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: 4/30/04


               Date of Reporting Period: Fiscal year ended 4/30/04


Item 1.     Reports to Stockholders

Federated Investors
World-Class Investment Manager

Federated Intermediate Corporate Bond Fund

(formerly, Federated Intermediate Income Fund)

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

April 30, 2004

Institutional Shares
Institutional Service Shares

FINANCIAL HIGHLIGHTS

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

BOARD OF TRUSTEES AND TRUST OFFICERS

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

Financial Highlights -- Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2004		2003		2002		2001		2000
Net Asset Value, Beginning of Period	$10.34		$ 9.88		$9.86		$9.45		$10.07
Income From Investment Operations:
Net investment income	0.50		0.60		0.62	¹	0.65		0.62
Net realized and unrealized gain (loss) on investments	(0.17	)	0.46		0.02	¹	0.41		(0.60	)

TOTAL FROM INVESTMENT OPERATIONS	0.33		1.06		0.64		1.06		0.02

Less Distributions:
Distributions from net investment income	(0.49	)	(0.60	)	(0.62	)	(0.65)		(0.62	)
Distributions from net realized gain on investments	--		--		--		--		(0.02	)

TOTAL DISTRIBUTIONS	(0.49	)	(0.60	)	(0.62	)	(0.65)		(0.64	)

Net Asset Value, End of Period	$10.18		$10.34		$9.88		$9.86		$ 9.45

Total Return²	3.28	%	11.08	%	6.55	%	11.54	%	0.30	%


Ratios to Average Net Assets:

Expenses	0.55	%	0.55	%	0.55	%	0.55	%	0.55	%

Net investment income	4.78	%	5.97	%	6.16	%¹	6.72	%	6.48	%

Expense waiver/reimbursement³	0.38	%	0.38	%	0.37	%	0.35	%	0.37	%

Supplemental Data:

Net assets, end of period (000 omitted)	$264,566		$241,837		$293,262		$300,289		$294,644

Portfolio turnover	68	%	52	%	45	%	43	%	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 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 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	2004		2003		2002		2001		2000
Net Asset Value, Beginning of Period	$10.34		$ 9.88		$9.86		$9.45		$10.07
Income From Investment Operations:
Net investment income	0.47		0.58		0.59	¹	0.63		0.60
Net realized and unrealized gain (loss) on investments	(0.16	)	0.46		0.02	¹	0.41		(0.60	)

TOTAL FROM INVESTMENT OPERATIONS	0.31		1.04		0.61		1.04		0.00

Less Distributions:
Distributions from net investment income	(0.47	)	(0.58	)	(0.59	)	(0.63	)	(0.60	)
Distributions from net realized gain on investments	--		--		--		--		(0.02	)

TOTAL DISTRIBUTIONS	(0.47	)	(0.58	)	(0.59	)	(0.63	)	(0.62	)

Net Asset Value, End of Period	$10.18		$10.34		$9.88		$9.86		$ 9.45

Total Return²	3.02	%	10.81	%	6.29	%	11.26	%	0.05	%


Ratios to Average Net Assets:

Expenses	0.80	%	0.80	%	0.80	%	0.81	%	0.80	%

Net investment income	4.53	%	5.69	%	5.91	%¹	6.46	%	6.24	%

Expense waiver/reimbursement³	0.38	%	0.38	%	0.37	%	0.34	%	0.37	%

Supplemental Data:

Net assets, end of period (000 omitted)	$68,292		$56,080		$43,461		$36,206		$18,159

Portfolio turnover	68	%	52	%	45	%	43	%	54	%

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 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

The fund's total return for the 12-month reporting period was 3.28% for Institutional Shares and 3.02% for Institutional Service Shares.¹ By comparison, during the 12-month reporting period the total return of the Lehman Brothers U.S. Intermediate Credit Index² the fund's benchmark index, was 3.34%, and the total return of the Lipper Intermediate Term Investment Grade Debt Funds Average³ category was 1.91%.

The fund's investment strategy focused on: (a) the effective duration of its portfolio (which indicates the portfolio's sensitivity to changes in interest rates); and (b) the selection of securities with different maturities (expressed by a "yield curve" showing the relative yield of similar securities with different maturities). These were the most significant factors affecting the fund's performance relative to its benchmark index. In addition, the fund's total return reflected actual cash flows, transaction costs and other expenses, which were not reflected in the total return of the Lehman Brothers U.S. Intermediate Credit Index.

DURATION⁴

Duration management is a significant component of the fund's investment strategy and had a positive impact on fund performance during the reporting period. At the end of the reporting period, the fund's dollar-weighted average duration was 3.6 years, which is on the shorter side of the fund's target duration range of between three and seven years. The fund's duration at the beginning of the reporting period was 4.5 years. The fund maintained duration shorter than its benchmark index and its peers, anticipating that interest rates could rise as economic momentum continued. In retrospect, rates did rise, which caused the fund's net asset value ("NAV") to decline. However, the fund's short duration position decreased the size of the NAV decline relative to the fund's peers and, therefore, positively impacted fund performance during the reporting period.

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. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance, visit www.federatedinvestros.com or call 1-800-341-7400.

2 Lehman Brothers U.S. Intermediate Credit Index (LBIC) is a market value weighted performance benchmark for government and corporate fixed-rate debt issues with maturities between one and ten years. The Fund has elected to change its index to the LBIC, since the LBIC is more representative of the securities typically held by the Fund. This change is consistent with the change of the Fund's name to "Federated Intermediate Corporate Bond Fund" in March 2004 and its related policies.

3 Lipper figures represent the average of the total returns reported by all the mutual funds designated by Lipper Inc. as falling into the respective categories indicated. They do not reflect sales charges.

4 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 with shorter durations.

MATURITY AND YIELD CURVE

The fund's selection of securities with different maturities (expressed by a "yield curve" showing the relative yield of similar securities with different maturities) is also a significant component of the fund's investment strategy. At the end of the reporting period, the fund's dollar-weighted average maturity was 5.4 years, which is within the fund's target maturity range of between three and ten years. The fund achieved this average maturity by purchasing securities with both very short and very long maturities (referred to as a "barbelled maturity approach"), while relatively avoiding securities with short to intermediate maturities. The barbelled maturity approach was employed to deliver a higher total return relative to purchasing securities at or near the target average maturity (i.e., a "bullet" strategy), in anticipation of a greater rate increase for short to intermediate rates than for the very short or very long interest rates. Over the reporting period, interest rates did increase, as anticipated, and the barbelled maturity structure positively impacted fund performance.

GROWTH OF A $25,000 INVESTMENT IN FEDERATED INTERMEDIATE CORPORATE BOND FUND -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated Intermediate Corporate Bond Fund (Institutional Shares) (the "Fund") from April 30, 1994 to April 30, 2004, compared to the Lehman Brothers U.S. Intermediate Credit Index (LBIC),^2,3 Lehman Brothers U.S. Government/ Credit Index (LBGC),³ Lehman Brothers U.S. Credit Bond Index (LBCB),³ Lehman Brothers U.S. Intermediate Government/Credit Index (LBIGC)³ and the Lipper Intermediate Term Investment Grade Debt Funds Average (LIIGDFA).⁴

Average Annual Total Return for the Period Ended 4/30/2004
1 Year		3.28%

5 Years		6.46%

10 Years		7.15%

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 LBIC, LBGC, LBCB, LBIGC and LIIGDFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and average.

2 The Fund has elected to change its index to the LBIC, since the LBIC is more representative of the securities typically held by the Fund. This change is consistent with the change of the Fund's name to "Federated Intermediate Corporate Bond Fund" in March 2004 and its related policies.

3 The LBIC, 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 and, unlike the Fund, are not affected by cashflows.

4 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 A $25,000 INVESTMENT IN FEDERATED INTERMEDIATE CORPORATE BOND FUND -- INSTITUTIONAL SERVICE SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in Federated Intermediate Corporate Bond Fund (Institutional Service Shares) (the "Fund") from April 30, 1994 to April 30, 2004, compared to the Lehman Brothers U.S. Intermediate Credit Index (LBIC),^2,3 Lehman Brothers U.S. Government/ Credit Index (LBGC),³ Lehman Brothers U.S. Credit Bond Index (LBCB),³ Lehman Brothers U.S. Intermediate Government/Credit Index (LBIGC)³ and the Lipper Intermediate-Term Investment Grade Debt Funds Average (LIIGDFA).⁴

Average Annual Total Return for the Period Ended 4/30/2004
1 Year		3.02%

5 Years		6.20%

10 Years		6.88%

3 The LBIC, 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. The indexes are unmanaged and, unlike the Fund, are not affected by cashflows.

Portfolio of Investments

April 30, 2004

Principal Amount				Value
			ASSET-BACKED SECURITIES--1.1%
			Credit Card--0.5%
$	1,500,000		Prime Credit Card Master Trust 2000-1, Class A, 6.70%, 10/15/2009	$	1,581,495

			Financial Institution - Brokerage--0.3%
	759,114	¹	World Financial, Class B, 6.91%, 9/1/2013		830,311

			Home Equity Loan--0.3%
	562,804	¹	125 Home Loan Owner Trust 1998-1A, Class M2, 7.75%, 2/15/2029		572,304
	519,407		New Century Home Equity Loan Trust 1997-NC5, Class M2, 7.24%, 10/25/2028		535,852

			TOTAL		1,108,156

			Manufactured Housing--0.0%
	408,832		Green Tree Financial Corp. 1999-5, Class B1, 9.20%, 4/1/2031		26,709

			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $4,683,288)		3,546,671

			CORPORATE BONDS--80.5%
			Basic Industry - Chemicals--0.4%
	10,000		Air Products & Chemicals, Inc., Note, 7.375%, 5/1/2005		10,526
	30,000		PPG Industries, Inc., Note, 6.50%, 11/1/2007		32,873
	1,175,000		Praxair, Inc., 6.625%, 10/15/2007		1,294,885

			TOTAL		1,338,284

			Basic Industry - Metals & Mining--2.6%
	2,000,000		BHP Finance (USA), Inc., Unsecd. Note, 6.69%, 3/1/2006		2,142,200
	500,000		Barrick Gold Corp., Deb., 7.50%, 5/1/2007		555,405
	950,000		Inco Ltd., 5.70%, 10/15/2015		953,591
	500,000		Noranda, Inc., 6.00%, 10/15/2015		513,105
	2,405,000		Noranda, Inc., Deb., 8.125%, 6/15/2004		2,421,883
	750,000		Placer Dome, Inc., Bond, 8.50%, 12/31/2045		829,860
	1,200,000		Thiokol Corp., Sr. Note, 6.625%, 3/1/2008		1,315,080

			TOTAL		8,731,124

			Basic Industry - Paper--1.5%
	350,000		International Paper Co., 4.25%, 1/15/2009		348,281
	350,000	²	International Paper Co., 5.50%, 1/15/2014		348,257
	25,000		International Paper Co., Note, 6.50%, 11/15/2007		27,192
	300,000		Westvaco Corp., 7.65%, 3/15/2027		344,676
	1,000,000		Westvaco Corp., Sr. Deb., 7.50%, 6/15/2027		1,136,920
	450,000	²	Weyerhaeuser Co., Deb., 7.375%, 3/15/2032		494,320
	1,000,000		Weyerhaeuser Co., Note, 5.50%, 3/15/2005		1,029,170
	1,250,000	²	Weyerhaeuser Co., Note, 6.125%, 3/15/2007		1,338,200

			TOTAL		5,067,016

Principal Amount				Value
			CORPORATE BONDS--continued
			Capital Goods - Aerospace & Defense--0.8%
$	15,000		Boeing Co., Unsecd. Note, 6.625%, 6/1/2005	$	15,680
	1,600,000		Raytheon Co., Deb., 7.20%, 8/15/2027		1,750,512
	860,000	²	Rockwell Collins, Unsecd. Note, 4.75%, 12/1/2013		842,877

			TOTAL		2,609,069

			Capital Goods - Building Materials--0.8%
	650,000		CRH America, Inc., 5.30%, 10/15/2013		648,778
	2,000,000		Masco Corp., Note, 6.75%, 3/15/2006		2,144,060

			TOTAL		2,792,838

			Capital Goods - Construction Machinery--0.0%
	25,000		Ingersoll-Rand Co., Note, 6.51%, 12/1/2004		25,639

