Federated Income Securities Trust N-CSR 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

4000 Ericsson Drive

Warrendale, Pennsylvania 15086-7561

(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

(Notices should be sent to the Agent for Service)

Date of Fiscal Year End: 09/30/13

Date of Reporting Period: 09/30/13

Item 1. Reports to Stockholders

Annual Shareholder Report

September 30, 2013

Share Class	Ticker
A	PSAFX
C	FPGCX
Institutional	FPGIX

Federated Prudent DollarBear Fund

Successor to the Prudent Global Income Fund Established 2000

A Portfolio of Federated Income Securities Trust

Dear Valued Shareholder,

I am pleased to present the Annual Shareholder Report for your fund covering the period from October 1, 2012 through September 30, 2013. This report includes Management's Discussion of Fund Performance, a complete listing of your fund's holdings, performance information and financial statements along with other important fund information.

In addition, our website, FederatedInvestors.com, offers easy access to Federated resources that include timely fund updates, economic and market insights from our investment strategists, and financial planning tools. We invite you to register to take full advantage of its capabilities.

Thank you for investing with Federated. I hope you find this information useful and look forward to keeping you informed.

Sincerely,

J. Christopher Donahue, President

Not FDIC Insured • May Lose Value • No Bank Guarantee

CONTENTS

Management's Discussion of Fund Performance	1
Portfolio of Investments Summary Table	7
Portfolio of Investments	8
Financial Highlights	11
Statement of Assets and Liabilities	14
Statement of Operations	16
Statement of Changes in Net Assets	17
Notes to Financial Statements	18
Report of Independent Registered Public Accounting Firm	28
Shareholder Expense Example	29
Shareholder Meeting Results	31
Board of Trustees and Trust Officers	32
Evaluation and Approval of Advisory Contract	39
Voting Proxies on Fund Portfolio Securities	44
Quarterly Portfolio Schedule	44

Management's Discussion of Fund Performance (unaudited)

The total return of Federated Prudent DollarBear Fund (the “Fund”), based on net asset value, for the 12-month reporting period ended September 30, 2013, was -6.41% for Class A Shares, -7.09% for Class C Shares and -6.14% for the Institutional Shares. The total return of the U.S. Dollar Index¹ was 0.36% during the same period. The Fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the U.S. Dollar Index.

As background, under normal market conditions, the Fund's investment strategy seeks to provide returns that are inversely correlated with the U.S. Dollar Index, primarily through a portfolio of top-tier, short-term international sovereign bonds.² At the same time, it is fundamental to the Fund managers' risk-based investment philosophy to position more opportunistically when the market backdrop is gauged as favorable–and to turn more defensive when the environment becomes less favorable. Such a risk discipline becomes only more challenging in a period of great uncertainty and associated market volatility. The Fund's investment strategy focused on currency exposure and the performance of gold³ equities during the reporting period. These were the most significant factors affecting Fund performance relative to the U.S. Dollar Index.

The following discussion will focus on the performance of the Fund's Institutional Shares. The Fund's Institutional Shares underperformed the U.S. Dollar Index.

MARKET OVERVIEW

The 12-month reporting period provided a continuation of extraordinary global market, policymaking and economic backdrops. The market environment was dominated by the implementation of aggressive experimental measures by the world's major central banks. The European Central Bank's promise to backstop troubled sovereign borrowers stabilized Europe's debt crisis. The Federal Reserve (the Fed) and Bank of Japan (BOJ) moved forward with unprecedented non-crisis period liquidity measures. During the reporting period, the Fed's holdings of mostly U.S. Treasuries and mortgage-backed securities expanded by about $925 billion, or 34%, while the BOJ commenced an only somewhat smaller quantitative easing (QE) program.

The Fund managers saw little during the reporting period that pointed toward a resolution of extraordinary global financial and economic uncertainties. In the face of unprecedented stimulus, “developed” world economic struggles have proven largely intractable. Key “developing” economic booms have faltered, while a protracted Chinese boom has been sustained by historic credit expansion. Seemingly everywhere, unrelenting financial and economic fragilities ensured that policymakers remained locked into extreme approaches. The effects from this global liquidity onslaught were dramatic, if not

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1

universal. During the 12-month reporting period, Japan's Nikkei-225 Stock Average returned 65.63%, including dividends. In the U.S., the Standard & Poor's 500 Index (S&P 500) returned 19.33%, and the small-cap Russell 2000 Index returned 30.07%. Early in the reporting period, QE exuberance spurred a torrent of destabilizing “hot money” into the emerging markets (EM). EM equities, bonds and currency markets were pushed to extremes.

EM fortunes began to reverse course in early calendar 2013. Pressure on “developing” markets and currencies strengthened the safe haven appeal of the U.S. dollar. After trading at about 79 in early-February, the U.S. Dollar Index rose to a three-year high above 84 during May. Signals from the Fed of a likely September taper and from Chinese officials of efforts to rein in credit excess were further destabilizing. Crisis conditions unfolded throughout EM during May and June, and “developing” central bank selling of international reserve holdings to support their weak currencies likely contributed to the global rise in sovereign bond yields. With EM turmoil beginning to feed into global risk aversion and market instability, the Fed and the Chinese backed away reducing accommodation.

Overall, the markets' fixation with QE created an unstable backdrop with an unusually wide dispersion of currency performance, exemplified by the yen's plunge and the euro rise against the U.S. dollar. The U.S. Dollar Index posted a 0.21% decline the first fiscal quarter; increased 4.02% in the second quarter; and gained 0.19% in the third quarter. The U.S. Dollar Index then declined 3.51% during the reporting period's final quarter, as the Fed's failure to taper was interpreted as dollar negative.

Currency Exposure

The Fund began the fiscal year cautiously positioned with U.S. dollar holdings of 26.3% and with an additional 9.5% allocated to the Hong Kong dollar which is pegged to the U.S. dollar. This defensive positioning was maintained throughout most of the reporting period. With the Fed reluctant to reduce stimulus, the managers moved in September to meaningfully reduce the Fund's U.S. dollar allocation, ending the reporting period at 14.7%.

The Fund's significant underperformance during the reporting period versus the inverse of the U.S. Dollar Index is due in part to a large underweight in euro exposure versus the benchmark. With a 5.19% gain versus the U.S. dollar, the euro was the best performing major currency during the reporting period. The euro had a 57.6% weighting in the U.S. Dollar Index, and the Fund had minimal euro exposure for much of the reporting period. The euro's strong performance masked overall dollar strength versus many currencies.

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Fund returns suffered during the reporting period from the Japanese yen's extraordinary 20.67% decline. The Fund began the fiscal year with an 11.1% yen allocation, below the benchmark weighting of 13.6%. The yen allocation was reduced to 8.0% by the end of December and cut further to 6.4% by the end of June, before ending the reporting period at 8.0%.

Benefiting Fund performance during the reporting period, the Swiss franc gained 3.86%, the Swedish krona rose 2.11% and the British pound increased 0.12% against the U.S. dollar. Hurting Fund performance, the Australian dollar declined 10.21%, the Norwegian krone declined 4.8%, the Canadian dollar declined 4.58% and the Singapore dollar fell 2.26% against the U.S. dollar.

