008		1,099,516

Principal Amount				Value
			CORPORATE BONDS--continued
			Capital Goods - Aerospace & Defense--1.3%
$	2,300,000	⁴	Boeing Capital Corp., Sr. Note, 5.65%, 5/15/2006	$	2,448,465
	1,000,000		Raytheon Co., Note, 6.30%, 3/15/2005		1,072,630

			TOTAL		3,521,095

			Communications - Media & Cable--0.4%
	1,000,000		Comcast Cable Communications Corp., 6.375%, 1/30/2006		1,084,360

			Communications - Media Noncable--0.4%
	1,100,000		Clear Channel Communications, Inc., 6.00%, 11/1/2006		1,197,174

			Communications - Telecom Wirelines--0.5%
	1,200,000		Citizens Communications Co., Note, 8.50%, 5/15/2006		1,375,824

			Consumer Cyclical - Automotive--0.4%
	1,000,000		DaimlerChrysler AG, 7.75%, 6/15/2005		1,110,590

			Consumer Cyclical - Entertainment--0.8%
	850,000		AOL Time Warner, Inc., 5.625%, 5/1/2005		894,668
	1,250,000		Viacom, Inc., Company Guarantee, 7.75%, 6/1/2005		1,394,175

			TOTAL		2,288,843

			Consumer Cyclical - Retailers--1.5%
	1,000,000		CVS Corp., 5.625%, 3/15/2006		1,088,400
	750,000		Target Corp., 3.375%, 3/1/2008		756,338
	2,000,000		Wal-Mart Stores, Inc., Note, 4.15%, 6/15/2005		2,097,080

			TOTAL		3,941,818

			Consumer Non-Food/Beverage--0.5%
	1,250,000		Kellogg Co., Note, 6.00%, 4/1/2006		1,365,713

			Cosmetics & Toiletries--0.4%
	1,000,000		Gillette Co., 2.875%, 3/15/2008		989,710

			Finance - Automotive--1.1%
	2,000,000		Ford Motor Credit Co., Sr. Note, 5.75%, 2/23/2004		2,043,260
	1,000,000		General Motors Acceptance Corp., Note, 6.75%, 1/15/2006		1,054,230

			TOTAL		3,097,490

			Financial Institution - Banking--1.3%
	1,200,000		Mellon Funding Corp., 7.50%, 6/15/2005		1,343,772
	1,000,000		PNC Funding Corp., 5.75%, 8/1/2006		1,097,620
	1,000,000		Wachovia Bank N.A., Sr. Note, 4.85%, 7/30/2007		1,074,970

			TOTAL		3,516,362

			Financial Institution - Brokerage--1.5%
	1,500,000		Amvescap PLC, Sr. Note, 6.60%, 5/15/2005		1,619,310
	2,400,000		Lehman Brothers Holdings, Inc., Note, 6.125%, 7/15/2003		2,423,208

			TOTAL		4,042,518

			Financial Institution - Finance Noncaptive--0.4%
	1,000,000		Household Finance Corp., Note, 6.50%, 1/24/2006		1,102,970

			Financial Institution - Insurance -- Life--0.4%
	1,000,000	^2,3	Metropolitan Life Insurance Co., 7.00%, 11/1/2005		1,085,880

Principal Amount				Value
			CORPORATE BONDS--continued
			Financial Institution - REITs--1.1%
$	1,500,000		EOP Operating LP, Note, 6.50%, 6/15/2004	$	1,564,140
	1,250,000		Simon Property Group LP, Inc., 6.375%, 11/15/2007		1,366,450

			TOTAL		2,930,590

			Financial Intermediaries--1.4%
	1,200,000		Merrill Lynch & Co., Inc., Note, 6.00%, 11/15/2004		1,278,636
	1,250,000		Salomon Smith Barney Holdings, Inc., Note, 5.875%, 3/15/2006		1,375,725
	1,000,000		Wells Fargo & Co., Sr. Note, 7.25%, 8/24/2005		1,120,180

