Federated Investment Series Funds NCSRS Certified semi-annual shareholder report (management investment company)

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form N-CSR

Certified Shareholder Report of Registered Management Investment Companies

811-58429

(Investment Company Act File Number)

Federated Investment Series Funds, Inc.

_______________________________________________________________

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds

5800 Corporate Drive

Pittsburgh, Pennsylvania 15237-7000

(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

(Notices should be sent to the Agent for Service)

Date of Fiscal Year End: 11/30/08

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

Item 1. Reports to Stockholders

Federated
World-Class Investment Manager

Federated Bond Fund

Established 1987

A Portfolio of Federated Investment Series Funds, Inc.

SEMI-ANNUAL SHAREHOLDER REPORT

May 31, 2008

Class A Shares
Class B Shares
Class C Shares
Class F Shares

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

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$8.87
Income From Investment Operations:
Net investment income	0.25
Net realized and unrealized gain (loss) on investments, futures contracts and swap contracts	(0.21	)
TOTAL FROM INVESTMENT OPERATIONS	0.04
Less Distributions:
Distributions from net investment income	(0.25	)
Net Asset Value, End of Period	$8.66
Total Return²	0.45	%

Ratios to Average Net Assets:
Net expenses³	0.99	%⁴
Net investment income	5.47	%⁴
Expense waiver/reimbursement⁵	0.23	%⁴
Supplemental Data:
Net assets, end of period (000 omitted)	$601,465
Portfolio turnover	12	%

1 Beginning with the year ended November 30, 2005, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

2 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.

3 Pursuant to a settlement with the New York Attorney General, the Adviser has agreed to waive investment adviser fees in compliance with an Assurance of Discontinuance dated November 17, 2005. The net investment adviser fee was reduced to 0.5557% effective January 1, 2006 and may not be increased until after December 31, 2010.

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Year Ended November 30,
2007		2006		2005	¹	2004		2003
$8.93		$8.79		$9.09		$9.04		$8.49

0.48		0.50		0.52		0.53		0.58
(0.07	)	0.13		(0.31	)	0.08		0.55
0.41		0.63		0.21		0.61		1.13

(0.47	)	(0.49	)	(0.51	)	(0.56	)	(0.58	)
$8.87		$8.93		$8.79		$9.09		$9.04
4.74	%	7.47	%	2.36	%	6.89	%	13.62	%


0.99	%	0.99	%	1.06	%	1.05	%	1.05	%
5.37	%	5.48	%	5.37	%	5.81	%	6.32	%
0.22	%	0.26	%	0.19	%	0.17	%	0.16	%

$573,375		$478,755		$442,294		$395,445		$377,436
27	%	34	%	34	%	25	%	28	%

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$8.90
Income From Investment Operations:
Net investment income	0.21
Net realized and unrealized gain (loss) on investments, futures contracts and swap contracts	(0.20	)
TOTAL FROM INVESTMENT OPERATIONS	0.01
Less Distributions:
Distributions from net investment income	(0.21	)
Net Asset Value, End of Period	$8.70
Total Return²	0.16	%

Ratios to Average Net Assets:
Net expenses³	1.79	%⁴
Net investment income	4.66	%⁴
Expense waiver/reimbursement⁵	0.21	%⁴
Supplemental Data:
Net assets, end of period (000 omitted)	$215,753
Portfolio turnover	12	%

1 Beginning with the year ended November 30, 2005, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Year Ended November 30,
2007		2006		2005	¹	2004		2003
$8.96		$8.82		$9.12		$9.06		$8.51

0.42		0.43		0.45		0.46		0.51
(0.08	)	0.13		(0.31	)	0.08		0.55
0.34		0.56		0.14		0.54		1.06

(0.40	)	(0.42	)	(0.44	)	(0.48	)	(0.51	)
$8.90		$8.96		$8.82		$9.12		$9.06
3.89	%	6.59	%	1.53	%	6.12	%	12.69	%


1.79	%	1.79	%	1.85	%	1.85	%	1.85	%
4.57	%	4.68	%	4.57	%	5.04	%	5.52	%
0.21	%	0.21	%	0.15	%	0.12	%	0.11	%

$236,276		$292,622		$353,858		$417,278		$480,042
27	%	34	%	34	%	25	%	28	%

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$8.90
Income From Investment Operations:
Net investment income	0.21
Net realized and unrealized gain (loss) on investments, futures contracts and swap contracts	(0.20	)
TOTAL FROM INVESTMENT OPERATIONS	0.01
Less Distributions:
Distributions from net investment income	(0.21	)
Net Asset Value, End of Period	$8.70
Total Return²	0.16	%