Performance of gold Equities

The Fund also faced atypically large losses in the Fund's gold equities holdings. These losses had a meaningfully negative impact on performance, although losses were mitigated by generally defensive positioning. With bullion down $443, or 25.0%, during the reporting period, the NYSE Arca Gold Bugs Index (HUI) sank 54.45% on a total return basis. The Fund's gold equities did outperform the HUI. The Fund began the reporting period with a 5.7% gold equities allocation, near the low end of the typical range, and ended the period at 4.1%.

1	Please see the footnote to the line graphs under “Fund Performance and Growth of a $10,000 Investment” below for the definition of, and more information about, the U.S. Dollar Index. The Fund's broad-based securities market index is the BofA Merrill Lynch Pan-Europe Government 1-3 Year Index. The total return for the BofA Merrill Lynch Pan-Europe Government 1-3 Year Index was 6.25% during the 12-month reporting period. Please see the footnote to the line graphs under “Fund Performance and Growth of a $10,000 Investment” below for the definition of, and more information about, the BofA Merrill Lynch Pan-Europe Government 1-3 Year Index.
2	International investing involves special risks including currency risk, increased volatility, political risks and differences in auditing and other financial standards.
3	Investments in gold and precious metals are subject to additional risks such as the possibility of substantial price fluctuations over a short period of time.

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FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT¹

The Average Annual Total Return table below shows returns for each class averaged over the stated periods. The graphs below illustrate the hypothetical investment of $10,000² in the Federated Prudent DollarBear Fund (the “Fund”) from September 30, 2003 to September 30, 2013, compared to the BofA Merrill Lynch Pan-Europe Government 1-3 Year Index³ (“BAMLPEG1-3”) and the U.S. Dollar Index.⁴

Average Annual Total Returns for the Period Ended 9/30/2013

(returns reflect all applicable sales charges and contingent deferred sales charge as specified below in footnote #2)

Share Class	1 Year	5 Years	10 Years
Class A Shares	-10.61%	0.15%	2.74%
Class C Shares	-8.02%	0.34%	2.45%
Institutional Shares	-6.14%	1.33%	3.34%

Performance data quoted represents past performance which 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 and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

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Growth of a $10,000 Investment–class A SHARES

Growth of $10,000 as of September 30, 2013

Federated Prudent DollarBear Fund -	Class A Shares	BAMLPEG1-3	U.S. Dollar Index
9/30/2003	9,550	10,000	10,000
9/30/2004	9,946	10,964	9,409
9/30/2005	10,002	10,999	9,641
9/30/2006	10,750	11,720	9,259
9/30/2007	12,220	13,551	8,370
9/30/2008	12,412	13,927	8,556
9/30/2009	13,329	15,273	8,254
9/30/2010	13,541	14,635	8,477
9/30/2011	13,861	14,587	8,486
9/30/2012	14,008	14,668	8,604
9/30/2013	13,108	15,587	8,642

41 graphic description end -->

■  Total returns shown include the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge = $9,550)

    
Growth of a $10,000 Investment–class C SHARES

Growth of $10,000 as of September 30, 2013

Federated Prudent DollarBear Fund -	Class C Shares	BAMLPEG1-3	U.S. Dollar Index
9/30/2003	10,000	10,000	10,000
9/30/2004	10,340	10,964	9,409
9/30/2005	10,324	10,999	9,641
9/30/2006	11,011	11,720	9,259
9/30/2007	12,424	13,551	8,370
9/30/2008	12,522	13,927	8,556
9/30/2009	13,346	15,273	8,254
9/30/2010	13,465	14,635	8,477
9/30/2011	13,676	14,587	8,486
9/30/2012	13,711	14,668	8,604
9/30/2013	12,738	15,587	8,642

41 graphic description end -->

■  Total returns shown include the maximum contingent deferred sales charge of 1.00% as applicable.

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Growth of a $10,000 Investment–INSTITUTIONAL SHARES

Growth of $10,000 as of September 30, 2013

Federated Prudent DollarBear Fund -	Institutional Shares	BAMLPEG1-3	U.S. Dollar Index
9/30/2003	10,000	10,000	10,000
9/30/2004	10,415	10,964	9,409
9/30/2005	10,474	10,999	9,641
9/30/2006	11,256	11,720	9,259
9/30/2007	12,796	13,551	8,370
9/30/2008	12,997	13,927	8,556
9/30/2009	13,968	15,273	8,254
9/30/2010	14,244	14,635	8,477
9/30/2011	14,609	14,587	8,486
9/30/2012	14,794	14,668	8,604
9/30/2013	13,886	15,587	8,642

41 graphic description end -->

1	Federated Prudent DollarBear Fund is the successor to Prudent Global Income Fund pursuant to a reorganization that took place on December 5, 2008. The information above for the Fund's Class A Shares, for the periods prior to December 5, 2008, is historical information for Prudent Global Income Fund, but adjusted to reflect the sales charge applicable to the Class A Shares of Federated Prudent DollarBear Fund. The Fund's Class C Shares commenced operations on December 8, 2008. The information presented above, for the periods prior to December 8, 2008, is historical information for the Class A Shares of the Prudent Global Income Fund, adjusted to reflect the expenses of Class C Shares. The Fund's Institutional Shares commenced operations on December 8, 2008. The information presented above, for the periods prior to December 8, 2008, is historical information for the Class A Shares of the Prudent Global Income Fund. The performance of the Class A Shares has not been adjusted to reflect the expenses of the Institutional Shares since the Institutional Shares have a lower expense ratio than the expense ratio of the Class A Shares. The performance of the Class A Shares has been adjusted to remove any voluntary waiver of Fund expenses related to the Class A Shares that may have occurred during the period prior to commencement of operations of the Institutional Shares.
2	Represents a hypothetical investment of $10,000 in the Fund after deducting applicable sales charges: for Class A Shares, the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge = $9,550); for Class C Shares, the maximum contingent deferred sales charge is 1.00% on any redemption less than one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The BAMLPEG 1-3 Year Index and the U.S. Dollar Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.
3	The BAMLPEG1-3 Index tracks the total return performance of the outstanding debt of European sovereign issuers. It is a market-capitalization weighted basket comprising bonds issued in their respective domestic markets and denominated in their local currency. This index is further segmented by debt issues maturing in one to three years. The BAMLPEG1-3 Index is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged, and unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.
4	The U.S. Dollar Index indicates the general international value of the U.S. dollar by averaging the exchange rates between the U.S. dollar and six major world currencies. Under normal market conditions, the Fund's investment strategy seeks to provide returns that are inversely correlated with the U.S. Dollar Index. The U.S. Dollar Index 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 cash flows. It is not possible to invest directly in an index.