			Capital Goods - Diversified Manufacturing--1.3%
	760,000		Emerson Electric Co., 4.50%, 5/1/2013		734,753
	500,000	¹	Hutchison Whampoa International Ltd., 7.45%, 11/24/2033		483,100
	500,000		Kennametal, Inc., 7.20%, 6/15/2012		534,365
	1,400,000		Tyco International Group, Company Guarantee, 6.375%, 2/15/2006		1,476,706
	1,000,000	²	Tyco International Group, Note, 5.80%, 8/1/2006		1,048,070

			TOTAL		4,276,994

			Capital Goods - Environmental--1.6%
	2,500,000		Waste Management Inc., Sr. Note, 7.00%, 10/1/2004		2,553,700
	425,000		Waste Management Inc., Sr. Note, 7.125%, 10/1/2007		471,329
	2,000,000		Waste Management, Inc., Deb., 8.75%, 5/1/2018		2,297,740

			TOTAL		5,322,769

			Communications - Media & Cable--4.0%
	2,000,000	²	British Sky Broadcasting Group PLC, 8.20%, 7/15/2009		2,334,240
	1,600,000		Comcast Corp., 6.375%, 1/30/2006		1,695,456
	400,000	²	Comcast Corp., 7.05%, 3/15/2033		422,168
	3,500,000		Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013		3,978,205
	2,250,000		Cox Communications, Inc., Medium Term Note, 6.69%, 9/20/2004		2,293,942
	2,200,000		Grupo Televisa S.A., Note, 8.00%, 9/13/2011		2,497,000

			TOTAL		13,221,011

			Communications - Media Noncable--2.5%
	2,000,000	²	Clear Channel Communications, Inc., 6.00%, 11/1/2006		2,126,380
	500,000	²	News America Holdings, Inc., Sr. Deb., 9.25%, 2/1/2013		633,915
	3,700,000		Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006		3,959,999
	1,500,000		Univision Communications, Inc., 7.85%, 7/15/2011		1,741,650

			TOTAL		8,461,944

Principal Amount				Value
			CORPORATE BONDS--continued
			Communications - Telecom Wireless--7.5%
$	3,350,000		AT&T Wireless Services, Inc., Sr. Note, 7.35%, 3/1/2006	$	3,626,844
	3,100,000		CenturyTel, Inc., 8.375%, 10/15/2010		3,549,004
	675,000		Citizens Communications Co., 9.00%, 8/15/2031		671,645
	1,000,000		Deutsche Telekom International Finance BV, 5.25%, 7/22/2013		995,270
	100,000		GTE Southwest, Inc., Deb., 6.54%, 12/1/2005		106,131
	8,000,000		Sprint Capital Corp., 7.125%, 1/30/2006		8,589,360
	1,800,000		Sprint Capital Corp., Company Guarantee, 7.625%, 1/30/2011		2,036,700
	3,125,000		Telecom de Puerto Rico, Note, 6.65%, 5/15/2006		3,346,062
	2,000,000	¹	Telefonos de Mexico, 4.50%, 11/19/2008		1,981,060

			TOTAL		24,902,076

			Consumer Cyclical - Automotive--7.6%
	1,600,000		Delphi Auto Systems Corp., 6.125%, 5/1/2004		1,602,176
	600,000	²	Ford Motor Credit Co., 7.00%, 10/1/2013		617,730
	3,000,000	²	Ford Motor Credit Co., Note, 5.625%, 10/1/2008		3,056,670
	9,000,000	²	Ford Motor Credit Co., Note, 6.50%, 1/25/2007		9,536,040
	250,000		Ford Motor Credit Co., Note, 7.50%, 4/25/2011		263,307
	35,000		Ford Motor Credit Co., Note, 7.75%, 3/15/2005		36,596
	150,000	²	General Motors Acceptance Corp., 4.50%, 7/15/2006		153,396
	1,000,000	²	General Motors Acceptance Corp., 6.875%, 8/28/2012		1,040,570
	1,500,000		General Motors Acceptance Corp., 7.50%, 7/15/2005		1,584,420
	1,060,000		General Motors Acceptance Corp., 8.00%, 11/1/2031		1,113,212
	5,000,000	²	General Motors Acceptance Corp., Note, 7.75%, 1/19/2010		5,490,900
	860,000	¹	Harley Davidson, Inc., 3.625%, 12/15/2008		850,798

			TOTAL		25,345,815

			Consumer Cyclical - Entertainment--3.4%
	3,000,000		AOL Time Warner, Inc., 6.15%, 5/1/2007		3,221,370
	500,000	²	AOL Time Warner, Inc., Bond, 7.625%, 4/15/2031		547,600
	1,400,000	¹	Carnival Corp., 3.75%, 11/15/2007		1,388,310
	180,000	¹	International Speedway Corp., 4.20%, 4/15/2009		178,524
	940,000	¹	International Speedway Corp., 5.40%, 4/15/2014		931,737
	3,900,000		International Speedway Corp., 7.875%, 10/15/2004		4,007,796
	1,000,000		Time Warner, Inc., Deb., 8.11%, 8/15/2006		1,105,150

			TOTAL		11,380,487

			Consumer Cyclical - Retailers--1.8%
	1,050,000		CVS Corp., 5.625%, 3/15/2006		1,106,049
	750,000		Loews Corp., Deb., 8.875%, 4/15/2011		876,952
	1,000,000		Neiman-Marcus Group, Inc., Sr. Deb., 7.125%, 6/1/2028		1,078,650
	400,000	²	Target Corp., 5.40%, 10/1/2008		423,732
	2,750,000	²	Wal-Mart Stores, Inc., Unsecd. Note, 3.375%, 10/1/2008		2,692,113

			TOTAL		6,177,496

Principal Amount				Value
			CORPORATE BONDS--continued
			Consumer Cyclical - Services--0.9%
$	500,000		Adecco SA, Sr. Note, 7.00%, 3/15/2006	$	525,000
	2,025,000		Boston University, 7.625%, 7/15/2097		2,314,069

			TOTAL		2,839,069

			Consumer Non-Cyclical - Consumer Products--0.8%
	2,350,000		Alberto-Culver Co., Unsecd. Note, 8.25%, 11/1/2005		2,545,003

			Consumer Non-Cyclical - Food/Beverage--1.3%
	700,000		Diageo Finance BV, Unsecd. Note, 3.00%, 12/15/2006		699,489
	1,300,000		General Mills, Inc., Unsecd. Note, 2.625%, 10/24/2006		1,283,893
	5,000		Grand Metropolitan Investment Corp., Company Guarantee, 9.00%, 8/15/2011		6,196
	100,000		Hershey Foods Corp., Note, 6.70%, 10/1/2005		106,344
	2,000,000		Kraft Foods, Inc., Note, 4.625%, 11/1/2006		2,069,200

			TOTAL		4,165,122

			Consumer Non-Cyclical - Health Care--0.6%
	2,000,000		UnitedHealth Group, Inc., 7.50%, 11/15/2005		2,156,000

			Consumer Non-Cyclical - Pharmaceuticals--0.3%
	290,000		Wyeth, 6.45%, 2/1/2024		291,798
	810,000		Wyeth, 6.50%, 2/1/2034		811,353

			TOTAL		1,103,151

			Consumer Non-Cyclical - Supermarkets--0.4%
	450,000		Kroger Co., 7.25%, 6/1/2009		503,915
	675,000	²	Kroger Co., Company Guarantee, 7.45%, 3/1/2008		757,998

			TOTAL		1,261,913

			Consumer Non-Cyclical - Tobacco--0.4%
	375,000		Altria Group, Inc., 5.625%, 11/4/2008		385,035
	750,000		Philip Morris Cos., Inc., Note, 6.375%, 2/1/2006		788,933

			TOTAL		1,173,968

			Energy - Independent--3.6%
	1,000,000		Anadarko Petroleum Corp., Unsecd. Note, 7.00%, 10/15/2006		1,096,220
	5,000,000	²	Devon Energy Corp., Sr. Note, 2.75%, 8/1/2006		4,930,900
	1,500,000	¹	EOG Co. of Canada, Company Guarantee, Series 144A, 7.00%, 12/1/2011		1,658,160
	850,000		Norcen Energy Resources, Inc., Deb., 7.375%, 5/15/2006		926,449
	1,350,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		1,576,125
	1,800,000	¹	Ras Laffan Liquified Natural Gas, 3.437%, 9/15/2009		1,773,612

			TOTAL		11,961,466

			Energy - Integrated--2.0%
	10,000		BP Amoco PLC, Deb., 9.125%, 3/1/2011		12,536
	3,300,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		3,815,394
	750,000		Husky Oil Ltd., Sr. Note, 7.125%, 11/15/2006		802,928
	1,100,000		Petro-Canada, Bond, 5.35%, 7/15/2033		960,740
	1,100,000	¹	Statoil ASA, 5.125%, 4/30/2014		1,097,437

			TOTAL		6,689,035

Principal Amount				Value
			CORPORATE BONDS--continued
			Energy - Oil Field Services--0.3%
$	1,000,000		Global Marine, Inc., Sr. Note, 7.125%, 9/1/2007	$	1,105,880

			Energy - Refining--0.2%
	625,000		Valero Energy Corp., 7.50%, 4/15/2032		701,731

			Financial Institution - Banking--7.7%
	1,250,000		ABN AMRO Bank NV, Chicago, Sub. Deb., 7.30%, 12/1/2026		1,297,513
	1,200,000		Astoria Financial Corp., Note, 5.75%, 10/15/2012		1,234,476
	100,000		Bank One Corp., Sub. Deb., 7.25%, 8/15/2004		101,597
	15,000	²	Bank of America Corp., Sub. Note, 7.625%, 4/15/2005		15,664
	1,000,000		Chase Manhattan Corp., Note, 6.375%, 2/15/2008		1,088,740
	2,000,000		City National Bank, Sub. Note, 6.375%, 1/15/2008		2,139,640
	2,100,000		Corp Andina De Fomento, Bond, 7.375%, 1/18/2011		2,356,746
	1,300,000		Crestar Financial Corp., Sub. Note, 8.75%, 11/15/2004		1,350,999
	1,500,000		FirstBank Puerto Rico, Sub. Note, 7.625%, 12/20/2005		1,577,910
	1,200,000		Hudson United Bancorp, 7.00%, 5/15/2012		1,328,424
	750,000		Northern Trust Corp., 4.60%, 2/1/2013		730,928
	715,000		PNC Funding Corp., Sub. Note, 6.875%, 7/15/2007		785,127
	1,000,000		PNC Funding Corp., Sub. Note, 7.50%, 11/1/2009		1,142,420
	3,864,076	¹	Regional Diversified Funding, 9.25%, 3/15/2030		4,386,035
	200,000		SunTrust Bank, Central Florida, Sub. Note, 6.90%, 7/1/2007		221,492
	1,000,000	¹	Swedbank, Sub., 7.50%, 11/29/2049		1,095,247
	1,300,000		Union Planters Corp., 4.375%, 12/1/2010		1,296,464
	1,200,000	²	Washington Mutual Bank FA, Sub. Note, 6.875%, 6/15/2011		1,345,404
	2,000,000	²	Washington Mutual Finance Corp., Sr. Note, 8.25%, 6/15/2005		2,133,380

			TOTAL		25,628,206

			Financial Institution - Brokerage--7.5%
	1,700,000		Amvescap PLC, Sr. Note, 6.60%, 5/15/2005		1,774,919
	6,000,000		Bear Stearns Cos., Inc., 6.50%, 5/1/2006		6,442,620
	5,000		Citigroup Global Markets Inc., Note, 6.375%, 10/1/2004		5,105
	3,000,000	¹	FMR Corp., 4.75%, 3/1/2013		2,921,550
	900,000	¹	FMR Corp., Bond, 7.57%, 6/15/2029		1,055,691
	500,000		Franklin Resources, Inc., 3.70%, 4/15/2008		494,615
	1,000,000	²	Goldman Sachs Group, Inc., Sub. Note, 6.345%, 2/15/2034		961,260
	1,250,000		Lehman Brothers Holdings, Inc., 7.50%, 9/1/2006		1,383,175
	1,875,000		Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007		2,071,088
	15,000		Merrill Lynch & Co., Inc., Note, 7.375%, 5/15/2006		16,267
	5,000,000		Morgan Stanley, Unsub., 6.10%, 4/15/2006		5,330,050
	2,250,000		Waddell & Reed Financial, Inc., 7.50%, 1/18/2006		2,421,180