Ratios to Average Net Assets:
Net expenses³	1.79	%⁴
Net investment income	4.67	%⁴
Expense waiver/reimbursement⁵	0.21	%⁴
Supplemental Data:
Net assets, end of period (000 omitted)	$104,364
Portfolio turnover	12	%

1 Beginning with the year ended November 30, 2005, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Year Ended November 30,
2007		2006		2005	¹	2004		2003
$8.96		$8.82		$9.12		$9.07		$8.52

0.41		0.43		0.45		0.46		0.51
(0.07	)	0.13		(0.31	)	0.07		0.55
0.34		0.56		0.14		0.53		1.06

(0.40	)	(0.42	)	(0.44	)	(0.48	)	(0.51	)
$8.90		$8.96		$8.82		$9.12		$9.07
3.89	%	6.60	%	1.54	%	6.00	%	12.68	%


1.79	%	1.79	%	1.85	%	1.85	%	1.85	%
4.57	%	4.68	%	4.57	%	5.02	%	5.52	%
0.21	%	0.21	%	0.15	%	0.12	%	0.11	%

$101,561		$95,453		$90,716		$89,339		$91,905
27	%	34	%	34	%	25	%	28	%

Financial Highlights - Class F Shares

(For a Share Outstanding Throughout Each Period)

	Six Months Ended (unaudited)
	5/31/2008
Net Asset Value, Beginning of Period	$8.91
Income From Investment Operations:
Net investment income	0.25
Net realized and unrealized gain (loss) on investments, futures contracts and swap contracts	(0.20	)
TOTAL FROM INVESTMENT OPERATIONS	0.05
Less Distributions:
Distributions from net investment income	(0.25	)
Net Asset Value, End of Period	$8.71
Total Return²	0.54	%

Ratios to Average Net Assets:
Net expenses³	1.02	%⁴
Net investment income	5.43	%⁴
Expense waiver/reimbursement⁵	0.23	%⁴
Supplemental Data:
Net assets, end of period (000 omitted)	$163,245
Portfolio turnover	12	%

1 Beginning with the year ended November 30, 2005, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Year Ended November 30,
2007		2006		2005	¹	2004		2003
$8.97		$8.83		$9.13		$9.07		$8.52

0.48		0.50		0.52		0.53		0.57
(0.07	)	0.13		(0.31	)	0.08		0.55
0.41		0.63		0.21		0.61		1.12

(0.47	)	(0.49	)	(0.51	)	(0.55	)	(0.57	)
$8.91		$8.97		$8.83		$9.13		$9.07
4.68	%	7.41	%	2.32	%	6.94	%	13.53	%


1.02	%	1.03	%	1.08	%	1.08	%	1.08	%
5.34	%	5.45	%	5.34	%	5.80	%	6.28	%
0.22	%	0.21	%	0.16	%	0.14	%	0.13	%

$170,492		$170,464		$185,591		$211,844		$246,014
27	%	34	%	34	%	25	%	28	%

Shareholder Expense Example

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

ACTUAL EXPENSES

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

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

	Beginning Account Value 12/1/2007	Ending Account Value 5/31/2008	Expenses Paid During Period¹
Actual:
Class A Shares	$1,000	$1,004.50	$4.96
Class B Shares	$1,000	$1,001.60	$8.96
Class C Shares	$1,000	$1,001.60	$8.96
Class F Shares	$1,000	$1,005.40	$5.11
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,020.05	$5.00
Class B Shares	$1,000	$1,016.05	$9.02
Class C Shares	$1,000	$1,016.05	$9.02
Class F Shares	$1,000	$1,019.90	$5.15

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

Class A Shares		0.99%
Class B Shares		1.79%
Class C Shares		1.79%
Class F Shares		1.02%

Portfolio of Investments Summary Table

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

Security Type		Percentage of Total Net Assets²
Corporate Debt Securities		90.6%
Mortgage-Backed Securities³		5.3%
Municipal Securities		0.7%
Foreign Governments/Agencies		0.7%
U.S. Treasury and Agency Securities⁴		0.6%
Asset-Backed Securities⁵		0.0%
Derivative Contracts^5,6		0.0%
Other Security Types⁷		0.8%
Cash Equivalents⁸		0.7%
Other Assets and Liabilities--Net⁹		0.6%
TOTAL		100.0%

1 See the Fund's Prospectus and Statement of Additional Information for a description of these security types.

2 As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of this table, the affiliated investment company (other than an affiliated money market fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments.