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Portfolio of Investments Summary Table (unaudited)

At September 30, 2013, the Fund's portfolio composition¹ was as follows:

Security Type	Percentage of Total Net Assets
Foreign Government Debt Securities	81.1%
Equity Securities—Metals & Mining	1.3%
Closed-End Investment Company	2.8%
Cash Equivalents2	14.6%
Other Assets and Liabilities—Net3	0.2%
TOTAL	100.0%

1	See the Fund's Prospectus and Statement of Additional Information for a description of the types of securities in which the Fund invests.
2	Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.
3	Assets, other than investments in securities less liabilities. See Statement of Assets and Liabilities.

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Portfolio of Investments

September 30, 2013

Shares or Foreign Currency Par Amount			Value in U.S. Dollars
		COMMON STOCKS—1.3%
		Metals & Mining—1.3%
16,632		Agnico Eagle Mines Ltd.	$440,484
10,000		Goldcorp, Inc., Class A	260,100
7,000		Newmont Mining Corp.	196,700
10,000		Royal Gold, Inc.	486,600
54,375		Yamana Gold, Inc.	565,500
		TOTAL COMMON STOCKS (IDENTIFIED COST $1,723,197)	1,949,384
		FOREIGN GOVERNMENTS/AGENCIES—81.1%
		Sovereign—71.7%
2,300,000	1	Canada, Government of, 0.95%, 10/24/2013	2,231,517
8,300,000	1	Canada, Government of, 0.97%, 12/19/2013	8,040,859
5,900,000	1	Canada, Government of, 0.98%, 2/27/2014	5,704,966
3,900,000	1	Canada, Government of, 0.99%, 4/10/2014	3,766,687
3,370,000	1	French T-Bill, 0.09%, 2/20/2014	4,557,501
32,000,000	1	Hong Kong T-Bills, 0.16%, 2/12/2014	4,123,416
30,000,000	1	Hong Kong T-Bills, 0.16%, 2/5/2014	3,865,857
46,500,000	1	Hong Kong T-Bills, 0.17%, 1/15/2014	5,992,378
36,000,000	1	Hong Kong T-Bills, 0.18%, 12/4/2013	4,640,128
500,000,000	1	Japan, Government of, 0.04%, 1/15/2014	5,086,123
650,000,000	1	Japan, Government of, 0.04%, 11/5/2013	6,612,456
8,400,000	1	New Zealand, Government of, 2.58%, 1/29/2014	6,917,885
41,000,000	1	Norwegian T-Bill, 1.59%, 3/19/2014	6,768,428
8,900,000	1	Singapore T-Bills, 0.15%, 10/18/2013	7,093,645
45,000,000	1	Swedish T-Bill, 0.96%, 3/19/2014	6,970,865
1,200,000	1,2	Switzerland, Government of, 0.00%, 10/24/2013	1,335,922
5,100,000	1,2	Switzerland, Government of, 0.00%, 12/27/2013	5,640,143
3,000,000	1	United Kingdom, Government of, 0.39%, 1/6/2014	4,851,617
3,100,000	1	United Kingdom, Government of, 0.39%, 12/16/2013	5,014,532
3,860,000	1	United Kingdom, Government of, 0.40%, 1/27/2014	6,240,946
		TOTAL	105,455,871
		State/Provincial—3.1%
4,800,000		New South Wales Treasury Corp., 2.75%, 7/8/2014	4,483,990

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Shares or Foreign Currency Par Amount			Value in U.S. Dollars
		FOREIGN GOVERNMENTS/AGENCIES—continued
		Supranational—6.3%
3,400,000		EFSF, 1.00%, 3/12/2014	$4,616,572
6,100,000		European Investment Bank, 4.00%, 5/15/2014	1,027,411
8,000,000		European Investment Bank, 4.50%, 5/5/2014	1,266,838
14,400,000		Intl Bk Recon & Develop, 2.25%, 11/8/2013	2,242,668
		TOTAL	9,153,489
		TOTAL FOREIGN GOVERNMENTS/AGENCIES (IDENTIFIED COST $118,670,119)	119,093,350
		CLOSED-END INVESTMENT COMPANY—2.8%
280,000		Central Fund of Canada Ltd. (IDENTIFIED COST $1,257,200)	4,116,000
		INVESTMENT COMPANY—14.6%
21,518,735	3,4	Federated U.S. Treasury Cash Reserves Fund, Institutional Shares 0.00% (AT NET ASSET VALUE)	21,518,735
		TOTAL INVESTMENTS—99.8% (IDENTIFIED COST $143,169,251)5	146,677,469
		OTHER ASSETS AND LIABILITIES - NET—0.2%6	267,636
		TOTAL NET ASSETS—100%	$146,945,105

1	Discount rate at time of purchase.
2	Zero coupon bond.
3	Affiliated holding.
4	7-day net yield.
5	The cost of investments for federal tax purposes amounts to $146,028,051.
6	Assets, other than investments in securities, less liabilities.

Note: The categories of investments are shown as a percentage of total net assets at September 30, 2013.

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

Level 1—quoted prices in active markets for identical securities, including investment companies with daily net asset values, if applicable.

Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.

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

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

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The following is a summary of the inputs used, as of September 30, 2013, in valuing the Fund's assets carried at fair value:

Valuation Inputs
	Level 1— Quoted Prices and Investments in Investment Companies	Level 2— Other Significant Observable Inputs	Level 3— Significant Unobservable Inputs	Total
Equity Securities:
Common Stocks
Domestic	$683,300	$—	$—	$683,300
International	1,266,084	—	—	1,266,084
Debt Securities:
Foreign Governments/Agencies	—	119,093,350		119,093,350
Closed-End Investment Company	4,116,000	—	—	4,116,000
Investment Company	21,518,735	—	—	21,518,735
TOTAL SECURITIES	$27,584,119	$119,093,350	$—	$146,677,469

See Notes which are an integral part of the Financial Statements

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Financial Highlights–Class A Shares

(For a Share Outstanding Throughout Each Period)

Year Ended September 30	2013	2012	2011	2010	20091
Net Asset Value, Beginning of Period	$12.14	$12.89	$13.00	$12.80	$12.41
Income From Investment Operations:
Net investment income (loss)2	(0.09)	(0.09)	(0.07)	(0.07)	0.01
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(0.69)	0.21	0.36	0.27	0.85
TOTAL FROM INVESTMENT OPERATIONS	(0.78)	0.12	0.29	0.20	0.86
Less Distributions:
Distributions from net investment income	—	(0.77)	(0.30)	—	(0.47)
Distributions from net realized gain on investments and foreign currency transactions	(0.01)	(0.10)	(0.10)	(0.00)3	(0.00)3
TOTAL DISTRIBUTIONS	(0.01)	(0.87)	(0.40)	(0.00)3	(0.47)
Redemption Fee	—	—	—	—	0.003
Net Asset Value, End of Period	$11.35	$12.14	$12.89	$13.00	$12.80
Total Return4	(6.41)%	1.06%	2.36%	1.59%	7.39%
Ratios to Average Net Assets:
Net expenses	1.29%	1.29%	1.29%	1.28%	1.28%5
Net investment income (loss)	(0.80)%	(0.75)%	(0.53)%	(0.55)%	0.10%
Expense waiver/reimbursement6	0.06%	0.02%	0.00%7	0.05%	0.02%
Supplemental Data:
Net assets, end of period (000 omitted)	$115,133	$189,004	$266,857	$302,129	$385,339
Portfolio turnover	4%	2%	13%8	35%	171%

1	Prudent Global Income Fund (the “Predecessor Fund”) was reorganized into Federated Prudent DollarBear Fund (the “Fund”) as of the close of business on December 5, 2008. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.
2	Per share numbers have been calculated using the average shares method.
3	Represents less than $0.01.
4	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
5	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratio is 1.28% for the year ended September 30, 2009, after taking into account this expense reduction.
6	This expense decrease is reflected in both the net expense and net investment income (loss) ratios shown above.
7	Represents less than 0.01%.
8	Previously reported as 192%. Corrected to exclude the impact of short term security transactions.