			TOTAL		3,774,541

			Financial Services--2.0%
	1,500,000		General Electric Capital Corp., 5.35%, 3/30/2006		1,627,005
	1,250,000	^2,3	Goldman Sachs Group LP, 6.75%, 2/15/2006		1,375,163
	1,000,000		Morgan Stanley, Unsub., 6.10%, 4/15/2006		1,099,320
	1,100,000		SLM Corp., 5.625%, 4/10/2007		1,206,139

			TOTAL		5,307,627

			Food & Drug Retailers--0.7%
	1,895,000		Albertson's, Inc., Sr. Note, 6.55%, 8/1/2004		1,993,900

			Food Products--0.4%
	1,000,000	⁴	General Mills, Inc., 3.875%, 11/30/2007		1,024,660

			Insurance--0.9%
	1,100,000	^2,3	Allstate Financial Global, Note, 7.125%, 9/26/2005		1,221,946
	1,250,000		Equitable Cos., Inc., Note, 6.50%, 4/1/2008		1,354,200

			TOTAL		2,576,146

			Oil & Gas--0.4%
	1,100,000		Texaco Capital, Inc., 5.70%, 12/1/2008		1,195,392

			Pharmaceutical--0.6%
	1,500,000		Johnson & Johnson, Deb., 8.72%, 11/1/2024		1,734,765

			Rail Industry--0.5%
	1,330,000		Norfolk & Western Railroad Co., Equip. Trust, 8.75%, 2/1/2004		1,391,765

			State/Provincial--0.9%
	1,000,000	⁴	Ontario, Province of, 2.35%, 6/30/2006		1,004,240
	1,200,000		Quebec, Province of, 5.50%, 4/11/2006		1,307,976

			TOTAL		2,312,216

			Technology Services--1.2%
	1,000,000		Computer Sciences Corp., 7.50%, 8/8/2005		1,112,580
	1,000,000	^2,3	FIserv, Inc., 4.00%, 4/15/2008		1,015,905
	1,000,000		International Business Machines Corp., Note, 4.125%, 6/30/2005		1,051,430

			TOTAL		3,179,915

Principal Amount				Value
			CORPORATE BONDS--continued
			Telecommunications & Cellular--2.4%
$	1,250,000		AT&T Wireless Services, Inc., 6.875%, 4/18/2005	$	1,346,938
	769,369		BellSouth Savings & Employee Stock Ownership Trust, Company Guarantee, 9.125%, 7/1/2003		779,156
	1,000,000		GTE North, Inc., Deb., 6.40%, 2/15/2005		1,070,350
	1,100,000		SBC Communications, Inc., Note, 5.75%, 5/2/2006		1,202,806
	2,000,000	¹	Verizon Wireless, Capital LLC, Note, 1.66%, 12/17/2003		2,001,000

			TOTAL		6,400,250

			Utilities--1.8%
	1,000,000		Alabama Power Co., 2.65%, 2/15/2006		1,010,860
	600,000		FPL Group Capital, Inc., 3.25%, 4/11/2006		601,710
	2,000,000		Ohio Power Co., Note, 7.00%, 7/1/2004		2,107,740
	1,000,000		PSEG Power LLC, Company Guarantee, 6.875%, 4/15/2006		1,096,250

			TOTAL		4,816,560

			TOTAL CORPORATE BONDS (IDENTIFIED COST $70,371,441)		71,572,610

			GOVERNMENT AGENCIES--9.7%
			Federal Home Loan Mortgage Corporation--2.2%
	6,000,000	⁴	Federal Home Loan Mortgage Corp., 2.375%, 4/15/2006		6,044,340

			Federal National Mortgage Association--6.7%
	9,000,000		Federal National Mortgage Association, Note, 5.125%, 2/13/2004		9,281,250
	8,000,000		Federal National Mortgage Association, Note, 6.00%, 12/15/2005		8,825,200

			TOTAL		18,106,450

			Government Agency--0.8%
	2,000,000		Federal Home Loan Bank System, Sr. Note, 5.80%, 9/2/2008		2,255,900