			TOTAL		24,877,520

Principal Amount				Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--1.2%
$	1,020,000		Capital One Financial Corp., Note, 7.125%, 8/1/2008	$	1,106,088
	1,500,000		General Electric Capital Corp., Medium Term Note, 9.18%, 12/30/2008		1,706,940
	1,000,000		MBNA Corp., 7.50%, 3/15/2012		1,146,240

			TOTAL		3,959,268

			Financial Institution - Insurance - Life--1.5%
	1,100,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		1,366,266
	300,000		Principal Financial Group, 6.125%, 10/15/2033		293,775
	150,000		Prudential Financial, Inc., 5.75%, 7/15/2033		139,134
	2,000,000	¹	Reinsurance Group of America, Sr. Note, 7.25%, 4/1/2006		2,145,000
	1,150,000	¹	Union Central Life Insurance Co., Note, 8.20%, 11/1/2026		1,187,318

			TOTAL		5,131,493

			Financial Institution - Insurance - P&C--2.5%
	3,500,000	¹	MBIA Global Funding LLC, 2.875%, 11/30/2006		3,476,270
	2,265,000		Marsh & McLennan Cos., Inc., Sr. Note, 7.125%, 6/15/2009		2,552,723
	1,000,000	¹	Oil Insurance Ltd., Sub. Deb., 5.15%, 8/15/2033		1,008,170
	1,000,000		St. Paul Cos., Inc., Medium Term Note, Series MTNB, 7.29%, 8/28/2007		1,106,500

			TOTAL		8,143,663

			Financial Institution - REITs--1.4%
	2,000,000		Archstone-Smith Trust, 5.00%, 8/15/2007		2,073,980
	1,750,000		EOP Operating LP, 8.375%, 3/15/2006		1,922,865
	700,000		Rouse Co., 5.375%, 11/26/2013		688,709

			TOTAL		4,685,554

			Foreign-Local-Government--0.7%
	2,180,000		Hydro Quebec, Sr. Deb., 6.30%, 5/11/2011		2,418,819

			Sovereign--2.3%
	3,800,000	²	KFW-Kredit Wiederaufbau, 2.70%, 3/1/2007		3,754,856
	1,000,000		Sweden, Government of, Deb., 10.25%, 11/1/2015		1,276,160
	1,500,000	²	United Mexican States, 6.625%, 3/3/2015		1,518,750
	1,200,000		United Mexican States, 7.50%, 4/8/2033		1,187,700

			TOTAL		7,737,466

			Technology--1.7%
	1,500,000		Computer Sciences Corp., 7.375%, 6/15/2011		1,719,600
	1,000,000		IBM Corp., Deb., 8.375%, 11/1/2019		1,271,770
	400,000	¹	Sungard Data Systems, Inc., 4.875%, 1/15/2014		383,848
	2,000,000		Unisys Corp., 8.125%, 6/1/2006		2,165,000

			TOTAL		5,540,218

Principal Amount				Value
			CORPORATE BONDS--continued
			Transportation - Airlines--1.1%
$	187,216		Continental Airlines, Inc., Pass Thru Cert., 7.73%, 3/15/2011	$	163,814
	1,300,000		Delta Air Lines, Inc., Pass Thru Cert., 7.92%, 11/18/2010		1,020,500
	803,420		Northwest Airlines Corp., Equip. Trust, 8.072%, 10/1/2019		874,812
	1,000,000		Southwest Airlines Co., 6.50%, 3/1/2012		1,073,930
	425,000		Southwest Airlines Co., Deb., 7.375%, 3/1/2027		449,824

			TOTAL		3,582,880

			Transportation - Railroads--0.3%
	857,943		Burlington Northern Santa Fe, Pass Thru Cert., 7.57%, 1/2/2021		1,005,072

			Transportation - Services--0.9%
	3,100,000	¹	FedEx Corp., Unsecd. Note, 2.65%, 4/1/2007		3,036,326

			Utility - Electric--5.1%
	2,000,000		Alabama Power Co., 2.80%, 12/1/2006		1,988,760
	2,300,000		American Electric Power Co., Inc., Note, 6.125%, 5/15/2006		2,448,005
	1,500,000		Enersis S.A., Note, 7.40%, 12/1/2016		1,483,125
	1,000,000		Gulf States Utilities, 1st Mtg. Bond, Series 2005B, 6.77%, 8/1/2005		1,049,100
	1,500,000	¹	Israel Electric Corp. Ltd., Sr. Note, 7.875%, 12/15/2026		1,560,495
	1,350,000		MidAmerican Energy Co., Unsecd. Note, 6.75%, 12/30/2031		1,463,211
	750,000		National Rural Utilities Cooperative Finance Corp., Medium Term Note, 5.75%, 12/1/2008		799,305
	500,000	²	Oncor, Inc., Deb., 7.00%, 9/1/2022		542,130
	3,000,000		PSEG Power LLC, Company Guarantee, 7.75%, 4/15/2011		3,486,570
	610,000		Pacific Gas & Electric Co., 6.05%, 3/1/2034		577,493
	555,000		Pacific Gas & Electric Co., Unsecd. Note, 4.20%, 3/1/2011		535,919
	1,000,000	¹	Tenaga Nasional Berhad, Deb., 7.50%, 1/15/2096		925,630

			TOTAL		16,859,743

			TOTAL CORPORATE BONDS (IDENTIFIED COST $260,087,683)		267,961,128

			GOVERNMENT AGENCIES--7.3%
			Agency--0.4%
	1,500,000		Federal Home Loan Bank System, Bond, 7.00%, 7/16/2009		1,517,310

			Federal Home Loan Mortgage Corporation--0.9%
	3,000,000		Federal Home Loan Mortgage Corp., Note, 6.875%, 1/15/2005		3,113,520

			Federal National Mortgage Association--6.0%
	20,000,000		Federal National Mortgage Association, Note, Series, 2.50%, 8/11/2006		19,846,400

			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $24,435,527)		24,477,230

Principal Amount or Shares				Value
			MUNICIPALS--2.7%
			Consumer Cyclical - Services--0.4%
$	1,100,000		Harvard University, Revenue Bonds, 8.125% Bonds, 4/15/2007	$	1,251,503

			Municipal Services--2.3%
	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		1,366,488
	825,000		Kansas City, MO Redevelopment Authority, 7.65% Bonds (FSA LOC), 11/1/2018		900,075
	2,000,000		McKeesport, PA, Taxable G.O. Series B 1997, 7.30% Bonds (MBIA Insurance Corp. INS), 3/1/2020		2,103,740
	1,000,000		Miami Florida Revenue Pension Obligation, 7.20% Bonds (AMBAC LOC), 12/1/2025		1,086,710
	1,000,000		Pittsburgh, PA Urban Redevelopment Authority, 9.07% Bonds (CGIC GTD), 9/1/2014		1,095,060
	1,000,000		St. Johns County, FL Convention Center, Taxable Municipal Revenue Bonds, 8.00% Bonds (FSA INS), 1/1/2026		1,072,920

			TOTAL		7,624,993

			TOTAL MUNICIPALS (IDENTIFIED COST $8,190,386)		8,876,496

			PREFERRED STOCKS--1.1%
			Financial Institution - Banking--1.1%
	70,000		Citigroup, Inc., Cumulative Pfd., Series F (IDENTIFIED COST $3,343,620)		3,661,875

			U.S. TREASURY--3.1%
	9,065,000		United States Treasury Bond, 12.75%, 11/15/2010 (IDENTIFIED COST $10,703,144)		10,516,850

			REPURCHASE AGREEMENTS--11.3%
$	11,853,000		Interest in $1,000,000,000 joint repurchase agreement with Banc of America Securities LLC, Inc., 1.060%, dated 4/30/2004, to be repurchased at $11,854,047 on 5/3/2004, collateralized by U.S. Government Agency Obligations with various maturities to 2/1/2034		11,853,000
	25,663,000		Interest in $1,775,000,000 joint repurchase agreement with Countrywide Securities Corp., 1.06%, dated 4/30/2004, to be repurchased at $25,665,267 on 5/3/2004, collateralized by U.S. Government Agency Obligations with various maturities to 4/25/2034 (held as collateral for securities lending)		25,663,000

			TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST)		37,516,000

			TOTAL INVESTMENTS--107.1% (IDENTIFIED COST $348,959,648)³		356,556,250

			OTHER ASSETS AND LIABILITIES -- NET--(7.1)%		(23,698,866	)

			TOTAL NET ASSETS--100%	$	332,857,384

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, 2004, these securities amounted to $34,926,933 which represents 10.5% of total net assets.

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

3 The cost of investments for federal tax purposes amounts to $348,988,512.

Note: The categories of investments are shown as a percentage of total net assets at April 30, 2004.

The following acronyms are used throughout this portfolio:

AMBAC	- --American Municipal Bond Assurance Corporation
CGIC	- --Capital Guaranty Insurance Corporation
FSA	- --Financial Security Assurance
GTD	- --Guaranteed
INS	- --Insured
LOC	- --Letter of Credit
REITs	- --Real Estate Investment Trust

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

April 30, 2004

Assets:
Investments in repurchase agreements	$	37,516,000
Investments in securities		319,040,250

Total investments in securities, at value including $21,588,727 of securities loaned (identified cost $348,959,648)			$	356,556,250
Cash				381
Income receivable				5,498,899
Receivable for investments sold				5,933,282
Receivable for shares sold				915,672

TOTAL ASSETS				368,904,484

Liabilities:
Payable for investments purchased	$	9,103,087
Payable for shares redeemed		529,853
Income distribution payable		701,327
Payable for collateral due to broker		25,663,000
Payable for transfer and dividend disbursing agent fees and expense (Note 5)		23,335
Payable for Directors'/Trustees' fees		1,764
Payable for shareholder services fee (Note 5)		13,999
Accrued expenses		10,735

TOTAL LIABILITIES				36,047,100

Net assets for 32,692,908 shares outstanding			$	332,857,384

Net Assets Consist of:
Paid in capital			$	330,378,289
Net unrealized appreciation of investments				7,596,602
Accumulated net realized loss on investments				(5,194,080	)
Undistributed net investment income				76,573

TOTAL NET ASSETS			$	332,857,384

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$264,565,628 ÷ 25,985,477 shares outstanding				$10.18

Institutional Service Shares:
$68,291,756 ÷ 6,707,431 shares outstanding				$10.18

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended April 30, 2004

Investment Income:
Interest (including income on securities loaned of $9,147)							$	15,857,164
Dividends (including $474,392 received from affiliated issuers (Note 5))								697,167

TOTAL INCOME								16,554,331

Expenses:
Investment adviser fee (Note 5)				$	1,551,057
Administrative personnel and services fee (Note 5)					240,883
Custodian fees					18,089
Transfer and dividend disbursing agent fees and expenses (Note 5)					124,295
Directors'/Trustees' fees					6,926
Auditing fees					12,501
Legal fees					6,027
Portfolio accounting fees (Note 5)					98,648
Distribution services fee--Institutional Service Shares (Note 5)					151,788
Shareholder services fee--Institutional Shares (Note 5)					623,741
Shareholder services fee--Institutional Service Shares (Note 5)					151,788
Share registration costs					45,149
Printing and postage					28,926
Insurance premiums					1,814
Miscellaneous					4,734

TOTAL EXPENSES					3,066,366

Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(397,546	)
Waiver of administrative personnel and services fee		(5,986	)
Waiver of transfer and dividend disbursing agent fees and expenses		(14,155	)
Waiver of distribution services fee--Institutional Service Shares		(151,788	)
Waiver of shareholder services fee--Institutional Shares		(623,741	)

TOTAL WAIVERS AND REIMBURSEMENT					(1,193,216	)

Net expenses								1,873,150

Net investment income								14,681,181

Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								4,199,751
Net change in unrealized appreciation of investments								(9,677,568	)

Net realized and unrealized loss on investments								(5,477,817	)

Change in net assets resulting from operations							$	9,203,364

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended April 30		2004			2003
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	14,681,181		$	18,467,591
Net realized gain (loss) on investments		4,199,751			(886,047	)
Net change in unrealized appreciation/depreciation of investments		(9,677,568	)		14,467,377

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		9,203,364			32,048,921

Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(11,903,204	)		(15,478,344	)
Institutional Service Shares		(2,740,182	)		(3,084,704	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(14,643,386	)		(18,563,048	)

Share Transactions:
Proceeds from sale of shares		168,328,892			162,292,576
Net asset value of shares issued to shareholders in payment of distributions declared		6,633,136			6,975,089
Cost of shares redeemed		(134,582,019	)		(221,559,343	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		40,380,009			(52,291,678	)

Change in net assets		34,939,987			(38,805,805	)

Net Assets:
Beginning of period		297,917,397			336,723,202

End of period (including undistributed net investment income of $76,573 and $54,403, respectively)	$	332,857,384		$	297,917,397

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

April 30, 2004

1. 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 five portfolios. The financial statements included herein are only those of Federated Intermediate Corporate Bond Fund, formerly 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.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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 or official closing 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 accordance with procedures established by and under general supervision of 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 short-term securities including repurchase agreements. 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 securities lending agent, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of April 30, 2004, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$21,588,727		$25,663,000

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.