3 For purposes of this table, mortgage-backed securities include mortgage-backed securities guaranteed by Government Sponsored Entities (GSEs) and adjustable rate mortgage-backed securities.

4 For purposes of this table, U.S. Treasury and Agency Securities do not include mortgage-backed securities guaranteed by GSEs.

5 Represents less than 0.1%.

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

7 Other Security Types consist of common stock and preferred stock.

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

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

Portfolio of Investments

May 31, 2008 (unaudited)

Principal Amount					Value
			CORPORATE BONDS--66.0%
			Basic Industry - Chemicals--1.2%
$	3,760,000		Albemarle Corp., Sr. Note, 5.10%, 2/1/2015	$	3,560,067
	1,530,000		Du Pont (E.I.) de Nemours & Co., 5.00%, 1/15/2013		1,548,438
	1,900,000	¹	Fertinitro Finance, Company Guarantee, 8.29%, 4/1/2020		1,529,500
	2,365,000		RPM International, Inc., 6.50%, 2/15/2018		2,377,390
	2,500,000		Praxair, Inc., 4.625%, 3/30/2015		2,430,019
	1,525,000		Rohm & Haas Co., 6.00%, 9/15/2017		1,503,048
			TOTAL		12,948,462
			Basic Industry - Metals & Mining--2.1%
	2,500,000		Alcoa, Inc., Note, 5.55%, 2/1/2017		2,380,711
	1,370,000	^1,2	ArcelorMittal, 6.125%, 6/1/2018		1,344,968
	3,760,000		BHP Finance (USA), Inc., 5.00%, 12/15/2010		3,799,232
	5,000,000		Barrick Gold Corp., 4.875%, 11/15/2014		4,760,280
	3,325,000	^1,2	Codelco, Inc., Bond, 5.625%, 9/21/2035		2,987,845
	4,050,000		Newmont Mining Corp., Company Guarantee, 5.875%, 4/1/2035		3,442,388
	2,500,000		Xstrata Canada Corp., 6.00%, 10/15/2015		2,432,543
	1,500,000	^1,2	Xstrata Finance Canada Ltd., Unsecd. Note, 5.50%, 11/16/2011		1,486,330
			TOTAL		22,634,297
			Basic Industry- Paper--1.7%
	2,600,000		International Paper Co., 4.25%, 1/15/2009		2,597,381
	6,980,000		Louisiana-Pacific Corp., 8.875%, 8/15/2010		6,948,499
	2,850,000		Pope & Talbot, Inc., 8.375%, 6/1/2013		334,875
	4,500,000		Westvaco Corp., 7.65%, 3/15/2027		4,457,579
	3,750,000		Weyerhaeuser Co., Deb., 7.375%, 3/15/2032		3,742,484
			TOTAL		18,080,818
			Capital Goods - Aerospace & Defense--0.7%
	3,650,000	^1,2	BAE Systems Holdings, Inc., 5.20%, 8/15/2015		3,476,048
	1,210,000		Lockheed Martin Corp., Sr. Note, 4.121%, 3/14/2013		1,174,491
	2,840,000		Raytheon Co., Unsecd. Note, 5.375%, 4/1/2013		2,900,150
			TOTAL		7,550,689
Principal Amount					Value
			CORPORATE BONDS--continued
			Capital Goods - Building Materials--0.5%
$	5,500,000		Masco Corp., Note, 5.875%, 7/15/2012	$	5,308,227
			Capital Goods - Diversified Manufacturing--1.7%
	2,940,000		Briggs & Stratton Corp., Company Guarantee, 8.875%, 3/15/2011		3,042,900
	2,065,000		Dover Corp., Note, 5.45%, 3/15/2018		2,029,226
	2,020,000		Harsco Corp., 5.75%, 5/15/2018		1,988,126
	2,600,000		Hubbell, Inc., 5.95%, 6/1/2018		2,584,389
	1,580,000	^1,2	Hutchison Whampoa Ltd., 6.50%, 2/13/2013		1,638,708
	2,630,000		Textron Financial Corp., 5.40%, 4/28/2013		2,606,863
	3,230,000	^1,2	Textron Financial Corp., Jr. Sub. Note, 6.00%, 2/15/2067		2,565,595
	2,025,000		Thomas & Betts Corp., Note, 7.25%, 6/1/2013		2,067,930
			TOTAL		18,523,737
			Capital Goods - Environmental--0.1%
	500,000		Republic Services, Inc., Note, 6.086%, 3/15/2035		463,661