			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $25,726,387)		26,406,690

			MORTGAGE BACKED SECURITIES--0.9%
			Government National Mortgage Association--0.9%
	524,299		Government National Mortgage Association, Pool 354754, 7.50%, 2/15/2024		563,458
	1,582,119		Government National Mortgage Association, Pool 780360, 11.00%, 9/15/2015		1,768,017

			TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST $2,300,639)		2,331,475

			U.S. TREASURY--10.0%
	12,500,000	⁴	U.S. Treasury Note, 2.125%, 10/31/2004		12,652,375
	5,000,000	⁴	U.S. Treasury Note, 3.25%, 8/15/2007		5,135,150
	500,000		U.S. Treasury Note, 5.625%, 5/15/2008		564,375
	7,000,000	⁴	U.S. Treasury Note, 5.75%, 11/15/2005		7,694,540
	935,000	⁴	U.S. Treasury Note, 6.625%, 5/15/2007		1,084,020

			TOTAL U.S. TREASURY (IDENTIFIED COST $26,567,432)		27,130,460

Shares				Value
			MUTUAL FUNDS--25.0%
	2,663,350		Federated Mortgage Core Portfolio	$	27,459,140
	9,155,388		Prime Value Obligations Fund, Class IS		9,155,388
	31,288,519		Prime Value Obligations Fund, Class IS (held as collateral for securities lending)		31,288,519

			TOTAL MUTUAL FUNDS (IDENTIFIED COST $67,796,718)		67,903,047

			TOTAL INVESTMENTS--112.9% (IDENTIFIED COST $307,552,532)⁵		306,121,805

			OTHER ASSETS AND LIABLILITIES - NET--(12.9)%		(34,863,652)

			TOTAL NET ASSETS--100%	$	271,258,153

1 Denotes variable rate and floating rate obligations for which the current rate is shown.

2 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At April 30, 2003, these securities amounted to $23,676,656 which represents 8.7% of total net assets. Included in these amounts are restricted securities which have been deemed liquid (amounting to $9,778,324 and representing 3.6% of net assets).

3 Denotes a restricted security that has been deemed liquid by the criteria approved by the Fund's Board of Trustees.

4 Certain shares are temporarily on loan to unaffiliated broker/dealers.

5 The cost of investments for federal tax purposes amounts to $307,588,049.

Note: The categories of investments are shown as a percentage of total net assets at April 30, 2003.

The following acronyms are used throughout this portfolio:

IO	- --Interest Only
REITs	- --Real Estate Investment Trusts

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

April 30, 2003

Assets:
Total investments in securities, at value including $30,727,078 of securities loaned (identified cost $307,552,532)			$	306,121,805
Income receivable				2,030,998
Receivable for investments sold				3,164,344
Receivable for shares sold				257,965

TOTAL ASSETS				311,575,112

Liabilities:
Payable for investments purchased	$	7,680,473
Payable for shares redeemed		978,215
Payable on collateral due to broker		31,288,519
Payable to bank		30,910
Income distribution payable		333,330
Accrued expenses		5,512

TOTAL LIABILITIES				40,316,959

Net assets for 31,682,668 shares outstanding			$	271,258,153

Net Assets Consist of:
Paid in capital			$	291,100,238
Net unrealized depreciation of investments				(1,430,727	)
Accumulated net realized loss on investments				(18,108,598	)
Distributions in excess of net investment income				(302,760	)

TOTAL NET ASSETS			$	271,258,153

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$236,393,919 ÷ 27,610,507 shares outstanding				$8.56

Institutional Service Shares:
$34,864,234 ÷ 4,072,161 shares outstanding				$8.56

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended April 30, 2003

Investment Income:
Dividends							$	52,811
Interest (including income on securities loaned of $27,414)								12,998,427

TOTAL INCOME								13,051,238

Expenses:
Investment adviser fee				$	1,154,698
Administrative personnel and services fee					217,083
Custodian fees					19,928
Transfer and dividend disbursing agent fees and expenses					85,325
Directors'/Trustees' fees					7,021
Auditing fees					15,353
Legal fees					5,568
Portfolio accounting fees					87,755
Distribution services fee--Institutional Service Shares					85,462
Shareholder services fee--Institutional Shares					636,224
Shareholder services fee--Institutional Service Shares					85,462
Share registration costs					46,973
Printing and postage					30,011
Insurance premiums					1,670
Miscellaneous					5,221