3. SHARES OF BENEFICIAL INTEREST

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

Transactions in shares were as follows:

Year Ended April 30	2004					2003
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	11,528,168		$	119,419,226		8,602,675		$	86,827,734
Shares issued to shareholders in payment of distributions declared	419,192			4,325,181		408,809			4,128,629
Shares redeemed	(9,343,686	)		(96,598,697	)	(15,322,926	)		(153,704,384	)

NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	2,603,674		$	27,145,710		(6,311,442	)	$	(62,748,021	)


Year Ended April 30	2004					2003
Institutional Services Shares:	Shares			Amount		Shares			Amount
Shares sold	4,728,953		$	48,909,666		7,420,692		$	75,464,842
Shares issued to shareholders in payment of distributions declared	223,586			2,307,955		281,599			2,846,460
Shares redeemed	(3,667,231	)		(37,983,322	)	(6,680,715	)		(67,854,959	)

NET CHANGE RESULTING FROM INSTITUTIONAL SERVICES SHARE TRANSACTIONS	1,285,308		$	13,234,299		1,021,576		$	10,456,343

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	3,888,982		$	40,380,009		(5,289,866	)	$	(52,291,678	)

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for proceeds from litigation claims.

For the year ended April 30, 2004, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Distributions in Excess of Net Investment Income		Accumulated Net Realized Loss
$(15,625)		$15,625

Net investment income (loss), net realized gains (losses), as disclosed on the Statement of Operations 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, 2004 and April 30, 2003, were as follows:

	2004	2003
Ordinary income¹	$14,643,386	$18,563,048

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

As of April 30, 2004, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	777,900

Net unrealized appreciation	$	7,567,738

Capital loss carryforward	$	5,165,216

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

At April 30, 2004 the cost of investments for federal tax purposes was $348,988,512. The net unrealized appreciation of investments for federal tax purposes was $7,567,738. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $11,417,683 and net unrealized depreciation from investments for those securities having an excess of cost over value of $3,849,945.

At April 30, 2004, the Fund had a capital loss carryforward of $5,165,216 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2009		$3,108,396

2011		$2,056,820

5. 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 Securities and Exchange Commission, the Fund may invest in other Funds, which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse certain investment adviser fees as a result of these transactions. Income distributions earned from investments in these funds are recorded as income in the accompanying financial statements and are listed below:

Federated Mortgage Core Portfolio		$322,742
Prime Value Obligations Fund		$151,650

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares.

FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion.

Prior to November 1, 2003, Federated Services Company ("FServ") provided the Fund with Administrative personnel and services. The fee paid to FServ was based on the average aggregate daily net assets of all Federated funds as specified below:

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

The administrative fee received during any fiscal year was at least $125,000 per portfolio and $30,000 per each additional class of Shares.

For the year ended April 30, 2004 the fees paid to FAS and FServ were $123,276 and $111,621, respectively, after voluntary waiver, if applicable.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the daily net assets of the Fund's Institutional Service Shares to finance activities intended to result in the sale of these Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of average daily net assets, 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 the average daily net assets of the Fund's Institutional Shares and Institutional Services Shares 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

Prior to January 1, 2004, FServ maintained the Fund's accounting records for which it received a fee. The fee was based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. The fee paid to FServ during the reporting period was $64,134, after voluntary waiver, if applicable.

General

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

6. 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, 2004, were as follows:

Purchases	$	191,147,304

Sales	$	137,813,665

7. LEGAL PROCEEDINGS

In October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, "Federated"), along with various investment companies sponsored by Federated ("Funds") were named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland seeking damages of unspecified amounts. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and will respond appropriately. Additional lawsuits based upon similar allegations have been filed, and others may be filed in the future. Although Federated does not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from related regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

8. FEDERAL TAX INFORMATION (UNAUDITED)

For the fiscal year ended April 30, 2004, 1.52% of total ordinary dividends paid by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended April 30, 2004, 1.37% qualify for the dividend received reduction available to corporate shareholders.

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

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

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Federated Intermediate Corporate Bond Fund, formerly Federated Intermediate Income Fund, one of the portfolios constituting Federated Income Securities Trust (the "Trust"), as of April 30, 2004, 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2004 by correspondence with the custodian. 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 Corporate Bond Fund, a portfolio of Federated Income Securities Trust, at April 30, 2004, 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 U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
June 10, 2004

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, 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 Trust comprises five portfolios and the Federated Fund Complex consists of 44 investment companies (comprising 136 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; Golden Oak® Family of Funds--seven portfolios; and WesMark Funds--five portfolios. The Fund's Statement of Additional Information includes additional information about Trust 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. Previous Positions: Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.


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.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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 3838 North Tamiami Trail Suite 402 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 and Member of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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.


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; Partner, Murray, Hogue and Lannis. 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.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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)
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRISIDENT 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.




Name Birth Date Positions Held with Trust Date Service Began		Principal Occupation(s) and Previous Position(s)
Stephen F. Auth Birth Date: September 3, 1956 CHIEF INVESTMENT OFFICER Began serving: May 2004		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 Equity Management Company of Pennsylvania and Passport Research II, Ltd. Previous Positions: Executive Vice President, Federated Investment Management Company, and Passport Research, Ltd.; Senior Vice President, Global Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and Portfolio Manager, Prudential Investments.


Robert J. Ostrowski Birth Date: April 26, 1963 CHIEF INVESTMENT OFFICER Began serving: May 2004		Principal Occupations: Mr. Ostrowski joined Federated in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of taxable fixed income products in 2004 and also serves as a Senior Portfolio Manager. He has been a Senior Vice President of the Fund's Adviser since 1997. Mr. Ostrowski is a Chartered Financial Analyst. He received his M.S. in Industrial Administration from Carnegie Mellon University.


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.


John L. Nichol Birth Date: May 21, 1963 VICE PRESIDENT Began Serving: May 2004		John L. Nichol is Vice President of the Trust. Mr. Nichol joined Federated in September 2000 as an Assistant Vice President/Senior Investment Analyst. He has been a Portfolio Manager since December 2000 and was named a Vice President of the Fund's Adviser in July 2001. Mr. Nichol served as a portfolio manager and analyst for the Public Employees Retirement System of Ohio from 1992 through August 2000. Mr. Nichol is a Chartered Financial Analyst. He received has M.B.A. with an emphasis in Finance and Management and Information Science from the Ohio 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.

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.

Federated Investors
World-Class Investment Manager

Federated Intermediate Corporate Bond 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. 2004 ©Federated Investors, Inc.

G00715-02 (6/04)

Federated Investors
World-Class Investment Manager

Federated Short-Term Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

April 30, 2004

Institutional Shares
Institutional Service Shares

FINANCIAL HIGHLIGHTS
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
BOARD OF TRUSTEES AND TRUST OFFICERS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

Financial Highlights -- Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended April 30	2004		2003		2002		2001		2000
Net Asset Value, Beginning of Period	$8.56		$8.70		$8.74		$8.52		$8.67
Income From Investment Operations:
Net investment income	0.25		0.35		0.47	¹	0.56		0.53
Net realized and unrealized gain (loss) on investments	(0.10	)	(0.14	)	(0.05	)¹	0.22		(0.15	)

TOTAL FROM INVESTMENT OPERATIONS	0.15		0.21		0.42		0.78		0.38

Less Distributions:
Distributions from net investment income	(0.24	)	(0.35	)	(0.46	)	(0.56	)	(0.53	)

Net Asset Value, End of Period	$8.47		$8.56		$8.70		$8.74		$8.52

Total Return²	1.81	%	2.46	%	4.90	%	9.39	%	4.52	%


Ratios to Average Net Assets:

Expenses	0.56	%	0.56	%	0.57	%	0.56	%	0.56	%

Net investment income	3.00	%	3.96	%	5.30	%¹	6.41	%	6.23	%

Expense waiver/reimbursement³	0.30	%	0.26	%	0.28	%	0.29	%	0.28	%

Supplemental Data:

Net assets, end of period (000 omitted)	$185,337		$236,394		$236,307		$193,030		$189,395

Portfolio turnover	38	%	69	%	29	%	43	%	44	%

1 Effective May 1, 2001, the Fund adopted 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	2004		2003		2002		2001		2000
Net Asset Value, Beginning of Period	$8.56		$8.70		$8.74		$8.52		$8.67
Income From Investment Operations:
Net investment income	0.23		0.33		0.45	¹	0.53		0.51
Net realized and unrealized gain (loss) on investments	(0.10	)	(0.14	)	(0.05	)¹	0.22		(0.15	)

TOTAL FROM INVESTMENT OPERATIONS	0.13		0.19		0.40		0.75		0.36

Less Distributions:
Distributions from net investment income	(0.22	)	(0.33	)	(0.44	)	(0.53	)	(0.51	)

Net Asset Value, End of Period	$8.47		$8.56		$8.70		$8.74		$8.52

Total Return²	1.56	%	2.21	%	4.64	%	9.12	%	4.26	%


Ratios to Average Net Assets:

Expenses	0.81	%	0.81	%	0.82	%	0.81	%	0.81	%

Net investment income	2.75	%	3.71	%	5.05	%¹	6.16	%	5.94	%

Expense waiver/reimbursement³	0.30	%	0.26	%	0.28	%	0.29	%	0.28	%

Supplemental Data:

Net assets, end of period (000 omitted)	$19,130		$34,864		$24,121		$18,145		$13,999

Portfolio turnover	38%		69	%	29	%	43	%	44	%

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

This report covers Federated Short-Term Income Fund's fiscal year performance period from May 1, 2003, through April 30, 2004.

During the reporting period, the fund's Institutional Shares and Institutional Service Shares produced total returns of 1.81% and 1.56%, respectively.¹ The fund's benchmark, the Merrill Lynch 0-3 Year Composite Index (ML0-3C)² returned 1.99% during the same period. Its peer group, as measured by the Lipper Short Investment Grade Debt Funds category, averaged a return of 1.27% for the reporting period ended April 30, 2004. Net asset value, for each share class, moved from $8.56 at the beginning of the reporting period to $8.47 at the end. In terms of income, the fund's Institutional Shares and Institutional Service Shares paid monthly dividends of $0.021 and $0.019 per share, respectively, in April 2004. At the end of the reporting period, the fund's 30-day Securities and Exchange Commission (SEC) yield for the Institutional Shares was 2.61%, with a 30-day distribution yield of 2.92%.³

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. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance, visit www.federatedinvestors.com or call 1-800-341-7400.

2 The ML0-3C is a composite of four separate indices which track various security types. The indices are produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. The four component indices are the ML1-3 Year Corporate Index (30% weighting in the Composite Index), the ML0-3 Year Fixed Rate Asset-Backed Securities Index (30%), the ML1-3 Year Treasury/Agency Index (20%), and the ML0-3 Year Mortgage-Backed Securities Index (20%). Investments cannot be made in an index. The four component indices (and, by extension the ML0-3C), 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 four component indices are unmanaged and, unlike the fund, are not affected by cashflows.

3 The 30-day SEC yield is calculated by dividing the net investment income per share for the 30 days ended on the date of calculation by the maximum offering price per share on that date. The figure is compounded and annualized. The 30-day distribution yield reflects actual distributions made to shareholders. It is calculated by dividing the monthly annualized dividend plus short-term capital gains, if any, by the average 30-day offering price.