See Notes which are an integral part of the Financial Statements

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Financial Highlights–Class C Shares

(For a Share Outstanding Throughout Each Period)

Year Ended September 30	2013	2012	2011	2010	Period Ended 9/30/20091
Net Asset Value, Beginning of Period	$11.96	$12.73	$12.84	$12.73	$11.23
Income From Investment Operations:
Net investment (loss)2	(0.18)	(0.18)	(0.17)	(0.16)	(0.12)
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(0.67)	0.20	0.36	0.27	1.62
TOTAL FROM INVESTMENT OPERATIONS	(0.85)	0.02	0.19	0.11	1.50
Less Distributions:
Distributions from net investment income	—	(0.69)	(0.20)	—	—
Distributions from net realized gain on investments and foreign currency transactions	(0.01)	(0.10)	(0.10)	(0.00)3	—
TOTAL DISTRIBUTIONS	(0.01)	(0.79)	(0.30)	(0.00)3	—
Net Asset Value, End of Period	$11.10	$11.96	$12.73	$12.84	$12.73
Total Return4	(7.09)%	0.25%	1.57%	0.89%	13.36%
Ratios to Average Net Assets:
Net expenses	2.04%	2.04%	2.03%	2.03%	2.03%5,6
Net investment (loss)	(1.55)%	(1.50)%	(1.28)%	(1.29)%	(1.18)%5
Expense waiver/reimbursement7	0.06%	0.02%	0.00%8	0.05%	0.02%5
Supplemental Data:
Net assets, end of period (000 omitted)	$12,346	$23,575	$32,779	$24,697	$19,026
Portfolio turnover	4%	2%	13%9	35%	171%10

1	Reflects operations for the period from December 8, 2008 (date of initial investment) to September 30, 2009.
2	Per share numbers have been calculated using the average shares method.
3	Represents less than $0.01.
4	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.
5	Computed on an annualized basis.
6	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratio is 2.03% for the period ended September 30, 2009, after taking into account this expense reduction.
7	This expense decrease is reflected in both the net expense and net investment income (loss) ratios shown above.
8	Represents less than 0.01%.
9	Previously reported as 192%. Corrected to exclude the impact of short term security transactions.
10	Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the fiscal year ended September 30, 2009.

See Notes which are an integral part of the Financial Statements

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Financial Highlights–Institutional Shares

(For a Share Outstanding Throughout Each Period)

Year Ended September 30	2013	2012	2011	2010	Period Ended 9/30/20091
Net Asset Value, Beginning of Period	$12.19	$12.95	$13.07	$12.82	$11.23
Income From Investment Operations:
Net investment income (loss)2	(0.07)	(0.06)	(0.04)	(0.04)	(0.01)
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(0.68)	0.20	0.36	0.29	1.60
TOTAL FROM INVESTMENT OPERATIONS	(0.75)	0.14	0.32	0.25	1.59
Less Distributions:
Distributions from net investment income	—	(0.80)	(0.34)	—	—
Distributions from net realized gain on investments and foreign currency transactions	(0.01)	(0.10)	(0.10)	(0.00)3	—
TOTAL DISTRIBUTIONS	(0.01)	(0.90)	(0.44)	(0.00)3	—
Net Asset Value, End of Period	$11.43	$12.19	$12.95	$13.07	$12.82
Total Return4	(6.14)%	1.27%	2.56%	1.98%	14.16%
Ratios to Average Net Assets:
Net expenses	1.04%	1.04%	1.04%	1.03%	1.03%5,6
Net investment (loss)	(0.55)%	(0.50)%	(0.32)%	(0.30)%	(0.12)%5
Expense waiver/reimbursement7	0.06%	0.02%	0.00%8	0.05%	0.03%5
Supplemental Data:
Net assets, end of period (000 omitted)	$19,466	$33,849	$62,427	$17,316	$18,434
Portfolio turnover	4%	2%	13%9	35%	171%10

1	Reflects operations for the period from December 8, 2008 (date of initial investment) to September 30, 2009.
2	Per share numbers have been calculated using the average shares method.
3	Represents less than $0.01.
4	Based on net asset value. Total returns for periods of less than one year are not annualized.
5	Computed on an annualized basis.
6	The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratio is 1.03% for the period ended September 30, 2009, after taking into account this expense reduction.
7	This expense decrease is reflected in both the net expense and net investment income (loss) ratios shown above.
8	Represents less than 0.01%.
9	Previously reported as 192%. Corrected to exclude the impact of short term security transactions.
10	Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the fiscal year ended September 30, 2009.

See Notes which are an integral part of the Financial Statements

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Statement of Assets and Liabilities
September 30, 2013

Assets:
Total investments in securities at value (including $21,518,735 of investment in an affiliated holding) (Note 5) (identified cost $143,169,251)		$146,677,469
Cash denominated in foreign currencies (identified cost $132,919)		134,624
Receivable for investments sold		331,730
Income receivable		265,663
Receivable for shares sold		44,464
TOTAL ASSETS		147,453,950
Liabilities:
Payable for shares redeemed	$287,243
Payable for transfer agent fee	52,841
Payable for portfolio accounting fees	41,124
Payable for shareholder services fee (Note 5)	38,800
Payable for share registration costs	31,304
Payable for auditing fees	30,000
Payable for distribution services fee (Note 5)	7,818
Payable for Directors'/Trustees' fees (Note 5)	556
Accrued expenses (Note 5)	19,159
TOTAL LIABILITIES		508,845
Net assets for 12,963,934 shares outstanding		$146,945,105
Net Assets Consist of:
Paid-in capital		$154,374,689
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency		3,518,651
Accumulated net realized gain on investments and foreign currency transactions		719,518
Distributions in excess of net investment income		(11,667,753)
TOTAL NET ASSETS		$146,945,105

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Statement of Assets and Liabilities–continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Class A Shares:
Net asset value per share ($115,132,581 ÷ $10,147,764 shares outstanding) $0.001 par value, 250,000,000 shares authorized	$11.35
Offering price per share (100/95.50 of $11.35)	$11.88
Redemption proceeds per share	$11.35
Class C Shares:
Net asset value per share ($12,346,115 ÷ $1,112,451 shares outstanding) $0.001 par value, 250,000,000 shares authorized	$11.10
Offering price per share	$11.10
Redemption proceeds per share (99.00/100 of $11.10)	$10.99
Institutional Shares:
Net asset value per share ($19,466,409 ÷ $1,703,719 shares outstanding) $0.001 par value, 250,000,000 shares authorized	$11.43
Offering price per share	$11.43
Redemption proceeds per share	$11.43