	600,000		Republic Services, Inc., Note, 6.75%, 8/15/2011		623,730
			TOTAL		1,087,391
			Communications - Media & Cable--2.1%
	900,000		Comcast Corp., 7.05%, 3/15/2033		932,817
	4,700,000		Comcast Corp., 7.125%, 6/15/2013		4,955,365
	5,480,000		Comcast Corp., Company Guarantee, 6.50%, 1/15/2017		5,623,794
	4,630,000		Cox Communications, Inc., Unsecd. Note, 4.625%, 1/15/2010		4,596,520
	5,010,000		Cox Communications, Inc., Unsecd. Note, 5.45%, 12/15/2014		4,873,548
	2,250,000		Time Warner Cable, Inc., Sr. Unsecd. Note, 5.85%, 5/1/2017		2,162,946
			TOTAL		23,144,990
			Communications - Media Noncable--0.9%
	615,000		British Sky Broadcasting Group PLC, 8.20%, 7/15/2009		637,920
	6,880,000		Grupo Televisa S.A., 6.625%, 3/18/2025		6,811,888
	2,590,000		News America, Inc., 6.65%, 11/15/2037		2,563,099
			TOTAL		10,012,907
			Communications - Telecom Wireless--1.4%
	6,540,000		AT&T Wireless Services, Inc., 8.75%, 3/1/2031		7,894,266
	3,100,000		America Movil S.A.B. de C.V., Note, 5.75%, 1/15/2015		3,092,870
Principal Amount					Value
			CORPORATE BONDS--continued
			Communications - Telecom Wireless--continued
$	800,000		Vodafone Group PLC, 5.35%, 2/27/2012	$	809,903
	2,960,000		Vodafone Group PLC, Note, 5.625%, 2/27/2017		2,923,235
			TOTAL		14,720,274
			Communications - Telecom Wirelines--3.3%
	3,810,000		BellSouth Corp., 5.20%, 9/15/2014		3,814,465
	2,620,000		Citizens Communications Co., 9.00%, 8/15/2031		2,436,600
	995,000		Embarq Corp., 6.738%, 6/1/2013		978,725
	4,940,000	^1,2	KT Corp., Note, 5.875%, 6/24/2014		4,989,783
	3,870,000		SBC Communications, Inc., 5.10%, 9/15/2014		3,854,032
	1,390,000		Telefonica SA, Company Guarantee, 7.045%, 6/20/2036		1,469,720
	5,030,000		Telefonica SA, Sr. Note, 5.855%, 2/4/2013		5,084,530
	7,050,000		Telefonos de Mexico, Note, 4.50%, 11/19/2008		7,069,388
	1,000,000		Verizon Communications, Inc., 6.10%, 4/15/2018		1,027,668
	4,931,000		Verizon Global Funding, Note, 7.25%, 12/1/2010		5,297,897
			TOTAL		36,022,808
			Consumer Cyclical - Automotive--1.9%
	3,560,000	^1,2	American Honda Finance Corp., 4.625%, 4/2/2013		3,480,755
	2,490,000		DaimlerChrysler North America Holding Corp., 6.50%, 11/15/2013		2,600,390
	7,740,000		DaimlerChrysler North America Holding Corp., Note, 4.875%, 6/15/2010		7,786,410
	2,100,000		General Motors Corp., Note, 9.45%, 11/1/2011		1,732,500
	4,800,000	^1,2	Nissan Motor Acceptance Corp., Sr. Unsecd. Note, 5.625%, 3/14/2011		4,772,578
			TOTAL		20,372,633
			Consumer Cyclical - Entertainment--1.0%
	4,020,000		International Speedway Corp., 4.20%, 4/15/2009		4,028,278
	2,500,000		Time Warner, Inc., 5.50%, 11/15/2011		2,479,172
	3,800,000		Walt Disney Co., Note, 5.70%, 7/15/2011		3,961,004
			TOTAL		10,468,454
			Consumer Cyclical - Lodging--0.1%
	1,530,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.00%, 12/1/2016		1,359,358
			Consumer Cyclical - Retailers--1.1%
	2,036,667	^1,2	CVS Caremark Corp., Pass Thru Cert., 5.298%, 1/11/2027		1,869,401
	500,000		CVS Caremark Corp., Sr. Note, 5.75%, 8/15/2011		511,185
	4,350,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.75%, 6/1/2017		4,304,918
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Cyclical - Retailers--continued
$	2,180,000		Costco Wholesale Corp., 5.30%, 3/15/2012	$	2,248,584