Corporate securities, at 39% of the portfolio as of April 30, 2004, remained the single largest allocation of fund net assets over the reporting period, while asset-backed securities (ABS) accounted for 25% of fund net assets at the end of the reporting period. A move toward greater use of corporates was initiated early in 2003 in response to improving economic conditions. Credit sensitive securities like corporates tend to outperform higher quality securities of similar duration during economic expansions, and the greater emphasis on corporates had a positive impact on performance. ABS, being a generally higher-quality asset class, was de-emphasized somewhat in the portfolio, although the ABS sector also performed well. While the fund was underweight in ABS relative to the ML0-3C, the subordinate sector of the ABS market (those ABS rated below "AAA") performed particularly well during the reporting period, and the fund's allocation within this market segment produced some security-specific outperformance for the portfolio. The remainder of the portfolio at April 30, 2004, was accounted for by government securities at 16%, mortgage-backed securities (MBS) at 17%, and cash at 3%. Governments and MBS generally carried a portfolio underweight relative to ML0-3C, during the reporting period, and these sectors did underperform the corporate and ABS segments of the ML0-3C during the reporting period, which provided a positive performance effect relative to the ML0-3C.

Fund duration was maintained shorter than that of the ML0-3C during the reporting period, reflecting fund management's belief that the next significant move in interest rates would more likely be an upward one. Duration, which is a general measure of the fund's sensitivity to interest rate movements, stood at 1.48 years at the end of the reporting period, versus 1.79 years for the ML0-3C.⁴ This posture generally had a positive impact on performance. The fund's duration range will be affected by the duration of the benchmark comparison, and is bounded by a maximum 20% positive or negative variance from the duration of the ML0-3C.

In terms of credit quality, the highest percentage of fund net assets remains in AAA-rated securities--51% at the end of the reporting period.⁵ BBB-rated securities accounted for 14% of net assets. Management has utilized a greater percentage of lower investment grade rated corporate securities in an effort to take advantage of the improving economy. The general credit quality of the portfolio however, remains solidly investment grade, averaging a low "AA" at the end of the reporting period. Actual "AA" rated securities accounted for 11% of net assets, with "A" rated securities at 21% of the portfolio, and cash comprising the remaining 3%.

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, 1994 to April 30, 2004, 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 4/30/2004
1 Year		1.81%

5 Years		4.58%

10 Years		5.26%

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 SEC requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows.

3 The LSIGDFA represents the average of the total returns reported by all 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, 1994 to April 30, 2004, 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 4/30/2004
1 Year		1.56%

5 Years		4.32%

10 Years		5.00%

Portfolio of Investments

April 30, 2004

Principal Amount				Value
			ADJUSTABLE RATE MORTGAGES--3.5%
			Federal National Mortgage Association--3.5%
$	953,073	¹	FNMA ARM 544843, 10/1/2027	$	972,669
	2,523,368	¹	FNMA ARM 544852, 4/1/2028		2,575,123
	2,729,426	¹	FNMA ARM 556379, 5/1/2040		2,769,587
	873,156	¹	FNMA ARM 556388, 5/1/2040		886,004

			TOTAL ADJUSTABLE RATE MORTGAGES (IDENTIFIED COST $7,183,881)		7,203,383

			ASSET-BACKED SECURITIES--24.3%
			Auto Receivables--7.2%
	2,481,472		Americredit Automobile Receivables Trust 2001-B, Class A4, 5.37%, 6/12/2008		2,548,811
	1,830,603	¹	Americredit Automobile Receivables Trust 2002-A, Class A3, 1.29%, 10/12/2006		1,832,149
	1,000,000	¹	Capital Auto Receivables Asset Trust 2004-1, Class A3, 2.00%, 11/15/2007		990,954
	2,000,000	¹	DaimlerChrysler Master Owner Trust 2002-A, Class A, 1.15%, 5/15/2007		2,000,680
	926,434	²	First Tennessee Financial Auto Securitization Trust 2002-A, Class A, 3.55%, 7/15/2008		938,302
	646,156		Ford Credit Auto Owner Trust 2001-D, Class A3, 4.31%, 6/15/2005		647,907
	416,632		Honda Auto Receivables Owner Trust 2002-1, Class A3, 3.50%, 10/17/2005		418,344
	1,500,000		M&I Auto Loan Trust 2001-1, Class B, 5.88%, 6/20/2008		1,530,855
	1,000,000		MMCA Automobile Trust 2000-2, Class B, 7.42%, 8/15/2005		1,010,686
	506,641		Navistar Financial Corp. Owner Trust 2002-A, Class B, 4.95%, 4/15/2009		518,315
	319,165		The CIT Group Securitization Corp. II, Class B, 6.45%, 6/15/2018		329,014
	2,000,000		Whole Auto Loan Trust 2003-1, Class A3B, 1.99%, 5/15/2007		1,996,380

			TOTAL		14,762,397

			Credit Card--4.6%
	2,000,000		Bank One Issuance Trust 2002-A4, Class A4, 2.94%, 6/16/2008		2,024,480
	1,000,000		Bank One Issuance Trust 2002-B1, Class B1, 1.48%, 12/15/2009		1,006,400
	1,250,000		Capital One Multi Asset Execution 2003-A6, Class A6, 2.95%, 8/17/2009		1,251,162
	3,000,000	¹	Citibank Credit Card Issuance Trust 2000-C2, Class C2, 1.77%, 10/15/2007		3,011,280
	2,000,000	¹	MBNA Master Credit Card Trust 2000-D, Class B, 1.53%, 9/15/2009		2,012,240

			TOTAL		9,305,562

			Home Equity Loan--7.5%
	562,804	²	125 Home Loan Owner Trust 1998-1A, Class M2, 7.75%, 2/15/2029		572,304
	9,999,862		ACE Securities Corp. 2001-HE1, Class AIO, 6.00%, 8/20/2004		148,698
	398,173	^1,2	AQ Finance NIM Trust 2002-N6, Class NOTE, 1.74%, 12/25/2007		400,414
Principal Amount				Value
			ASSET-BACKED SECURITIES--continued
			Home Equity Loan--continued
$	773,162	¹	Ameriquest Mortgage Securities, Inc. 2002-5, Class AV1, 1.61%, 2/25/2033	$	779,525
	1,152,690	²	Bayview Financial Acquisition Trust 1998-1, Class MI1, 7.52%, 5/25/2029		1,218,480
	431,731	^1,2	Bayview Financial Acquisition Trust 1998-1, Class MII1, 1.85%, 5/25/2029		412,437
	631,222	^1,2	Bayview Financial Acquisition Trust 1998-1, Class MII2, 1.94%, 5/25/2029		590,590
	7,700,000		Centex Home Equity 2002-C, Class AIO, 6.00%, 8/25/2004		86,625
	197,155	¹	Chase Funding Mortgage Loan Asset-Backed Certificates 1999-1, Class IIB, 3.85%, 6/25/2028		197,528
	1,000,000		Chase Funding Mortgage Loan Asset-Backed Certificates 2003-6, Class 1A2, 2.737% 3/25/2020		998,860
	867,824		Chase Funding Net Interest Margin, Class NOTE, 3.75%, 2/27/2034		874,836
	205,486		Cityscape Home Equity Loan Trust 1997-1, Class A4, 7.23%, 3/25/2018		206,717
	118,497	¹	ContiMortgage Home Equity Loan Trust 1996-4, Class A10, 1.33%, 1/15/2028		118,570
	1,788,954	¹	Fifth Third Home Equity Loan Trust, Class A, 1.34%, 9/20/2023		1,788,954
	970,901	¹	First Franklin Mortgage Loan Asset Backed Certificates 2003-FF5, Class A3, 1.45%, 3/25/2034		972,334
	870,153	²	First Franklin NIM Trust 2004-FFA, Class A, 5.00%, 3/27/2024		869,065
	469,521		Mellon Bank Home Equity Installment Loan 1998-1, Class B, 6.95%, 3/25/2015		482,912
	613,680		New Century Home Equity Loan Trust 1997-NC5, Class M2, 7.24%, 10/25/2028		633,109
	957,229		Quest Trust 2004 - X1, Class A, 1.42%, 2/25/2034		959,919
	16,137,898		Residential Asset Mortgage Products, Inc. 2002-RS1, Class AII, 5.50%, 7/25/2004		93,923
	1,000,000		Residential Asset Mortgage Products, Inc. 2003-RS10, Class AI2, 3.12%, 5/25/2025		989,110
	1,833,761		Residential Asset Securities Corp. 1999-KS3, Class AI7, 7.505%, 10/25/2030		1,919,581

			TOTAL		15,314,491

			Manufactured Housing--0.7%
	270,306		Green Tree Financial Corp. 1993-2, Class A4, 6.90%, 7/15/2018		271,990
	1,053,388		Green Tree Financial Corp. 1997-1, Class A5, 6.86%, 3/15/2028		1,118,267

			TOTAL		1,390,257

			Other--2.4%
	47,811	^1,2	CapitalSource Commercial Loan Trust 2002-2A, Class A, 1.64125%, 9/20/2010		47,833
	276,877		Caterpillar Financial Asset Trust 2001-A, Class A3, 4.85%, 4/25/2007		277,761
	2,702,813	^2,3	FMAC Loan Receivables Trust 1997-A, Class A-X, 4.02%, 4/15/2019		108,113
Principal Amount				Value
			ASSET-BACKED SECURITIES--continued
			Other--continued
$	635,782	^1,2	Great America Leasing Receivables 2002-1, Class C, 4.91%, 7/15/2007	$	649,454
	1,858,421		John Deere Owner Trust 2003-A, Class A2, 1/17/2006		1,859,120
	2,000,000	¹	Mellon Bank Premium Finance Loan Master Trust 2002-1, Class A, 1.41%, 12/17/2007		2,003,560

			TOTAL		4,945,841

			Rate Reduction Bond--1.9%
	952,469		CPL Transition Funding LLC 2002-1, Class A1, 3.54%, 1/15/2007		961,650
	1,643,432		California Infrastructure & Economic Development Bank Special Purpose Trust SCE-1, Class A6, 6.38%, 9/25/2008		1,721,133
	1,234,104		California Infrastructure SDG&E-1 1997-1, Class A6, 6.31%, 9/25/2008		1,291,341

			TOTAL		3,974,124

			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $50,572,320)		49,692,672

			COLLATERALIZED MORTGAGE OBLIGATIONS--12.3%
			Commercial Mortgage--0.1%
	5,432,322		First Union Lehman Brothers Commercial Mortgage Trust 1997-C1, Class IO, 1.301%, 4/18/2029		221,191

			Federal Home Loan Mortgage Corporation--5.3%
	1,446,670		Federal Home Loan Mortgage Corp. Structured Pass Through, Class A1, 1.582%, 9/15/2008		1,425,682
	1,810,298		Federal Home Loan Mortgage Corp. Structured Pass Through, Class A2, 1.876%, 3/15/2008		1,757,522
	4,757,038		Federal Home Loan Mortgage Corp. Structured Pass Through, Class A3, 2.29%, 6/15/2007		4,760,045
	1,711,272	¹	Federal Home Loan Mortgage Corp., Series 2571, Class FB, 1.45%, 2/15/2018		1,709,304
	147		Federal Home Loan Mortgage Corp., Series 2603, Class AC, 2.00%, 12/15/2008		147
	1,178,769		Federal Home Loan Mortgage Corp., Series SF1, Class A3, 2.00%, 12/15/2008		1,181,355

			TOTAL		10,834,055

			Federal National Mortgage Association--0.7%
	1,413,094		Federal National Mortgage Association, Series 2002-22, Class PE, 6.50%, 11/25/2030		1,446,330