See Notes which are an integral part of the Financial Statements

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Statement of Operations
Year Ended September 30, 2013

Investment Income:
Interest			$897,863
Dividends (including $1,482 received from affiliated holding (Note 5) and net of foreign taxes withheld of $6,025)			60,611
Total Income			958,474
Expenses:
Investment adviser fee (Note 5)		$1,457,807
Administrative fee (Note 5)		151,690
Custodian fees		36,914
Transfer agent fee		250,463
Directors'/Trustees' fees (Note 5)		1,849
Auditing fees		30,000
Legal fees		5,947
Distribution services fee (Note 5)		136,843
Shareholder services fee (Note 5)		414,629
Share registration costs		51,572
Printing and postage		36,154
Insurance premiums (Note 5)		4,409
Miscellaneous (Note 5)		128,724
TOTAL EXPENSES		2,707,001
Waivers and Reimbursement: (Note 5)
Waiver/reimbursement of investment adviser fee	$(124,513)
Waiver of distribution services fee	(50)
TOTAL WAIVERS AND REIMBURSEMENT		(124,563)
Net expenses			2,582,438
Net investment loss			(1,623,964)
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions			(4,079,654)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currencies			(8,732,747)
Net realized and unrealized loss on investments and foreign currency transcations			(12,812,401)
Change in net assets resulting from operations			$(14,436,365)

See Notes which are an integral part of the Financial Statements

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Statement of Changes in Net Assets

Year Ended September 30	2013	2012
Increase (Decrease) in Net Assets
Operations:
Net investment loss	$(1,623,964)	$(2,336,281)
Net realized loss on investments and foreign currency transactions	(4,079,654)	(9,704,489)
Net change in unrealized appreciation/depreciation on investments and foreign currency transactions	(8,732,747)	14,296,520
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS	(14,436,365)	2,255,750
Distribution to Shareholders:
Distributions from net investment income
Class A Shares	—	(14,898,360)
Class C Shares	—	(1,725,932)
Institutional Shares	—	(4,415,121)
Distributions from net realized gain on investments and foreign currency transactions
Class A Shares	(185,612)	(1,958,009)
Class C Shares	(23,768)	(252,413)
Institutional Shares	(33,240)	(554,643)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS	(242,620)	(23,804,478)
Share Transactions:
Proceeds from sale of shares	19,730,480	75,646,347
Net asset value of shares issued to shareholders in payment of distributions declared	227,952	22,242,260
Cost of shares redeemed	(104,761,383)	(191,975,413)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS	(84,802,951)	(94,086,806)
Change in net assets	(99,481,936)	(115,635,534)
Net Assets:
Beginning of period	246,427,041	362,062,575
End of period (including (distributions in excess of) net investment income of $(11,667,753) and $(18,184,788), respectively)	$146,945,105	$246,427,041

See Notes which are an integral part of the Financial Statements

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Notes to Financial Statements

September 30, 2013

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 nine portfolios. The financial statements included herein are only those of Federated Prudent DollarBear Fund (the “Fund”). 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. Each portfolio pays its own expenses. The Fund offers three classes of shares: Class A Shares, Class C Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class specific matters. The investment objective of the Fund is to seek current income and capital appreciation.

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

■	Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Fund's Board of Trustees (the “Trustees”).
■	Fixed-income securities and repurchase agreements acquired with remaining maturities of 60 days or less are valued at their amortized cost (adjusted for the accretion of any discount or amortization of any premium) unless the issuer's creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment's fair value, in which case it would be valued in the same manner as a longer-term security.
■	Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
■	Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs.
■	Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
■	Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.
■	For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered such as: the purchase price of the security, information obtained by contacting the issuer, analysis of the issuer's financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded and public trading in similar securities of the issuer or comparable issuers.

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

Fair Valuation and Significant Events Procedures

The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Equity Management Company of Pennsylvania (“Adviser”) and certain of the Adviser's affiliated companies to determine fair value of securities and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services' policies, procedures and valuation methods (including key inputs and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.

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

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

■	With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;
■	Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
■	Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

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

Repurchase Agreements

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

The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

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

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Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class C Shares and Institutional Shares may bear distribution services fees and shareholder services fees unique to those 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

All premiums and discounts on fixed-income securities are amortized/accreted using the effective-interest-rate method.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended September 30, 2013, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of September 30, 2013, tax years 2010 through 2013 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

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Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended September 30	2013		2012
Class A Shares:	Shares	Amount	Shares	Amount
Shares sold	564,830	$6,642,740	2,584,785	$31,601,969
Shares issued to shareholders in payment of distributions declared	15,053	180,634	1,361,191	16,170,958
Shares redeemed	(6,004,790)	(69,602,347)	(9,081,196)	(110,605,820)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	(5,424,907)	$(62,778,973)	(5,135,220)	$(62,832,893)

Year Ended September 30	2013		2012
Class C Shares:	Shares	Amount	Shares	Amount
Shares sold	182,150	$2,141,147	633,925	$7,713,177
Shares issued to shareholders in payment of distributions declared	1,685	$19,900	158,153	1,863,037
Shares redeemed	(1,042,242)	$(11,846,118)	(1,397,149)	(16,771,940)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	(858,407)	$(9,685,071)	(605,071)	$(7,195,726)

Year Ended September 30	2013			2012
Institutional Shares:	Shares		Amount	Shares	Amount
Shares sold	921,811		$10,946,593	2,895,780	$36,331,201
Shares issued to shareholders in payment of distributions declared	2,274		27,418	353,339	4,208,265
Shares redeemed	(1,996,849)		(23,312,918)	(5,294,716)	(64,597,653)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(1,072,764)		$(12,338,907)	(2,045,597)	$(24,058,187)
NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS	(7,356,078)	$(84,802,951)		(7,785,888)	$(94,086,806)

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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 net operating loss, foreign currency transactions, passive foreign investment companies and foreign bond bifurcation.

For the year ended September 30, 2013, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income	Accumulated Net Realized Gain
$(13,190,296)	$8,140,999	$5,049,297

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

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended September 30, 2013 and 2012, was as follows:

	2013	2012
Ordinary income1	$—	$21,039,413
Long-term capital gains	$242,620	$2,765,065

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

As of September 30, 2013, the components of distributable earnings on a tax basis were as follows:

Deferrals	$(8,808,948)
Net unrealized appreciation	$659,846
Long-term Capital gains	$719,518

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the realization for tax purposes of unrealized gains on investments in passive foreign investment company.

At September 30, 2013, the cost of investments for federal tax purposes was $146,028,051. The net unrealized appreciation of investments for federal tax purposes was $649,418. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,837,336 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,187,918.