TOTAL EXPENSES					2,483,754

Waivers and Reimbursement:
Waiver of investment adviser fee	$	(35,472	)
Waiver of transfer and dividend disbursing agent fees and expenses		(10,630	)
Waiver of distribution services fee--Institutional Service Shares		(85,462	)
Waiver of shareholder services fee--Institutional Shares		(636,224	)
Reimbursement of investment adviser fee		(5,535	)

TOTAL WAIVERS AND REIMBURSEMENT					(773,323	)

Net expenses								1,710,431

Net investment income								11,340,807

Realized and Unrealized Loss on Investments:
Net realized loss on investments								(1,951,892	)
Net change in unrealized appreciation of investments								(2,774,251	)

Net realized and unrealized loss on investments								(4,726,143	)

Change in net assets resulting from operations							$	6,614,664

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended April 30		2003			2002
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	11,340,807		$	12,777,926
Net realized loss on investments		(1,951,892	)		(2,157,802	)
Net change in unrealized appreciation/depreciation of investments		(2,774,251	)		711,491

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		6,614,664			11,331,615

Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(10,309,685	)		(11,679,995	)
Institutional Service Shares		(1,299,731	)		(929,444	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(11,609,416	)		(12,609,439	)

Share Transactions:
Proceeds from sale of shares		232,362,535			171,558,296
Net asset value of shares issued to shareholders in payment of distributions declared		6,006,873			5,800,844
Cost of shares redeemed		(222,544,626	)		(126,828,817	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		15,824,782			50,530,323

Change in net assets		10,830,030			49,252,499

Net Assets:
Beginning of period		260,428,123			211,175,624

End of period (including distributions in excess of net investment income of $(302,760) and $(128,188), respectively)	$	271,258,153		$	260,428,123

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

April 30, 2003

ORGANIZATION

Federated Income Securities Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of four portfolios. The financial statements included herein are only those of Federated Short-Term Income Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is to seek to provide current income.

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the "Trustees").

Repurchase Agreements

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Trustees. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.

Investment Income, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. The Fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, without distinction between share classes. 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 are amortized/accreted. Gains and losses realized on principal payment of mortgaged backed securities (paydown gains and losses) are classified as part of investment income.

Federal Taxes

When-Issued and Delayed Delivery Transactions

Securities Lending

As of April 30, 2003, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$30,727,078		$31,288,519

Restricted Securities

Additional information on each illiquid restricted security held at April 30, 2003 is as follows:

Security	Acquisition Date	Acquisition Cost
AQ Finance NIM Trust 2002-1, Class Note, 9.50%, 6/25/2032	3/15/2002	$ 709,840

Banco Nacional de Mexico S.A., Credit Card Merchant Voucher Receivables Master Trust, Series 1996-A, Class A1, 6.25%, 12/1/2003	1/9/1997	446,268

Bayview Financial Acquisition Trust 1998-1, Class MII, 2.52%, 5/25/2029	12/8/1998	1,540,461

Bayview Financial Acquisition Trust 1998-1, Class MII2, 2.07%, 5/25/2029	3/12/1999	550,856

Bayview Financial Acquisition Trust 1998-1, Class MII2, 2.17%, 5/25/2029	12/8/1998	1,540,461

Credit-Based Asset Servicing And Securitization 1997-1, Class A1, 4.54%, 2/1/2017	2/25/1997	1,931,935

First USA Credit Card Master Trust 1999-1, Class C, 6.42%, 10/19/2006	2/6/2002	2,608,539

First Tennessee Financial Auto Securitization Trust 2002-A, Class A, 3.55%, 7/15/2008	6/10/2002	1,310,131

Great American Leasing Receivables 2002-1, Class C, 4.91%, 7/15/2007	3/22/2002	1,176,190

Greenwich Capital Acceptance 1991-4, Class B1A, 6.34%, 7/1/2019	1/7/1993	1,159,501

Merit Securities Corp. 12, Class 1B, 7.98%, 7/28/2033	5/18/1999	3,976,715

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

CHANGE IN ACCOUNTING POLICY

Effective May 1, 2001, the Fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies ("the Guide"). For financial statement purposes, the revised Guide requires the Fund to amortize premium and discount on all fixed income securities and to classify gains and losses realized on principal payments received on mortgage-backed securities (paydown gains and losses) as part of investment income.