	900,000		JC Penney Corp., Inc., Sr. Unsecd. Note, 5.75%, 2/15/2018		820,172
	2,560,000		Target Corp., Note, 5.875%, 7/15/2016		2,585,979
			TOTAL		12,340,239
			Consumer Cyclical - Services--0.8%
	7,475,000		Boston University, 7.625%, 7/15/2097		8,814,371
			Consumer Non-Cyclical Food/Beverage--1.3%
	2,550,000		Bottling Group LLC, Note, 5.50%, 4/1/2016		2,560,534
	2,420,000		General Mills, Inc., Note, 5.70%, 2/15/2017		2,444,045
	1,180,000		Kellogg Co., 4.25%, 3/6/2013		1,147,524
	1,460,000		Kellogg Co., Sr. Unsub., 5.125%, 12/3/2012		1,478,765
	2,000,000		Kraft Foods, Inc., 5.625%, 11/1/2011		2,021,605
	740,000		Kraft Foods, Inc., Note, 6.25%, 6/1/2012		758,562
	920,000		PepsiCo, Inc., 4.65%, 2/15/2013		931,681
	3,220,000	^1,2	SABMiller PLC, Note, 6.50%, 7/1/2016		3,295,723
			TOTAL		14,638,439
			Consumer Non-Cyclical Health Care--1.0%
	2,200,000		Anthem, Inc., 6.80%, 8/1/2012		2,263,439
	1,530,000		Baxter International, Inc., 6.25%, 12/1/2037		1,521,307
	1,960,000	^1,2	Covidien International Finance SA, 6.55%, 10/15/2037		1,954,282
	1,660,000		Thermo Electron Corp., Sr. Unsecd. Note, 5.00%, 6/1/2015		1,555,228
	4,000,000		UnitedHealth Group, Inc., Bond, 6.00%, 2/15/2018		3,900,589
			TOTAL		11,194,845
			Consumer Non-Cyclical Pharmaceuticals--1.2%
	3,370,000		Abbott Laboratories, 5.15%, 11/30/2012		3,461,686
	4,485,000		Eli Lilly & Co., Bond, 5.20%, 3/15/2017		4,458,654
	3,660,000		Genentech, Inc., Note, 4.75%, 7/15/2015		3,609,643
	1,920,000		Pharmacia Corp., Sr. Deb., 6.50%, 12/1/2018		2,074,953
			TOTAL		13,604,936
			Consumer Non-Cyclical Products--0.5%
	500,000		Philips Electronics NV, 4.625%, 3/11/2013		494,676
	1,960,000		Philips Electronics NV, 5.75%, 3/11/2018		1,935,884
	2,950,000		Whirlpool Corp., 5.50%, 3/1/2013		2,897,460
			TOTAL		5,328,020
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Non-Cyclical Supermarkets--0.1%
$	1,310,000		Kroger Co., Bond, 6.90%, 4/15/2038	$	1,347,690
			Consumer Non-Cyclical Tobacco--0.3%
	2,910,000		Philip Morris International, Inc., 5.65%, 5/16/2018		2,850,073
			Energy - Independent--1.8%
	4,240,000		Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.95%, 9/15/2016		4,279,525
	460,000		Canadian Natural Resources Ltd., 4.90%, 12/1/2014		440,119
	5,890,000		Canadian Natural Resources Ltd., 5.85%, 2/1/2035		5,259,359
	1,500,000	^1,2	Lukoil International Finance BV, 6.356%, 6/7/2017		1,436,250
	495,000		Pemex Project Funding Master, 5.75%, 12/15/2015		513,761
	3,450,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		3,861,930
	1,881,600	^1,2	Ras Laffan Liquified Natural Gas, 3.437%, 9/15/2009		1,878,539
	440,000		XTO Energy, Inc., 6.375%, 6/15/2038		423,214
	775,000		XTO Energy, Inc., 6.75%, 8/1/2037		783,656
	1,135,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.25%, 8/1/2017		1,158,232
			TOTAL		20,034,585
			Energy - Integrated--1.7%
	4,100,000		Conoco, Inc., 7.25%, 10/15/2031		4,623,563
	3,000,000		Husky Oil Ltd., Company Guarantee, 8.90%, 8/15/2028		3,030,915
	450,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		504,272
	4,650,000		Petro-Canada, Bond, 5.35%, 7/15/2033		3,859,468
	220,000		Petro-Canada, Deb., 7.00%, 11/15/2028		220,431
	2,380,079	^1,2	Qatar Petroleum, 5.579%, 5/30/2011		2,419,118
	4,150,000	^1,2	StatoilHydro ASA, 5.125%, 4/30/2014		4,147,425