Under current tax law, late-year ordinary loss realized after December 31 through the end of the Fund's fiscal year (“Late Year Ordinary Loss”) may be deferred, in whole or in part, and treated as occurring on the first day of the following fiscal year. As of September 30, 2013, for federal income tax purposes, a Late Year Ordinary Loss of $8,808,948 was deferred to October 1, 2013.

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5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. For the year ended September 30, 2013, the Adviser waived $117,867 of its fee.

Certain of the Fund's assets are managed by Federated Investment Management Company (the “Sub-Adviser”). Under the terms of a sub-adviser agreement between the Adviser and the Sub-Adviser, the Sub-Adviser receives an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended September 30, 2013, the Sub-Adviser earned a fee of $309,676.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below, plus certain out-of-pocket expenses:

Administrative Fee	Average Daily Net Assets of the Investment Complex
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

Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended September 30, 2013, the net fee paid to FAS was 0.078% of average daily net assets of the Fund.

Distribution Services Fee

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

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

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Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended September 30, 2013, distribution services fees for the Fund were as follows:

	Distribution Services Fees Incurred	Distribution Services Fees Waived
Class C Shares	$136,843	$50

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended September 30, 2013, FSC retained $22,202 of fees paid by the Fund. For the year ended September 30, 2013, the Fund's Class A shares did not incur a distribution services fee: however it may begin to incur this fee upon approval of the Trustees.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended September 30, 2013, FSC retained $3,325 in sales charges from the sale of Class A Shares.

Shareholder Services Fee

The Fund may pay fees (“Service Fees”) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for Service Fees. For the year ended September 30, 2013, Service Fees for the Fund were as follows:

	Service Fees Incurred
Class A Shares	$369,015
Class C Shares	45,614
TOTAL	$414,629

For the year ended September 30, 2013, FSSC received $48,666 of Service Fees paid by the Fund.

Interfund Transactions

During the year ended September 30, 2013, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Act and amounted to $10,322 and $0, respectively.

Expense Limitation

The Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their respective fees and/or reimburse expenses so that the total annual fund operating expenses (as shown in the financial highlights, excluding extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund's Class A

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Shares, Class C Shares and Institutional Shares (after the voluntary waivers and reimbursements) will not exceed 1.29%, 2.04% and 1.04% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) December 1, 2014; or (b) the date of the Fund's next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.

General

Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Directors'/Trustees' fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund.

Transactions Involving Affiliated Holdings

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended September 30, 2013, the Adviser reimbursed $6,646. Transactions with the affiliated holding during the year ended September 30, 2013, were as follows:

	Federated U.S. Treasury Cash Reserves Fund, Institutional Shares
Balance of Shares Held 9/30/2012	64,034,679
Purchases/Additions	79,172,401
Sales/Reductions	(121,688,345)
Balance of Shares Held 9/30/2013	21,518,735
Value	$21,518,735
Dividend Income	$1,482

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in a portfolio of Money Market Obligations Trust (MMOT), which is managed by Federated Investment Management Company, the Adviser. MMOT is an open-end management company, registered under the Act. The investment objective of Federated U.S. Treasury Cash Reserves Fund (USTCR), a portfolio of MMOT, is to provide current income consistent with stability of principal and liquidity. It pursues its objective by investing primarily in a portfolio of short-term U.S. Treasury securities that pay interest exempt from state personal income tax. Income distributions from USTCR are declared daily and paid monthly, and are recorded by the Fund as dividend income. Capital gain distributions, if any, from USTCR are declared and paid at least annually, and are recorded by the Fund as capital gains. A copy of USTCR's financial statements is available on the EDGAR Database on the SEC's website or upon request from the Fund.

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6. Investment TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended September 30, 2013 were as follows:

Purchases	$387,239
Sales	$3,069,483

7. CONCENTRATION OF RISK

At September 30, 2013, the diversification of countries was as follows:

Country	Percentage of Net Assets
Canada	17.1%
Hong Kong	12.7%
United Kingdom	11.0%
Singapore	4.8%
Switzerland	4.8%
Sweden	4.8%
New Zealand	4.7%
Norway	4.6%
France	3.1%
Australia	3.1%

8. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate offered to the Fund by PNC Bank at the time of the borrowing. As of September 30, 2013, there were no outstanding loans. During the year ended September 30, 2013, the Fund did not utilize the LOC.

9. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of September 30, 2013, there were no outstanding loans. During the year ended September 30, 2013, the program was not utilized.

10. FEDERAL TAX INFORMATION (UNAUDITED)

For the fiscal year ended September 30, 2013, the amount of long-term capital gains designated by the Fund was $242,620.

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Report of Independent Registered Public Accounting Firm

TO THE BOARD OF Trustees OF THE federated income securities trust AND SHAREHOLDERS OF federated prudent dollarbear fund:

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Prudent DollarBear Fund (the “Fund”), a portfolio of Federated Income Securities Trust, as of September 30, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund'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 September 30, 2013, by correspondence with the custodian and transfer agent. 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 the Federated Prudent DollarBear Fund as of September 30, 2013, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
November 21, 2013

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Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2013 to September 30, 2013.

ACTUAL EXPENSES

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

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

	Beginning Account Value 4/1/2013	Ending Account Value 9/30/2013	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$983.50	$6.41
Class C Shares	$1,000	$979.70	$10.12
Institutional Shares	$1,000	$984.50	$5.17
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.60	$6.53
Class C Shares	$1,000	$1,014.84	$10.30
Institutional Shares	$1,000	$1,019.85	$5.27

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.29%
Class C Shares	2.04%
Institutional Shares	1.04%

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Shareholder Meeting Results (unaudited)

A Special Meeting of Shareholders of Federated Income Securities Trust (the “Trust”), of which the Fund is a portfolio, was held on October 28, 2013. On August 29, 2013, the record date for shareholders voting at the meeting, there were 464,685,428.035 total outstanding shares of the Trust.

The following item was considered by shareholders of the Trust and the results of their voting were as follows:

AGENDA ITEM

Proposal to elect certain Trustees of the Trust:¹

Name	For	Withheld
John T. Collins	357,095,356.996	4,082,407.702
Maureen Lally-Green	356,880,665.829	4,297,098.869
Thomas M. O'Neill	357,032,580.339	4,145,184.359
P. Jerome Richey	356,553,411.684	4,624,353.014

1 The following Trustees continued their terms:
John F. Donahue, J. Christopher Donahue, Maureen Lally-Green (having benn previously appointed by the Board), Peter E. Madden, Charles F. Mansfield, Jr., Thomas M. O'Neill (having been previously appointed by the Board), and John S. Walsh.

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Board of Trustees and Trust Officers

The Board of Trustees 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 Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2012, the Trust comprised nine portfolio(s), and the Federated Fund Family consisted of 42 investment companies (comprising 137 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Fund Family and serves for an indefinite term. 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.

In Memoriam - John F. Cunningham, Independent Trustee

With deep sadness, Federated announces the passing of John F. Cunningham, who served as an independent member of the Board of the Federated Fund Family since 1999. Mr. Cunningham's savvy business acumen and incisive intellect made him a powerful force on the Federated Fund Board. He was an advocate for shareholders and a respected colleague within the Federated family. Mr. Cunningham enjoyed an outstanding career in technology, having served as President and in other Senior Executive positions with leading companies in the industry. Federated expresses gratitude to Mr. Cunningham for his fine contributions as a Board member, colleague and friend. He will be greatly missed.