			Non-Agency Collateralized Mortgage Obligations--6.2%
	1,628,831	^1,2	Credit-Based Asset Servicing And Securitization 1997-1, Class A1, 3.70469%, 2/1/2017		1,628,831
	872,437	²	Greenwich Capital Acceptance 1991-4, Class B-1A, 6.16%, 7/1/2019		872,166
	2,400,147	¹	Impac CMB Trust 2002-7, Class A, 1.53%, 11/25/2032		2,417,020
Principal Amount				Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--continued
			Non-Agency Collateralized Mortgage Obligations--continued
$	806,806		Mastr Asset Securitization Trust 2003-1, Class 2A1, 5.75%, 2/25/2033	$	810,921
	172,159		Prudential Home Mortgage Securities 1992-5, Class A-6, 7.50%, 4/25/2007		173,012
	982,856	^1,2,3	RESI Finance LP 2002-A, Class B3, 2.70%, 10/10/2034		1,001,665
	22,750,000		Residential Asset Securitization Trust 2002-A4, Class AIO, 2.50%, 8/25/2004		196,560
	22,500,000		Residential Asset Securitization Trust 2002-A11, Class AIO, 2.50%, 10/25/2032		393,750
	194,487		Residential Funding Mortgage Securities I 1994-S13, Class M1, 7.00%, 5/25/2024		195,152
	3,000,000		Washington Mutual 2003-AR9, Class A2A, 2.341%, 10/25/2033		2,991,240

	2,000,000		Washington Mutual 2003-AR12, Class A2, 2.44%, 12/25/2033		2,010,240

			TOTAL		12,690,557

			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $25,442,735)		25,192,133

			CORPORATE BONDS--38.5%
			Basic Industry - Chemicals--0.5%
	1,200,000		Praxair, Inc., 2.75%, 6/15/2008		1,152,084

			Basic Industry - Paper--0.5%
	1,000,000		Weyerhaeuser Co., Note, 5.50%, 3/15/2005		1,029,170

			Capital Goods - Aerospace & Defense--0.5%
	800,000		Boeing Capital Corp., 5.65%, 5/15/2006		845,176
	250,000		General Dynamics Corp., 2.125%, 5/15/2006		247,277

			TOTAL		1,092,453

			Communications - Media & Cable--1.0%
	500,000		Comcast Corp., 6.375%, 1/30/2006		529,830
	250,000		Continental Cablevision, Sr. Deb., 8.875%, 9/15/2005		271,085
	1,100,000		Cox Communications, Inc., 7.75%, 8/15/2006		1,208,273

			TOTAL		2,009,188

			Communications - Media Noncable--1.1%
	1,100,000		Clear Channel Communications, Inc., 6.00%, 11/1/2006		1,169,509
	1,000,000		Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006		1,070,270

			TOTAL		2,239,779

			Communications - Telecom Wireless--1.1%
	1,250,000		AT&T Wireless Services, Inc., 6.875%, 4/18/2005		1,307,450
	1,000,000	^2,3	Verizon Wireless, Inc., 1.19%, 5/23/2005		999,457

			TOTAL		2,306,907

			Communications - Telecom Wirelines--1.1%
	1,000,000		GTE North, Inc., Sr. Deb., 6.40%, 2/15/2005		1,033,160
	1,100,000		SBC Communications, Inc., Note, 5.75%, 5/2/2006		1,165,373

			TOTAL		2,198,533

Principal Amount				Value
			CORPORATE BONDS--continued
			Consumer Cyclical - Automotive--1.4%
$	500,000		DaimlerChrysler North America Holding Corp., 7.75%, 6/15/2005	$	529,280
	450,000		General Motors Acceptance Corp., 4.50%, 7/15/2006		460,188
	1,000,000		General Motors Acceptance Corp., Note, 6.75%, 1/15/2006		1,059,890
	850,000	^2,3	Harley Davidson, Inc., 3.625%, 12/15/2008		840,905

			TOTAL		2,890,263

			Consumer Cyclical - Entertainment--1.7%
	850,000		AOL Time Warner, Inc., 5.625%, 5/1/2005		879,384
	1,250,000		International Speedway Corp., 7.875%, 10/15/2004		1,284,550
	1,250,000		Viacom, Inc., Sr. Note, 7.75%, 6/1/2005		1,327,562

			TOTAL		3,491,496

			Consumer Cyclical - Retailers--2.4%
	1,000,000		CVS Corp., 5.625%, 3/15/2006		1,053,380
	1,000,000		Nordstrom, Inc., Sr. Note, 5.625%, 1/15/2009		1,060,930
	750,000		Target Corp., 3.375%, 3/1/2008		741,097
	2,000,000		Wal-Mart Stores, Inc., 4.15%, 6/15/2005		2,049,300

			TOTAL		4,904,707

			Consumer Non-Cyclical - Consumer Products--1.3%
	1,000,000		Alberto-Culver Co., Unsecd. Note, 8.25%, 11/1/2005		1,082,980
	500,000		Gillette Co., 2.875%, 3/15/2008		487,640
	1,000,000		Procter & Gamble Co., 3.50%, 12/15/2008		989,480

			TOTAL		2,560,100

			Consumer Non-Cyclical - Food/Beverage--1.7%
	1,100,000		Diageo Capital PLC, 3.375%, 3/20/2008		1,083,445
	1,000,000		General Mills, Inc., 3.875%, 11/30/2007		1,007,530
	1,250,000		Kellogg Co., Note, 6.00%, 4/1/2006		1,327,113

			TOTAL		3,418,088

			Consumer Non-Cyclical - Pharmaceuticals--1.2%
	1,500,000		Johnson & Johnson, Deb., 8.72%, 11/1/2024		1,618,245
	944,000		Lilly (Eli) & Co., Note, 2.90%, 3/15/2008		919,513

			TOTAL		2,537,758

			Consumer Non-Cyclical - Supermarkets--1.1%
	895,000		Albertsons, Inc., Sr. Note, 6.55%, 8/1/2004		906,429
	1,250,000		Kroger Co., Sr. Note, 6.375%, 3/1/2008		1,352,838

			TOTAL		2,259,267

			Energy - Independent--0.4%
	800,000	^2,3	Ras Laffan Liquified Natural Gas, 3.437%, 9/15/2009		788,272

Principal Amount				Value
			CORPORATE BONDS--continued
			Energy -- Integrated--1.2%
$	1,100,000		ChevronTexaco Corp., 5.70%, 12/1/2008	$	1,150,930
	1,250,000		Conoco, Inc., 5.45%, 10/15/2006		1,322,600

			TOTAL		2,473,530

			Energy - Refining--0.5%
	900,000		Valero Energy Corp., 7.375%, 3/15/2006		971,199

			Financial Institution - Banking--2.9%
	1,250,000		Citigroup Global Markets Holdings, Inc., Note, 5.875%, 3/15/2006		1,324,925
	1,000,000		Household Finance Corp., Note, 6.50%, 1/24/2006		1,065,960
	450,000		Mellon Funding Corp., 7.50%, 6/15/2005		476,690
	1,000,000		PNC Funding Corp., 5.75%, 8/1/2006		1,059,970
	1,000,000	⁴	Wachovia Bank N.A., Sr. Note, 4.85%, 7/30/2007		1,046,730
	1,000,000		Wells Fargo & Co., Sr. Note, 7.25%, 8/24/2005		1,065,150

			TOTAL		6,039,425

			Financial Institution - Brokerage--2.3%
	1,000,000		Amvescap PLC, Sr. Note, 6.60%, 5/15/2005		1,044,070
	1,250,000	^2,3	Goldman Sachs Group LP, 6.75%, 2/15/2006		1,334,688
	1,200,000	⁴	Merrill Lynch & Co., Inc., Note, 6.00%, 11/15/2004		1,229,076
	1,000,000		Morgan Stanley, Unsub., 6.10%, 4/15/2006		1,066,010

			TOTAL		4,673,844

			Financial Institution - Finance Noncaptive--2.5%
	1,250,000		American Express Co., 3.75%, 11/20/2007		1,260,888
	1,000,000	⁴	Capital One Bank, Sr. Note, 8.25%, 6/15/2005		1,062,410
	1,500,000		General Electric Capital Corp., 5.35%, 3/30/2006		1,578,600
	1,100,000		SLM Corp., 5.625%, 4/10/2007		1,170,785

			TOTAL		5,072,683

			Financial Institution - Insurance - Life--0.8%
	500,000		AXA Financial, Inc., Note, 6.50%, 4/1/2008		543,665
	1,000,000	^2,3	Metropolitan Life Insurance Co., 7.00%, 11/1/2005		1,064,090

			TOTAL		1,607,755

			Financial Institution - Insurance - P&C-1.2%
	1,100,000	^2,3	Allstate Financial Global, Note, Series 144A, 7.125%, 9/26/2005		1,175,801
	1,200,000	⁴	Marsh & McLennan Cos., Inc., 5.375%, 3/15/2007		1,268,700

			TOTAL		2,444,501

			Financial Institution - REITs--1.9%
	1,000,000		Archstone-Smith Trust, 3.00%, 6/15/2008		957,050
	1,500,000		EOP Operating LP, 6.50%, 6/15/2004		1,509,735
	1,250,000		Simon Property Group, Inc., 6.375%, 11/15/2007		1,352,375

			TOTAL		3,819,160

Principal Amount				Value
			CORPORATE BONDS--continued
			Foreign-Local-Govt--1.1%
$	1,000,000		Ontario, Province of, 2.35%, 6/30/2006	$	993,050
	1,200,000		Quebec, Province of, 5.50%, 4/11/2006		1,259,736

			TOTAL		2,252,786

			Technology--3.2%
	1,000,000		Computer Sciences Corp., 7.50%, 8/8/2005		1,064,740
	800,000		Dell Computer Corp., Sr. Note, 6.55%, 4/15/2008		876,840
	1,250,000		First Data Corp., 3.375%, 8/1/2008		1,228,713
	1,250,000		Fiserv, Inc., Note, 4.00%, 4/15/2008		1,240,088
	1,000,000		Hewlett-Packard Co., Unsecd. Note, 7.15%, 6/15/2005		1,056,200
	1,000,000		IBM Corp., 4.125%, 6/30/2005		1,025,140

			TOTAL		6,491,721

			Transportation - Airlines--0.4%
	750,000		Southwest Airlines Co., Pass Thru Cert., 6.126%, 11/1/2006		797,873

			Transportation - Services--0.5%
	1,000,000	^2,3	FedEx Corp., Unsecd. Note, 2.65%, 4/1/2007		979,460

			Utility - Electric--3.0%
	1,000,000		Alabama Power Co., 2.65%, 2/15/2006		1,002,200
	1,100,000		FPL Group, Inc., 3.25%, 4/11/2006		1,113,706
	2,000,000		Ohio Power Co., 7.00%, 7/1/2004		2,017,700
	1,000,000		PSEG Power LLC, 6.875%, 4/15/2006		1,075,900
	1,000,000		Pacific Gas & Electric Co., Unsecd. Note, 3.60%, 3/1/2009		971,260

			TOTAL		6,180,766

			TOTAL CORPORATE BONDS (IDENTIFIED COST $78,602,321)		78,682,768

			GOVERNMENT AGENCIES--5.6%
			Agency--1.1%
	2,000,000		Federal Home Loan Bank System, Sr. Note, 5.80%, 9/2/2008		2,160,100

			Federal Home Loan Mortgage Corporation--2.9%
	6,000,000	⁴	Federal Home Loan Mortgage Corp., 2.375%, 4/15/2006		5,988,480

			Federal National Mortgage Association--1.6%
	3,000,000		Federal National Mortgage Association, Note, 6.00%, 12/15/2005		3,178,350

			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $11,186,970)		11,326,930

Principal Amount or Shares				Value
			MORTGAGE-BACKED SECURITIES--0.8%
			Government National Mortgage Association--0.8%
$	295,939		GNMA, Pool 354754, 7.50%, 2/15/2024	$	319,336
	1,098,565		GNMA, Pool 780360, 11.00%, 9/15/2015		1,242,752

			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $1,529,439)		1,562,088

			U.S. TREASURY--10.0%
	4,500,000	⁴	United States Treasury Note, 2.125%, 10/31/2004		4,520,745
	3,000,000	⁴	United States Treasury Note, 3.25%, 8/15/2007		3,025,770
	4,000,000	⁴	United States Treasury Note, 3.25%, 8/15/2008		3,976,880
	500,000		United States Treasury Note, 5.625%, 5/15/2008		543,515
	7,000,000	⁴	United States Treasury Note, 5.75%, 11/15/2005		7,393,750
	935,000	⁴	United States Treasury Note, 6.625%, 5/15/2007		1,036,242

			TOTAL U.S. TREASURY (IDENTIFIED COST $20,277,861)		20,496,902

			MUTUAL FUNDS--15.8%⁵
	444,023		Federated Mortgage Core Portfolio		4,462,431
	4,133,138		Federated Prime Value Obligations Fund, IS Shares		4,133,138
	23,776,580		Federated Prime Value Obligations Fund, IS Shares (held as collateral for securities lending)		23,776,580

			TOTAL MUTUAL FUNDS (IDENTIFIED COST $32,469,386)		32,372,149

			TOTAL INVESTMENTS--110.8% (IDENTIFIED COST $227,264,913)⁶		226,529,025

			OTHER ASSETS AND LIABILITIES - NET--(10.8)%		(22,061,667	)

			TOTAL NET ASSETS--100%	$	204,467,358

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, 2004, these securities amounted to $16,492,327 which represents 8.1% of total net assets. Included in these amounts are restricted securities which have been deemed liquid (amounting to $8,292,451 and representing 4.1% of total net assets).