			TOTAL		18,805,192
			Energy - Oil Field Services--0.6%
	3,080,000		Enbridge, Inc., Sr. Note, 5.60%, 4/1/2017		2,980,595
	210,000		Noble Drilling Corp., Sr. Note, 7.50%, 3/15/2019		237,048
	100,000		Weatherford International Ltd., 6.00%, 3/15/2018		100,531
	2,700,000		Weatherford International Ltd., 7.00%, 3/15/2038		2,806,312
			TOTAL		6,124,486
			Energy - Refining--0.2%
	1,665,000		Valero Energy Corp., 7.50%, 4/15/2032		1,696,051
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Banking--11.3%
$	4,000,000		Astoria Financial Corp., Note, 5.75%, 10/15/2012	$	3,759,786
	5,000,000	^1,2	Barclays Bank PLC, 5.926%, 12/31/2049		4,302,054
	4,180,000		Capital One Capital IV, 6.745%, 2/17/2037		3,339,335
	4,050,000		Capital One Financial Corp., Note, 7.125%, 8/1/2008		4,072,541
	6,460,000		Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 3/5/2038		6,478,508
	2,876,000		Colonial BancGroup, Inc., Note, 6.375%, 12/1/2015		2,469,514
	5,350,000		Corp Andina De Fomento, Bond, 7.375%, 1/18/2011		5,732,251
	4,720,000		Credit Suisse First Boston USA, Inc., Sr. Note, 5.50%, 8/16/2011		4,834,371
	6,000,000		HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035		5,142,919
	2,200,000		HSBC Finance Corp., 4.75%, 4/15/2010		2,203,986
	2,770,000		HSBC Finance Corp., 5.00%, 6/30/2015		2,662,301
	3,500,000		Hudson United Bancorp, 7.00%, 5/15/2012		3,705,727
	1,500,000		J.P. Morgan Chase & Co., Sr. Note, 6.00%, 1/15/2018		1,503,524
	870,000		J.P. Morgan Chase & Co., Sub. Deb., 8.00%, 4/29/2027		988,443
	13,900,000		J.P. Morgan Chase & Co., Sub. Note, 5.125%, 9/15/2014		13,688,535
	3,975,000		Manufacturers & Traders Trust Co., Sub. Note, 5.629%, 12/1/2021		3,450,783
	5,000,000		Marshall & Ilsley Bank, Milwaukee, Sr. Note, 4.40%, 3/15/2010		4,981,451
	1,790,000		Northern Trust Corp., Sr. Note, 5.30%, 8/29/2011		1,807,669
	1,170,000		PNC Funding Corp., Sub. Note, 5.625%, 2/1/2017		1,104,740
	4,020,000		PNC Funding Corp., Sub. Note, 7.50%, 11/1/2009		4,177,017
	2,520,000		Popular North America, Inc., 5.65%, 4/15/2009		2,467,181
	10,511,111	^1,2	Regional Diversified Funding, 9.25%, 3/15/2030		11,617,595
	3,870,000		Sovereign Bancorp, Inc., Sr. Note, 4.80%, 9/1/2010		3,614,572
	1,700,000		State Street Bank and Trust Co., Sub. Note, 5.30%, 1/15/2016		1,610,569
	5,580,000		U.S. Bank, N.A., Sub. Note, 4.95%, 10/30/2014		5,545,527
	5,000,000		Wachovia Bank N.A., 4.80%, 11/1/2014		4,804,436
	3,440,000		Wachovia Bank N.A., Sub. Note, 4.875%, 2/1/2015		3,261,266
	500,000		Wachovia Corp., 5.75%, 2/1/2018		484,653
	500,000		Washington Mutual Bank, 5.125%, 1/15/2015		412,336
	2,400,000		Washington Mutual Bank, Sub. Note, 6.875%, 6/15/2011		2,252,902
	3,550,000		Wilmington Trust Corp., Sub. Note, 8.50%, 4/2/2018		3,768,902
	3,370,000		Zions Bancorp, Sub. Note, 5.50%, 11/16/2015		2,800,595
			TOTAL		123,045,989
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Brokerage--5.8%
$	4,750,000		Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.25%, 2/1/2018	$	5,059,230
	8,060,000		Blackrock, Inc., 6.25%, 9/15/2017		8,101,207
	1,500,000		Eaton Vance Corp., 6.50%, 10/2/2017		1,534,298
	4,255,000	^1,2	FMR Corp., Bond, 7.57%, 6/15/2029		4,656,324
	2,900,000		Goldman Sachs Group, Inc., 6.125%, 2/15/2033		2,666,584