Interested TRUSTEES Background

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 Trustee Began serving: January 1986	Principal Occupations: Director or Trustee of the Federated Fund Family; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Family's Executive Committee. Previous Positions: Chairman of the Federated Fund Family; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.

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Name Birth Date Positions Held with Trust Date Service Began

Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)

J. Christopher Donahue* Birth Date: April 11, 1949 President and Trustee Began serving: January 2000

Principal Occupations: Principal Executive Officer and President of certain of the Funds in the Federated Fund Family; Director or Trustee of certain of the Funds in the Federated Fund Family; 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, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); 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.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES Background

Name Birth Date Positions Held with Trust Date Service Began

Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications

John T. Collins Birth Date: January 24, 1947 Trustee Began serving: October 2013

Principal Occupations: Director or Trustee of certain Funds in the Federated Fund Family; Chairman and CEO, The Collins Group, Inc. (a private equity firm). Other Directorships Held: Chairman Emeriti, Bentley University; Director, Sterling Suffolk Downs, Inc.; Director, National Association of Printers and Lithographers. Previous Positions: Director and Audit Committee Member, Bank of America Corp. Qualifications: Business management and director experience.

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Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications
Maureen Lally-Green Birth Date: July 5, 1949 Trustee Began serving: August 2009	Principal Occupations: Director or Trustee of the Federated Fund Family; Director, Office of Church Relations, and Associate General Secretary, Diocese of Pittsburgh; Adjunct Professor of Law, Duquesne University School of Law. Other Directorships Held: Director, Auberle; Member, Pennsylvania State Board of Education; Director, Saint Vincent College; Director, Ireland Institute of Pittsburgh; Chair and Director, UPMC Mercy Hospital; Regent, St. Vincent Seminary; Director, Epilepsy Foundation of Western and Central Pennsylvania; Director, Saint Thomas More Society, Allegheny County; Director, Our Campaign for the Church Alive, Inc. Previous Position: Pennsylvania Superior Court Judge. Qualifications: Legal and director experience.
Peter E. Madden Birth Date: March 16, 1942 Trustee Began serving: November 1991	Principal Occupation: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Family. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, Chief Operating Officer and Director, 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. Qualifications: Business management, mutual fund services and director experience.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 Trustee Began serving: January 2000	Principal Occupations: Director or Trustee of the Federated Fund Family; Management Consultant. 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; Executive Vice President, DVC Group, Inc. (marketing, communications and technology). Qualifications: Banking, business management, education and director experience.

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Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications
Thomas M. O'Neill Birth Date: June 14, 1951 Trustee Began serving: October 2006	Principal Occupations: Director or Trustee, Vice Chairman of the Audit Committee of the Federated Fund Family; Sole Proprietor, Navigator Management Company (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College; Board of Directors, Medicines for Humanity; Board of Directors, The Golisano Children's Museum of Naples, Florida. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber). Qualifications: Business management, mutual fund, director and investment experience.
P. Jerome Richey Birth Date: February 23, 1949 Trustee Began serving: October 2013	Principal Occupations: Director or Trustee of certain Funds in the Federated Fund Family; General Counsel, University of Pittsburgh. Other Directorships Held: Board Chairman, Epilepsy Foundation of Western Pennsylvania; Board Member, World Affairs Council of Pittsburgh; Board Member, Energy & Mineral Law Foundation. Previous Positions: Chief Legal Officer and Executive Vice President, CONSOL Energy Inc.; Shareholder, Buchanan Ingersoll & Rooney PC (a law firm). Qualifications: Business management, legal and director experience.
John S. Walsh Birth Date: November 28, 1957 Trustee Began serving: January 2000	Principal Occupations: Director or Trustee, Chairman of the Audit Committee of the Federated Fund Family; 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. Qualifications: Business management and director experience.

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OFFICERS

Name Birth Date Address Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Officer since: January 1986	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Family; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Lori A. Hensler, CPA Birth Date: January 6, 1967 TREASURER Officer since: April 2013	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Family; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp. and Edgewood Services, Inc.; and Assistant Treasurer, Federated Investors Trust Company. Previous Positions: Controller of Federated Investors, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc.
Peter J. Germain Birth Date: September 3, 1959 CHIEF LEGAL OFFICER Officer since: January 2005	Principal Occupations: Mr. Germain is Chief Legal Officer of the Federated Fund Family. He is General Counsel and Vice President, Federated Investors, Inc.; President, Federated Administrative Services and Federated Administrative Services, Inc.; Vice President, Federated Securities Corp.; Secretary, Federated Private Asset Management, Inc.; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated in 1984 and is a member of the Pennsylvania Bar Association. Previous Positions: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated Investors, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Investors, Inc.
Brian P. Bouda Birth Date: February 28, 1947 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT Officer since: August 2004	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Family; Vice President and Chief Compliance Officer of Federated Investors, Inc. and Chief Compliance Officer of certain of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin. Previous Positions: Served in Senior Management positions with a large regional banking organization.

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Name Birth Date Address Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
Robert J. Ostrowski Birth Date: April 26, 1963 Chief Investment Officer Officer since: May 2004	Principal Occupations: Robert J. Ostrowski joined Federated in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of Federated's taxable fixed-income products in 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.
Stephen F. Auth Birth Date: September 3, 1956 450 Lexington Avenue Suite 3700 New York, NY 10017-3943 CHIEF INVESTMENT OFFICER Officer since: May 2004	Principal Occupations: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Fund Family; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated Equity Management Company of Pennsylvania. Previous Positions: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. (investment advisory subsidiary of Federated); 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.
Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Officer since: January 1986	Principal Occupations: Vice Chairman or Vice President of some of the Funds in the Federated Fund Family; 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 Family; Executive Vice President, Federated Investors, Inc.; Director and Chief Executive Officer, Federated Securities Corp.
Douglas C. Noland Birth Date: December 2, 1962 VICE PRESIDENT Officer since: June 2012 Portfolio Manager since: inception	Principal Occupations: Douglas C. Noland has been the Fund's Portfolio Manager since inception. He is Vice President of the Trust with respect to the Fund.. Mr. Noland joined Federated in December 2008 and was named a Senior Vice President of the Fund's Adviser in December 2008. Prior to joining Federated, Mr. Noland was employed with David Tice & Associates, Inc. where he served as an Assistant Portfolio Manager and strategist of Prudent Bear Fund and Prudent Global Income Fund from January 1999. From 1990 through 1998, Mr. Noland worked as a trader, portfolio manager and analyst for short-biased hedge funds including G. W. Ringoen & Associates from January 1990 to September 1996, Fleckenstein Capital from September 1996 to March 1997 and East Shore Partners, Inc. from October 1997 to December 1998. Mr. Noland earned a B.S. in Accounting and Finance from the University of Oregon and an M.B.A. from Indiana University.