Upon initial adoption, the Fund adjusted its cost of fixed income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding with a corresponding reclassification between unrealized appreciation/depreciation on investments and undistributed net investment income. Adoption of these accounting principles does not affect the Fund's net asset value or distributions, but changes the classification of certain amounts between investment income and realized and unrealized gain/loss on the Statement of Operations. The cumulative effect to the Fund resulting from the adoption of premium and discount amortization and recognition of paydown gain and losses as part of investment income on the financial statements is as follows:

	As of 5/1/2001		For the Year Ended 4/30/2002
	Cost of Investments	Undistributed Net Investment Income	Net Investment Income	Net Unrealized Appreciation (Depreciation)	Net Realized Gain (Loss)
Increase (Decrease)	$(29,152)	$(29,152)	$(50,978)	$6,365	$44,613

The Statement of Changes in Net Assets and Financial Highlights for the prior periods have not been restated to reflect this change in presentation.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares.

Transactions in shares were as follows:

Year Ended April 30	2003					2002
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	16,444,506		$	142,680,611		14,305,388		$	125,710,219
Shares issued to shareholders in payment of distributions declared	592,882			5,136,403		591,660			5,194,032
Shares redeemed	(16,576,833	)		(143,352,681	)	(9,836,579	)		(86,302,177	)

NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	460,555		$	4,464,333		5,060,469		$	44,602,074


Year Ended April 30	2003					2002
Institutional Service Shares:	Shares			Amount		Shares			Amount
Shares sold	10,329,944		$	89,681,924		5,235,278		$	45,848,077
Shares issued to shareholders in payment of distributions declared	100,441			870,470		69,083			606,812
Shares redeemed	(9,130,777	)		(79,191,945	)	(4,608,350	)		(40,526,640	)

NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS	1,299,608		$	11,360,449		696,011		$	5,928,249

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,760,163		$	15,824,782		5,756,480		$	50,530,323

FEDERAL TAX INFORMATION

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for post-October losses, capital loss carryforward, and amortization/accretion on fixed income securities.

For the year ended April 30, 2003, permanent differences identified and reclassified among the components of net assets were as follows:

Paid In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains (Losses)
$(5,539,213)	$94,037	$5,445,176

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

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended April 30, 2003 and 2002 was as follows:

	2003	2002
Ordinary income¹	$11,609,416	$12,609,439

1 For tax purposes short-term capital gain distributions are considered ordinary income.

As of April 30, 2003, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income		$ 30,569

Unrealized depreciation		$ (1,466,244)

Capital loss carryforward		$ 16,141,150

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax treatment of amortization/accretion tax elections on fixed income securities.

At April 30, 2003, the cost of investments for federal tax purposes was $307,588,049. The net unrealized depreciation of investments for federal tax purposes was $1,466,244. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $4,182,548 and net unrealized depreciation from investments for those securities having an excess of cost over value of $5,648,792.

At April 30, 2003, the Fund had a capital loss carryforward of $16,141,150, 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 the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2004		$10,784,773

2005		$ 1,566,031

2006		$ 696,886

2007		$ 159,370

2008		$ 496,189

2011		$ 2,437,901

Under current tax regulations capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of April 30, 2003, for federal tax purposes, post October losses of $1,931,930 were deferred to May 1, 2003.

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Prime Value Obligations Fund, which is managed by the Fund's Adviser. The Adviser has agreed to reimburse certain investment adviser fees as a result of the transactions.

Administrative 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 net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Service Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of Institutional Service Shares annually, to compensate FSC. 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.

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses.