	190,000		Goldman Sachs Group, Inc., Note, Series MTNB, 7.35%, 10/1/2009		198,201
	2,100,000		Goldman Sachs Group, Inc., Sub. Note, 6.345%, 2/15/2034		1,821,404
	8,140,000		Invesco Ltd., Note, 4.50%, 12/15/2009		8,044,074
	1,150,000		Janus Capital Group, Inc., Sr. Note, 6.25%, 6/15/2012		1,119,128
	1,375,000		Janus Capital Group, Inc., Sr. Note, 6.70%, 6/15/2017		1,315,372
	1,200,000		Lehman Brothers Holdings, Inc., 5.75%, 5/17/2013		1,147,450
	1,500,000		Lehman Brothers Holdings, Inc., 7.875%, 8/15/2010		1,546,820
	3,000,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.50%, 7/19/2017		2,762,871
	2,800,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 7/17/2037		2,445,054
	2,745,000		Merrill Lynch & Co., Inc., Note, 4.125%, 9/10/2009		2,753,279
	3,170,000		Merrill Lynch & Co., Inc., Sr. Unsecd. Note, 6.05%, 8/15/2012		3,149,706
	1,500,000		Morgan Stanley, Sr. Unsecd. Note, 5.95%, 12/28/2017		1,425,029
	2,450,000		Morgan Stanley, Sr. Unsecd. Note, 6.00%, 4/28/2015		2,414,936
	7,350,000		Morgan Stanley, Sr. Unsecd. Note, 6.625%, 4/1/2018		7,296,649
	1,020,000		Nuveen Investments, 5.00%, 9/15/2010		897,600
	1,020,000		Nuveen Investments, 5.50%, 9/15/2015		729,300
	1,834,166	^1,2	World Financial, Pass Thru Cert., Series 96 WFP, 6.91%, 9/1/2013		1,859,083
			TOTAL		62,943,599
			Financial Institution - Finance Noncaptive--3.4%
	6,930,000		American Express Credit Corp., 5.875%, 5/2/2013		6,960,688
	5,000,000		American International Group, Inc., Sr. Note, 4.70%, 10/1/2010		4,967,934
	4,295,000		Berkshire Hathaway, Inc., Company Guarantee, 4.85%, 1/15/2015		4,302,524
	2,920,000		Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.30%, 5/10/2017		2,145,911
	8,820,000		General Electric Capital Corp., 5.625%, 5/1/2018		8,738,880
	115,000		Heller Financial, Inc., Note, 7.375%, 11/1/2009		120,548
	1,500,000	^1,2	ILFC E-Capital Trust I, 5.90%, 12/21/2065		1,236,054
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--continued
$	3,100,000		International Lease Finance Corp., 4.875%, 9/1/2010	$	3,071,377
	1,670,000		International Lease Finance Corp., 6.625%, 11/15/2013		1,634,606
	3,250,000		Susa Partnership LP, 8.20%, 6/1/2017		3,627,377
			TOTAL		36,805,899
			Financial Institution - Insurance - Health--0.3%
	810,000		Aetna US Healthcare, 5.75%, 6/15/2011		829,572
	2,060,000		CIGNA Corp., 6.35%, 3/15/2018		2,063,269
			TOTAL		2,892,841
			Financial Institution - Insurance - Life--1.6%
	2,750,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		3,005,493
	2,950,000	^1,2	Pacific Life Global Funding, Note, 5.15%, 4/15/2013		2,938,966
	4,000,000	^1,2	Pacific LifeCorp., Bond, 6.60%, 9/15/2033		3,916,696
	2,280,000		Prudential Financial, Inc., 5.15%, 1/15/2013		2,244,854
	1,530,000		Prudential Financial, Inc., 6.625%, 12/1/2037		1,488,440
	3,950,000	^1,2	Union Central Life Insurance Co., Note, 8.20%, 11/1/2026		4,275,203
			TOTAL		17,869,652
			Financial Institution - Insurance - P&C--2.0%
	2,940,000		ACE INA Holdings, Inc., 5.60%, 5/15/2015		2,884,108
	3,170,000		ACE INA Holdings, Inc., Sr. Note, 5.70%, 2/15/2017		3,112,993
	540,000		CNA Financial Corp., 6.50%, 8/15/2016		530,076
	1,370,000		CNA Financial Corp., Note, 6.00%, 8/15/2011		1,381,677
	770,000		Chubb Corp., Sr. Note, 5.75%, 5/15/2018		759,834