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Name Birth Date Address Positions Held with Trust Date Service Began

Principal Occupation(s) for Past Five Years and Previous Position(s)

Ihab Salib Birth Date: December 14, 1964 VICE PRESIDENT Officer since: June 2012 Portfolio Manager since: December 2008

Principal Occupations: Ihab Salib has been a Portfolio Manager of the Fund since December 2008. He is Vice President of the Trust with respect to the Fund. Mr. Salib joined Federated in April 1999 as a Senior Fixed-Income Trader/Assistant Vice President of the Fund's Adviser. In July 2000, he was named a Vice President of the Fund's Adviser and in January 2007 he was named a Senior Vice President of the Fund's Adviser. He has served as a Portfolio Manager since January 2002. From January 1994 through March 1999, Mr. Salib was employed as a Senior Global Fixed-Income Analyst with UBS Brinson, Inc. Mr. Salib received his B.A. with a major in Economics from Stony Brook University.

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Evaluation and Approval of Advisory Contract–May 2013

Federated Prudent DollarBear Fund (the “Fund”)

Following a review and recommendation of approval by the Fund's independent trustees, the Fund's Board reviewed and approved at its May 2013 meetings the Fund's investment advisory and subadvisory contracts for an additional one-year term. The Board's decision regarding these contracts reflects the exercise of its business judgment on whether to continue the existing arrangements.

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

The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser to a fund and its shareholders, including the performance and expenses of the fund and of comparable funds; the Adviser's cost of providing the services, including the profitability to the Adviser of providing advisory services to a fund; the extent to which the Adviser may realize “economies of scale” as a fund grows larger and, if such economies exist, whether they have been shared with a fund and its shareholders or the family of funds; any “fall-out financial benefits” that accrue to the Adviser because of its relationship with a fund (including research services received from brokers that execute fund trades and any fees paid to affiliates of the Adviser for services rendered to a fund); comparative fee structures, including a comparison of fees paid to the Adviser with those paid by similar funds; and the extent to which the Board members are fully informed about all facts the Board deems relevant to its consideration of the Adviser's services and fees. Consistent with these judicial decisions, the Board also considered management fees charged to institutional and other clients of the Adviser and subadviser for what might be viewed as like services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory and subadvisory contracts to the extent it considered them to be appropriate and relevant, as discussed further below.

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

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funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

While mindful that courts have cautioned against giving such comparisons too much weight, the Board has found the use of comparisons of the Fund's fees and expenses to other mutual funds with comparable investment programs to be relevant. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because it is believed that they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a relevant indicator of what consumers have found to be reasonable in the precise marketplace in which the Fund competes.

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

By contrast, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; different portfolio management techniques made necessary by different cash flows; and the time spent by portfolio managers and their teams, funds financial services, legal, compliance and risk management in reviewing securities pricing, addressing different administrative responsibilities, addressing different degrees of risk associated with management and a variety of different costs. The Senior Officer did not consider these fee schedules to be determinative in judging the appropriateness of mutual fund advisory fees.

The Fund's ability to deliver competitive performance when compared to its peer group was also deemed to be relevant by the Board as a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory and subadvisory contracts.

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The Senior Officer reviewed information compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are relevant, though not conclusive, in judging the reasonableness of proposed fees.

The Fund's performance fell below the median of the relevant peer group for the one-year, three-year and five-year periods covered by the Evaluation. The Board discussed the Fund's performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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

Federated furnished information, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in arbitrarily allocating costs continues to cause the Senior Officer to question the precision of the process and to conclude that such reports may be unreliable, since a single change in an allocation estimate can dramatically alter the resulting estimate of cost and/or profitability of a fund. The allocation information was considered in the analysis by the Board but was determined to be of limited use.

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

The Senior Officer's Evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated family of funds, such as personnel and

Annual Shareholder Report

42

processes for the portfolio management, shareholder services, compliance, internal audit, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund family as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's Evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size.

The Senior Officer noted that, subject to the comments and recommendations made within his Evaluation, his observations and the information accompanying the Evaluation supported a finding by the Board that the management fees for each of the funds were reasonable. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory and subadvisory contracts.

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

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

Annual Shareholder Report

43

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the home page, select “All” under “Asset Class.” Select a fund name to go to the Fund Overview page, then select a share class, if applicable. On the Fund Overview page, select the “Literature and Prospectuses” tab. At the bottom of that page, select “Proxy Voting Record Report (Form N-PX).” Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated's website at FederatedInvestors.com. From the home page, select “All” under “Asset Class.” Select a fund name to go to the Fund Overview page, then select a share class, if applicable. On the Fund Overview page, select the “Literature and Prospectuses” tab. At the bottom of that page, select “Form N-Q.”

Annual Shareholder Report

44

Notes

[PAGE INTENTIONALLY LEFT BLANK]

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

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

Federated Prudent DollarBear Fund
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561

Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

CUSIP 31420C712
CUSIP 31420C696
CUSIP 31420C688

41204 (11/13)

Federated is a registered trademark of Federated Investors, Inc.
2013 ©Federated Investors, Inc.

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 of the following members of the Board's Audit Committee is an “audit committee financial expert,” and is "independent," for purposes of this Item:   Charles F. Mansfield, Jr., Thomas M. O'Neill and John S. Walsh.

Item 4. Principal Accountant Fees and Services

(a) Audit Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2013 - $246,450

Fiscal year ended 2012 - $243,000

(b) Audit-Related Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2013 - $218

Fiscal year ended 2012 - $0

Travel to Audit Committee meeting.

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.

(c) Tax Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2013 - $0

Fiscal year ended 2012 - $0

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $2,504 respectively. Fiscal year ended 2012- Tax preparation fees for fiscal year end 2011.

(d) All Other Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2013 - $0

Fiscal year ended 2012 - $0

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $14,045 and $16,345 respectively. Fiscal year ended 2013- Service fees for analysis of potential Passive Foreign Investment Company holdings. Fiscal year ended 2012- Service fees for analysis of potential Passive Foreign Investment Company holdings.

(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 2013 – 0%

Fiscal year ended 2012 - 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 2013 – 0%

Fiscal year ended 2012 – 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 2013 – 0%

Fiscal year ended 2012 – 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 2013 - $149,466

Fiscal year ended 2012 - $359,603

(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

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.

(b) Not Applicable; Fund had no divestments during the reporting period covered since the previous Form N-CSR filing.

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

Not Applicable

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not Applicable

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

No Changes to Report

Item 11. Controls and Procedures

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

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

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

Item 12. Exhibits

(a)(1) Code of Ethics- Not Applicable to this Report.

(a)(2) Certifications of Principal Executive Officer and Principal Financial Officer.

(a)(3) Not Applicable.

(b) Certifications pursuant to 18 U.S.C. Section 1350.

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/ Lori A. Hensler

Lori A. Hensler, Principal Financial Officer

Date November 20, 2013

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

By /S/ J. Christopher Donahue

J. Christopher Donahue, Principal Executive Officer

Date November 20, 2013

By /S/ Lori A. Hensler

Lori A. Hensler, Principal Financial Officer

Date November 20, 2013