General

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

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations (and in-kind contributions) for the year ended April 30, 2003, were as follows:

Purchases	$	153,355,061

Sales	$	162,822,903

Purchases and sales of long-term U.S. government securities, for the year ended April 30, 2003, were as follows:

Purchases	$	56,266,973

Sales	$	15,378,032

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

Report of Ernst & Young LLP, Independent Auditors

TO THE BOARD OF TRUSTEES OF FEDERATED INCOME SECURITIES TRUST AND SHAREHOLDERS OF FEDERATED SHORT-TERM INCOME FUND:

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Short-Term Income Fund, one of the portfolios constituting Federated Income Securities Trust, (the "Trust"), as of April 30, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2003, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated Short-Term Income Fund, a portfolio of Federated Income Securities Trust, at April 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Ernst & Young LLP

Boston, Massachusetts
June 10, 2003

Board of Trustees and Fund Officers (unaudited)

INTERESTED TRUSTEES BACKGROUND



Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 CHAIRMAN AND TRUSTEE Began serving: January 1986		Principal Occupations: Chairman and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.


J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: January 2000		Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.


Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 1987		Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

INDEPENDENT TRUSTEES BACKGROUND



Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: October 1995		Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.


John T. Conroy, Jr. Birth Date: June 23, 1937 Grubb & Ellis/Investment Properties Corporation 3201 Tamiami Trail North Naples, FL TRUSTEE Began serving: November 1991		Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.


Nicholas P. Constantakis Birth Date: September 3, 1939 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: February 1998		Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.


John F. Cunningham Birth Date: March 5, 1943 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: January 1999		Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.


Peter E. Madden Birth Date: March 16, 1942 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL TRUSTEE Began serving: November 1991		Principal Occupation: Director or Trustee of the Federated Fund Complex; Management Consultant. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 80 South Road Westhampton Beach, NY TRUSTEE Began serving: January 2000		Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant; Executive Vice President, DVC Group, Inc. (marketing communications and technology) (prior to 9/1/00). Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University.


John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 Chancellor, Duquesne University Pittsburgh, PA TRUSTEE Began serving: February 1995		Principal Occupations: Director or Trustee of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Consulting Partner, Mollica & Murray. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.


Marjorie P. Smuts Birth Date: June 21, 1935 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: January 1986		Principal Occupations: Director or Trustee of the Federated Fund Complex; Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.


John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN TRUSTEE Began serving: January 2000		Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.

OFFICERS



Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) and Previous Position(s)
Edward C. Gonzales Birth Date: October 22, 1930 EXECUTIVE VICE PRESIDENT Began serving: July 1995		Principal Occupations: Executive Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Trustee, Federated Administrative Services. Previous Positions: President and Trustee or Director of some of the Funds in the Federated Fund Complex; CEO and Chairman, Federated Administrative Services.


John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Began serving: January 1986		Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc.


Richard J. Thomas Birth Date: June 17, 1954 TREASURER Began serving: November 1998		Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services.


Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Began serving: January 1986		Principal Occupations: Vice Chairman or President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc. and Director and Chief Executive Officer, Federated Securities Corp.


William D. Dawson III Birth Date: March 3, 1949 CHIEF INVESTMENT OFFICER Began serving: November 1998		Principal Occupations: Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company and Passport Research, Ltd. Previous Positions: Executive Vice President and Senior Vice President, Federated Investment Counseling Institutional Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.




Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) and Previous Position(s)
Joseph M. Balestrino Birth Date: November 3, 1954 VICE PRESIDENT Began serving: November 1998		Joseph M. Balestrino is Vice President of the Trust. Mr. Balestrino joined Federated in 1986 and has been a Senior Portfolio Manager and Senior Vice President of the Fund's Adviser since 1998. He was a Portfolio Manager and a Vice President of the Fund's Adviser from 1995 to 1998. Mr. Balestrino served as a Portfolio Manager and an Assistant Vice President of the Adviser from 1993 to 1995. Mr. Balestrino is a Chartered Financial Analyst and received his Master's Degree in Urban and Regional Planning from the University of Pittsburgh.