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

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

5 Affiliated companies.

6 The cost of investments for federal tax purposes amounts to $227,300,567.

Note: The categories of investments are shown as a percentage of total net assets at April 30, 2004.

The following acronyms are used throughout this portfolio:

ARM	- --Adjustable Rate Mortgage
FNMA	- --Federal National Mortgage Association
GNMA	- --Government National Mortgage association
REITs	- --Real Estate Investment Trust

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

April 30, 2004

Assets:
Total investments in securities, at value including $32,372,149 of investments in affiliated issuers (Note 5) and $23,000,875 of securities loaned (identified cost $227,264,913)			$	226,529,025
Cash				55,648
Income receivable				2,068,637
Receivable for investments sold				37,732
Receivable for shares sold				71,183

TOTAL ASSETS				228,762,225

Liabilities:
Payable for shares redeemed	$	307,068
Income distribution payable		187,016
Payable for transfer and dividend disbursing agent fee and expenses (Note 5)		8,062
Payable for Directors'/Trustees' fees		2,117
Payable for shareholders service fee (Note 5)		4,150
Payable for collateral due to broker		23,776,580
Accrued expenses		9,874

TOTAL LIABILITIES				24,294,867

Net assets for 24,127,984 shares outstanding			$	204,467,358

Net Assets Consist of:
Paid in capital			$	216,016,664
Net unrealized depreciation of investments				(735,888	)
Accumulated net realized loss on investments				(10,850,233	)
Undistributed net investment income				36,815

TOTAL NET ASSETS			$	204,467,358

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
$185,336,935 ÷ 21,870,690 shares outstanding				$8.47

Institutional Service Shares:
$19,130,423 ÷ 2,257,294 shares outstanding				$8.47

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended April 30, 2004

Investment Income:
Interest (including income on securities loaned of $10,455)							$	8,063,111
Dividends (received from affiliated issuers) (Note 5)								486,818

TOTAL INCOME								8,549,929

Expenses:
Investment adviser fee (Note 5)				$	960,233
Administrative personnel and services fee (Note 5)					185,721
Custodian fees					17,707
Transfer and dividend disbursing agent fees and expenses (Note 5)					119,832
Directors'/Trustees' fees					7,492
Auditing fees					12,387
Legal fees					6,170
Portfolio accounting fees (Note 5)					82,472
Distribution services fee--Institutional Service Shares (Note 5)					73,616
Shareholder services fee--Institutional Shares (Note 5)					526,530
Shareholder services fee--Institutional Service Shares (Note 5)					73,616
Share registration costs					56,969
Printing and postage					29,246
Insurance premiums					1,743
Miscellaneous					5,764

TOTAL EXPENSES					2,159,498

Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(113,651	)
Waiver of administrative personnel and services fee		(4,091	)
Waiver of transfer and dividend disbursing agent fees and expenses		(11,655	)
Waiver of distribution services fee--Institutional Service Shares		(73,616	)
Waiver of shareholder services fee--Institutional Shares		(526,530	)

TOTAL WAIVERS AND REIMBURSEMENT					(729,543	)

Net expenses								1,429,955

Net investment income								7,119,974

Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(3,526,408	)
Net change in unrealized depreciation of investments								694,839

Net realized and unrealized loss on investments								(2,831,569	)

Change in net assets resulting from operations							$	4,288,405

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended April 30		2004			2003
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	7,119,974		$	11,340,807
Net realized loss on investments		(3,526,408	)		(1,951,892	)
Net change in unrealized appreciation/depreciation of investments		694,839			(2,774,251	)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		4,288,405			6,614,664

Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(6,015,697	)		(10,309,685	)
Institutional Service Shares		(764,702	)		(1,299,731	)

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(6,780,399	)		(11,609,416	)

Share Transactions:
Proceeds from sale of shares		90,730,092			232,362,535
Net asset value of shares issued to shareholders in payment of distributions declared		4,029,497			6,006,873
Cost of shares redeemed		(159,058,390	)		(222,544,626	)

CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		(64,298,801	)		15,824,782

Change in net assets		(66,790,795	)		10,830,030

Net Assets:
Beginning of period		271,258,153			260,428,123

End of period (including undistributed (distributions in excess of) net investment income of $36,815 and $(302,760), respectively)	$	204,467,358		$	271,258,153

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

April 30, 2004

1. 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 five 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.

2. 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 accordance with procedures established by and under general supervision of 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 the 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 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 on fixed income securities are amortized/accreted. Gains and losses realized on principal payments of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Federal Taxes

When-Issued and Delayed Delivery Transactions

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 of investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the securities lending agent, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of April 30, 2004, securities subject to this type of arrangement and related collateral were as follows:

Market Value of Securities Loaned		Market Value of Collateral
$23,000,875		$23,776,580

Restricted Securities

Additional information on each restricted illiquid security held at April 30, 2004, is as follows:

Security	Acquisition Date	Acquisition Cost
125 Home Loan Owner Trust 1998-1A, Class M2, 7.75%, 2/15/2029	7/30/1998	$ 562,540

AQ Finance NIM Trust 2002-N6, Class NOTE, 1.74%, 12/25/2007	12/5/2002	398,173

Bayview Financial Acquisition Trust 1998-1, Class MI1, 7.52%, 5/25/2029	12/8/1998	1,150,169

Bayview Finance Acquisition Trust 1998-1, Class MII1, 1.85% 5/25/2029	3/12/1999	407,986

Bayview Financial Acquisition Trust 1998-1, Class MII2, 1.94%, 5/25/2029	5/14/1998	631,223

CapitalSource Commercial Loan Trust 2002-2A, Class A 1.64125%, 9/20/2010	10/25/2002	47,811

Credit Based Asset Servicing and Securitization 1997-1, Class A1, 3.70469%, 2/1/2017	2/25/1997	1,635,449

First Tennessee Financial Auto Securitization Trust 2002-A, Class A, 3.55%, 7/15/2008	6/10/2002	928,399

First Franklin Nim Trust 2004-FFA, Class A, 5.00%, 3/27/2024	3/11/2004	869,065

Great America Leasing Receivables 2002-1, Class C, 4.91%, 7/15/2007	3/22/2002	635,713

Greenwich Capital Acceptance 1991-4, Class B-1A, 6.16%, 7/1/2019	1/7/1993	874,900

Use of Estimates

Other

Investment transactions are accounted for on a trade date basis.

3. SHARES OF BENEFICIAL INTEREST

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

Transactions in shares were as follows:

Year Ended April 30	2004					2003
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	8,874,897		$	75,682,625		16,444,506		$	142,680,611
Shares issued to shareholders in payment of distributions declared	416,516			3,546,120		592,882			5,136,403
Shares redeemed	(15,031,230	)		(128,088,314	)	(16,576,833	)		(143,352,681	)

NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(5,739,817	)	$	(48,859,569	)	460,555		$	4,464,333


Year Ended April 30	2004					2003
Institutional Service Shares:	Shares			Amount		Shares			Amount
Shares sold	1,763,661		$	15,047,467		10,329,944		$	89,681,924
Shares issued to shareholders in payment of distributions declared	56,754			483,377		100,441			870,470
Shares redeemed	(3,635,282	)		(30,970,076	)	(9,130,777	)		(79,191,945	)

NET CHANGE RESULTING FROM INSTITUTIONAL SERVICE SHARE TRANSACTIONS	(1,814,867	)	$	(15,439,232	)	1,299,608		$	11,360,449

NET CHANGE RESULTING FROM SHARE TRANSACTIONS	(7,554,684	)	$	(64,298,801	)	1,760,163		$	15,824,782

4. FEDERAL TAX INFORMATION

The timing and character of 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 expiring capital loss carryforwards.

For the year ended April 30, 2004, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital		Accumulated Net Realized Loss
$(10,784,773)		$10,784,773

Net investment income (loss), net realized gains (losses), as disclosed on the Statement of Operations 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, 2004 and 2003 was as follows:

	2004	2003
Ordinary income¹	$6,780,399	$11,609,416

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

As of April 30, 2004, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	223,832

Net unrealized depreciation	$	771,542

Capital loss carryforward	$	7,148,221

The difference between book-basis and tax-basis unrealized depreciation is attributable primarily to the tax deferral of losses from wash sales and the amortization/accretion tax elections on fixed income securities.

At April 30, 2004, the cost of investments for federal tax purposes was $227,300,567. The net unrealized depreciation of investments for federal tax purposes was $771,542. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,461,010 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,232,552.

At April 30, 2004, the Fund had a capital loss carryforward of $7,148,221 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2005		$ 1,566,031

2006		$ 696,886

2007		$ 159,370

2008		$ 496,189

2011		$ 2,437,901

2012		$1,791,844

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, 2004, for federal income tax purposes, post-October losses of $3,666,358 were deferred to May 1, 2005.

5. 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.

Federated Mortgage Core Portfolio	$	434,882

Prime Value Obligations Fund	$	51,936

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares.

FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion.

Prior to November 1, 2003, Federated Services Company ("FServ") provided the Fund with administrative personnel and services. The fee paid to FServ was based on the average aggregate daily net assets of all Federated funds as specified below:

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

The administrative fee received during any fiscal year was at least $125,000 per portfolio and $30,000 per each additional class of Shares.

For the year ended April 30, 2004 the fees paid to FAS and FServ were $84,256 and $97,374, respectively, after voluntary waiver, if applicable.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the daily net assets of the Fund's Institutional Service Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses of up to 0.25% of average daily net assets, 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 the average daily net assets of the Fund's Institutional Shares and Institutional Service Shares 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

Portfolio Accounting Fees

General

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

6. 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, 2004, were as follows:

Purchases	$	64,122,271

Sales	$	111,189,712

7. LEGAL PROCEEDINGS

In October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, "Federated"), along with various investment companies sponsored by Federated ("Funds"), were named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland seeking damages of unspecified amounts. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and will respond appropriately. Additional lawsuits based upon similar allegations have been filed, and others may be filed in the future. Although Federated does not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from related regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

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 Federated Short-Term Income Fund, one of the portfolios constituting Federated Income Securities Trust (the "Trust"), as of April 30, 2004, 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.

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, 2004, 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 U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
June 10, 2004

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, 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 Trust comprises five portfolios and the Federated Fund Complex consists of 44 investment companies (comprising 136 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; Golden Oak® Family of Funds--seven portfolios; and WesMark Funds--five portfolios. The Fund's Statement of Additional Information includes additional information about Trust 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. Previous Positions: Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.


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.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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 3838 North Tamiami Trail Suite 402 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 and Member of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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.


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; Partner, Murray, Hogue and Lannis. 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.




Name Birth Date Address Positions Held with Trust Date Service Began		Principal Occupation(s), Other Directorships Held and Previous Position(s)
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)
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRISIDENT 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.




Name Birth Date Positions Held with Trust Date Service Began			Principal Occupation(s) and Previous Position(s)
Stephen F. Auth Birth Date: September 3, 1956 CHIEF INVESTMENT OFFICER Began serving: May 2004			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 Equity Management Company of Pennsylvania and Passport Research II, Ltd. Previous Positions: Executive Vice President, Federated Investment Management Company, and Passport Research, Ltd.; Senior Vice President, Global Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and Portfolio Manager, Prudential Investments.


Robert J. Ostrowski Birth Date: April 26, 1963 CHIEF INVESTMENT OFFICER Began serving: May 2004			Principal Occupations: Mr. Ostrowski joined Federated in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of taxable fixed income products in 2004 and also serves as a Senior Portfolio Manager. He has been a Senior Vice President of the Fund's Adviser since 1997. Mr. Ostrowski is a Chartered Financial Analyst. He received his M.S. in Industrial Administration from Carnegie Mellon University.


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.


John L. Nichol Birth Date: May 21, 1963 VICE PRESIDENT Began Serving: May 2004			John L. Nichol is Vice President of the Trust. Mr. Nichol joined Federated in September 2000 as an Assistant Vice President/Senior Investment Analyst. He has been a Portfolio Manager since December 2000 and was named a Vice President of the Fund's Adviser in July 2001. Mr. Nichol served as a portfolio manager and analyst for the Public Employees Retirement System of Ohio from 1992 through August 2000. Mr. Nichol is a Chartered Financial Analyst. He received has M.B.A. with an emphasis in Finance and Management and Information Science from the Ohio State University.

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

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 (6/04)




Item 2.     Code of Ethics

(a) As of the end of the period covered by this report, the registrant has
adopted a code of ethics (the "Section 406 Standards for Investment Companies
- - Ethical Standards for Principal Executive and Financial Officers") that
applies to the registrant's Principal Executive Officer and Principal
Financial Officer; the registrant's Principal Financial Officer also serves
as the Principal Accounting Officer.

(c) Not Applicable

(d) Not Applicable

(e) Not Applicable

(f)(3) The registrant hereby undertakes to provide any person, without
charge, upon request, a copy of the code of ethics.  To request a copy of the
code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy
of the Section 406 Standards for Investment Companies - Ethical Standards for
Principal Executive and Financial Officers.

Item 3.     Audit Committee Financial Expert

The registrant's Board has determined that each member of the Board's Audit
Committee is an "audit committee financial expert," and that each such member
is "independent," for purposes of this Item.  The Audit Committee consists of
the following Board members:  Thomas G. Bigley, John T. Conroy, Jr., Nicholas
P. Constantakis and Charles F. Mansfield, Jr.


Item 4.     Principal Accountant Fees and Services

(a)  Audit Fees billed to the registrant for the two most recent fiscal years:
                  Fiscal year ended 2004 - $70,799
                  Fiscal year ended 2003 - $66,000

(b)  Audit-Related Fees billed to the registrant for the two most recent
fiscal years:
                  Fiscal year ended 2004 - $6,756
                  Fiscal year ended 2003 - $4,636
                  Transfer Agent Service Auditors Report
      Amount requiring approval of the registrant's audit committee pursuant
      to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $95,152 and
      $17,469 respectively.  Fiscal year ended 2004 - Attestation services
      relating to the review of fund share transactions, fees for review of
      N-14 merger documents and Transfer Agent Service Auditors report.
      Fiscal year ended 2003 - Design of Sarbanes Oxley sec. 302 procedures
      and fees for review of N-14 merger documents.

(c)  Tax Fees billed to the registrant for the two most recent fiscal years:
                  Fiscal year ended 2004 - $0
                  Fiscal year ended 2003 - $0
      Amount requiring approval of the registrant's audit committee pursuant
      to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $175,000 and
      $30,000 respectively.
      Analysis regarding the realignment of advisory companies.

(d)  All Other Fees billed to the registrant for the two most recent fiscal
years:
                  Fiscal year ended 2004 - $0
                  Fiscal year ended 2003 - $0
      Amount requiring approval of the registrant's audit committee pursuant
      to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $146,115 and
      $38,999 respectively.  Fiscal year ended 2004 - Consultation regarding
      information requests by regulatory agencies and executive compensation
      analysis.  Fiscal year ended 2003 - Executive compensation analysis.

(e)(1)      Audit Committee Policies regarding Pre-approval of Services.
            The Audit Committee is required to pre-approve audit and
      non-audit services performed by the independent auditor in order to
      assure that the provision of such services do not impair the auditor's
      independence.  Unless a type of service to be provided by the
      independent auditor has received general pre-approval, it will require
      specific pre-approval by the Audit Committee.  Any proposed services
      exceeding pre-approved cost levels will require specific pre-approval
      by the Audit Committee.
            Certain services have the general pre-approval of the Audit
      Committee.  The term of the general pre-approval is 12 months from the
      date of pre-approval, unless the Audit Committee specifically provides
      for a different period.  The Audit Committee will annually review the
      services that may be provided by the independent auditor without
      obtaining specific pre-approval from the Audit Committee and may grant
      general pre-approval for such services.  The Audit Committee will
      revise the list of general pre-approved services from time to time,
      based on subsequent determinations.  The Audit Committee will not
      delegate its responsibilities to pre-approve services performed by the
      independent auditor to management.
            The Audit Committee has delegated pre-approval authority to its
      Chairman.  The Chairman will report any pre-approval decisions to the
      Audit Committee at its next scheduled meeting.  The Committee will
      designate another member with such pre-approval authority when the
      Chairman is unavailable.

AUDIT SERVICES
      The annual Audit services engagement terms and fees will be subject to
the specific pre-approval of the Audit Committee.  The Audit Committee must
approve any changes in terms, conditions and fees resulting from changes in
audit scope, registered investment company (RIC) structure or other matters.
      In addition to the annual Audit services engagement specifically
approved by the Audit Committee, the Audit Committee may grant general
pre-approval for other Audit Services, which are those services that only the
independent auditor reasonably can provide.  The Audit Committee has
pre-approved certain Audit services, all other Audit services must be
specifically pre-approved by the Audit Committee.

AUDIT-RELATED SERVICES
      Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements or that are traditionally performed by the independent
auditor.  The Audit Committee believes that the provision of Audit-related
services does not impair the independence of the auditor, and has
pre-approved certain Audit-related services, all other Audit-related services
must be specifically pre-approved by the Audit Committee.

TAX SERVICES
      The Audit Committee believes that the independent auditor can provide
Tax services to the Company such as tax compliance, tax planning and tax
advice without impairing the auditor's independence.  However, the Audit
Committee will not permit the retention of the independent auditor in
connection with a transaction initially recommended by the independent
auditor, the purpose of which may be tax avoidance and the tax treatment of
which may not be supported in the Internal Revenue Code and related
regulations.  The Audit Committee has pre-approved certain Tax services, all
Tax services involving large and complex transactions must be specifically
pre-approved by the Audit Committee.

ALL OTHER SERVICES
      With respect to the provision of services other than audit, review or
attest services the pre-approval requirement is waived if:

(1)   The aggregate amount of all such services provided constitutes no more
                  than five percent of the total amount of revenues paid by
                  the registrant, the registrant's adviser (not including any
                  sub-adviser whose role is primarily portfolio management
                  and is subcontracted with or overseen by another investment
                  adviser), and any entity controlling, controlled by, or
                  under common control with the investment adviser that
                  provides ongoing services to the registrant to its
                  accountant during the fiscal year in which the services are
                  provided;
(2)   Such services were not recognized by the registrant, the registrant's
                  adviser (not including any sub-adviser whose role is
                  primarily portfolio management and is subcontracted with or
                  overseen by another investment adviser), and any entity
                  controlling, controlled by, or under common control with
                  the investment adviser that provides ongoing services to
                  the registrant  at the time of the engagement to be
                  non-audit services; and
(3)   Such services are promptly brought to the attention of the Audit
                  Committee of the issuer and approved prior to the
                  completion of the audit by the Audit Committee or by one or
                  more members of the Audit Committee who are members of the
                  board of directors to whom authority to grant such
                  approvals has been delegated by the Audit Committee.

      The Audit Committee may grant general pre-approval to those permissible
non-audit services classified as All Other services that it believes are
routine and recurring services, and would not impair the independence of the
auditor.

      The SEC's rules and relevant guidance should be consulted to determine
the precise definitions of prohibited non-audit services and the
applicability of exceptions to certain of the prohibitions.

PRE-APPROVAL FEE LEVELS
      Pre-approval fee levels for all services to be provided by the
independent auditor will be established annually by the Audit Committee.  Any
proposed services exceeding these levels will require specific pre-approval
by the Audit Committee.

PROCEDURES
      Requests or applications to provide services that require specific
approval by the Audit Committee will be submitted to the Audit Committee by
both the independent auditor and the Principal Accounting Officer and/or
Internal Auditor, and must include a joint statement as to whether, in their
view, the request or application is consistent with the SEC's rules on
auditor independence.


(e)(2)      Percentage of services identified in items 4(b) through 4(d) that
were approved by the registrants audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
            4(b)
                  Fiscal year ended 2004 - 0%
                  Fiscal year ended 2003 - 0%
            Percentage of services provided to the registrants investment
            adviser and any entity controlling, controlled by, or under
            common control with the investment adviser that provides ongoing
            services to the registrant that were approved by the registrants
            audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
            of Regulation S-X, 0% and 0% respectively.

            4(c)
                  Fiscal year ended 2004 - 0%
                  Fiscal year ended 2003 - 0%
            Percentage of services provided to the registrants investment
            adviser and any entity controlling, controlled by, or under
            common control with the investment adviser that provides ongoing
            services to the registrant that were approved by the registrants
            audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
            of Regulation S-X, 0% and 0% respectively.

            4(d)
                  Fiscal year ended 2004 - 0%
                  Fiscal year ended 2003 - 0%
            Percentage of services provided to the registrants investment
            adviser and any entity controlling, controlled by, or under
            common control with the investment adviser that provides ongoing
            services to the registrant that were approved by the registrants
            audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
            of Regulation S-X, 0% and 0% respectively.

(f)   NA

(g)   Non-Audit Fees billed to the registrant, the registrant's investment
      adviser, and certain entities controlling, controlled by or under
      common control with the investment adviser:
                  Fiscal year ended 2004 - $895,345
                  Fiscal year ended 2003 - $406,926

(h)   The registrant's Audit Committee has considered that the provision of
      non-audit services that were rendered to the registrant's adviser (not
      including any sub-adviser whose role is primarily portfolio management
      and is subcontracted with or overseen by another investment adviser),
      and any entity controlling, controlled by, or under common control with
      the investment adviser that provides ongoing services to the registrant
      that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
      2-01 of Regulation S-X is compatible with maintaining the principal
      accountant's independence.

Item 5      Audit Committee of Listed Registrants

            Not Applicable

Item 6      Schedule of Investments

            Not Applicable

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

            Not Applicable

Item 8.     Purchases of Equity Securities by Closed-End Management
            Investment Company and Affiliated Purchasers

            Not Applicable

Item 9.     Submission of Matters to a Vote of Security Holders

            Not Applicable

Item 10.    Controls and Procedures

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

(b)  There were no changes in the  registrant's  internal control over financial
     reporting  (as  defined  in rule  30a-3(d)  under the Act)  during the last
     fiscal  half  year  (the  registrant's  second  half year in the case of an
     annual report) that have materially  affected,  or are reasonably likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting.

Item 11.    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 Securities Trust

By          /S/ Richard J. Thomas, Principal Financial Officer
Date        June 21, 2004


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 22, 2004


By          /S/ Richard J. Thomas, Principal Financial Officer
Date        June 21, 2004

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

Federated Intermediate Corporate Bond Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

Institutional SharesInstitutional Service Shares

Financial Highlights -- Institutional Shares

Financial Highlights -- Institutional Service Shares

Management's Discussion of Fund Performance

DURATION4

MATURITY AND YIELD CURVE

GROWTH OF A $25,000 INVESTMENT IN FEDERATED INTERMEDIATE CORPORATE BOND FUND -- INSTITUTIONAL SHARES

GROWTH OF A $25,000 INVESTMENT IN FEDERATED INTERMEDIATE CORPORATE BOND 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

1. ORGANIZATION

2. 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

3. SHARES OF BENEFICIAL INTEREST

4. FEDERAL TAX INFORMATION

5. 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

6. INVESTMENT TRANSACTIONS

7. LEGAL PROCEEDINGS

8. FEDERAL TAX INFORMATION (UNAUDITED)

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

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

Board of Trustees and Trust Officers

INTERESTED TRUSTEES BACKGROUND

INDEPENDENT TRUSTEES BACKGROUND

OFFICERS

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

Federated Short-Term Income Fund

A Portfolio of Federated Income Securities Trust

ANNUAL SHAREHOLDER REPORT

Institutional SharesInstitutional Service Shares

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

1. ORGANIZATION

2. 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

3. SHARES OF BENEFICIAL INTEREST

4. FEDERAL TAX INFORMATION

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Administrative Fee

Institutional Shares
Institutional Service Shares

DURATION⁴

Institutional Shares
Institutional Service Shares