Randall S. Bauer Birth Date: November 16, 1957 VICE PRESIDENT Began serving: November 1998		Randall S. Bauer has been the Fund's Portfolio Manager since October 1995. He is Vice President of the Trust. Mr. Bauer joined Federated in 1989 and has been a Portfolio Manager and a Vice President of the Fund's Adviser since 1994. Mr. Bauer is a Chartered Financial Analyst and received his M.B.A. in Finance from Pennsylvania State University.

Federated Investors
World-Class Investment Manager

Federated Short-Term Income Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com

Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact

Federated Securities Corp., Distributor

Cusip 31420C209
Cusip 31420C308

28528 (6/03)


Item 2.     Code of Ethics

            Not Applicable

Item 3.     Audit Committee Financial Expert

            Not Applicable

Item 4.     Principal Accountant Fees and Services

            Not Applicable

Items 5-6   [Reserved]

Item 7.     Disclosure of Proxy Voting Policies and Procedures for Closed-End
            Management Investment Companies

            Not Applicable

Item 8.     [Reserved]

Item 9.     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-2
     under the  Investment  Company Act of 1940 (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 significant changes in the registrant's internal controls, or
     the internal  controls of its service  providers,  or in other factors that
     could  significantly  affect these controls subsequent to the date of their
     evaluation,  including any  corrective  actions with regard to  significant
     deficiencies and material weaknesses.

Item 10.    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 Income Securites Trust

By          /S/ Richard J. Thomas, Principal Financial Officer
Date            June 24, 2003

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, Principal Executive Officer

Date        June 25, 2003


By          /S/ Richard J. Thomas, Principal Financial Officer

Date        June 24, 2003

Federated Income Securities Trust N-CSRCertified annual shareholder report (management investment company)

Federated Intermediate Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

Financial Highlights--Institutional Shares

Financial Highlights--Institutional Service Shares

Management's Discussion of Fund Performance

GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE INCOME FUND--INSTITUTIONAL SHARES

GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE INCOME FUND--INSTITUTIONAL SERVICE SHARES

Portfolio of Investments

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Notes to Financial Statements

ORGANIZATION

SIGNIFICATION ACCOUNTING POLICIES

Investment Valuation

Repurchase Agreements

Investment Income, Expenses and Distributions

Premium and Discount Amortization/Paydown Gains and Losses

Federal Taxes

When-Issued and Delayed Delivery Transactions

Securities Lending

Restricted Securities

Use of Estimates

Other

CHANGE IN ACCOUNTING POLICY

SHARES OF BENEFICIAL INTEREST

FEDERAL TAX INFORMATION

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees

General

Investment Transactions

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

Report of Ernst & Young LLP, Independent Auditors

TO THE BOARD OF TRUSTEES OF FEDERATED INCOME SECURITIES TRUST AND SHAREHOLDERS OF FEDERATED INTERMEDIATE INCOME FUND:

Board of Trustees and Fund Officers (Unaudited)

INTERESTED TRUSTEES BACKGROUND

INDEPENDENT TRUSTEES BACKGROUND

OFFICERS

Federated Short-Term Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

Financial Highlights -- Institutional Shares

Financial Highlights -- Institutional Service Shares

Management's Discussion of Fund Performance

GROWTH OF $25,000 INVESTED IN FEDERATED SHORT-TERM INCOME FUND--INSTITUTIONAL SHARES

GROWTH OF $25,000 INVESTED IN FEDERATED SHORT-TERM INCOME FUND--INSTITUTIONAL SERVICE SHARES

Portfolio of Investments

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Notes to Financial Statements

ORGANIZATION

SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation

Repurchase Agreements

Investment Income, Expenses and Distributions

Premium and Discount Amortization/Paydown Gains and Losses

Federal Taxes

When-Issued and Delayed Delivery Transactions

Securities Lending

Restricted Securities

Use of Estimates

Other

CHANGE IN ACCOUNTING POLICY

SHARES OF BENEFICIAL INTEREST

FEDERAL TAX INFORMATION

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Distribution Services Fee

Shareholder Services Fee

Transfer and Dividend Disbursing Agent Fees and Expenses

Portfolio Accounting Fees