	1,710,000		Horace Mann Educators Corp., Sr. Note, 6.85%, 4/15/2016		1,792,505
	4,000,000	^1,2	Liberty Mutual Group, Inc., Unsecd. Note, 5.75%, 3/15/2014		3,860,997
	1,220,000		The Travelers Cos., Inc., Bond, 6.25%, 3/15/2067		1,070,336
	265,000		The Travelers Cos., Inc., Sr. Unsecd. Note, 5.50%, 12/1/2015		260,602
	1,000,000	^1,2	USF&G Corp., 8.312%, 7/1/2046		1,015,308
	5,610,000	^1,2	ZFS Finance USA Trust I, Jr. Sub. Note, 6.15%, 12/15/2065		5,116,309
			TOTAL		21,784,745
			Financial Institution - REITs--0.7%
	1,500,000		Equity One, Inc., Bond, 6.00%, 9/15/2017		1,304,212
	1,535,000		Liberty Property LP, 6.625%, 10/1/2017		1,458,375
	185,000		Mack-Cali Realty Corp., Note, 7.25%, 3/15/2009		187,480
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - REITs--continued
$	1,430,000		Simon Property Group LP, 6.125%, 5/30/2018	$	1,393,575
	430,000		Simon Property Group, Inc., 6.35%, 8/28/2012		439,791
	2,330,000		Simon Property Group, Inc., Note, 5.60%, 9/1/2011		2,334,359
			TOTAL		7,117,792
			Foreign-Local-Government--0.8%
	7,900,000		Hydro Quebec, Sr. Deb., 6.30%, 5/11/2011		8,441,876
			Municipal Services--0.4%
	1,825,000	^1,2	Army Hawaii Family Housing, 5.524%, 6/15/2050		1,532,014
	2,980,000	^1,2	Camp Pendleton & Quantico Housing LLC, 5.572%, 10/1/2050		2,532,911
			TOTAL		4,064,925
			Sovereign--0.6%
	3,500,000		Sweden, Government of, 10.25%, 11/1/2015		4,009,615
	2,715,000		United Mexican States, Series MTNA, 6.75%, 9/27/2034		2,934,915
			TOTAL		6,944,530
			Technology--2.3%
	1,400,000		BMC Software, Inc., 7.25%, 6/1/2018		1,397,560
	1,780,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.50%, 2/22/2016		1,801,801
	1,100,000		Dell Computer Corp., Deb., 7.10%, 4/15/2028		1,132,566
	3,030,000		Fiserv, Inc., Sr. Note, 6.80%, 11/20/2017		3,052,860
	6,175,000		Harris Corp., 5.95%, 12/1/2017		6,099,810
	1,500,000		Hewlett-Packard Co., Note, 5.40%, 3/1/2017		1,487,217
	965,000		IBM Corp., Deb., 8.375%, 11/1/2019		1,180,550
	1,250,000		IBM Corp., Sr. Note, 5.70%, 9/14/2017		1,272,240
	2,330,000		KLA-Tencor Corp., 6.90%, 5/1/2018		2,284,951
	5,120,000		Oracle Corp., 6.50%, 4/15/2038		5,131,256
			TOTAL		24,840,811
			Transportation - Airlines--0.3%
	710,000		Southwest Airlines Co., 6.50%, 3/1/2012		716,239
	1,995,000		Southwest Airlines Co., Deb., 7.375%, 3/1/2027		2,015,229
			TOTAL		2,731,468
			Transportation - Railroads--1.1%
	1,200,000		Burlington Northern Santa Fe Corp., 4.875%, 1/15/2015		1,134,525
	2,247,406		Burlington Northern Santa Fe Corp., Pass Thru Cert., 7.57%, 1/2/2021		2,418,061
	3,150,000		Canadian Pacific RR, 7.125%, 10/15/2031		3,044,384
Principal Amount					Value
			CORPORATE BONDS--continued
			Transportation - Railroads--continued
$	655,000		Norfolk Southern Corp., Note, 6.75%, 2/15/2011	$	680,857
	1,000,000	^1,2	Norfolk Southern Corp., Sr. Unsecd. Note, 5.75%, 4/1/2018		994,249
	3,580,000		Union Pacific Corp., 4.875%, 1/15/2015		3,436,721
			TOTAL		11,708,797
			Transportation - Services--0.4%
	3,080,000	^1,2	Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017		2,787,774
	1,570,000		FedEx Corp., Note, 5.50%, 8/15/2009		1,594,995
			TOTAL		4,382,769
			Utility - Electric--4.7%
	1,530,000		Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.95%, 12/15/2036		1,312,203
	4,670,000		Commonwealth Edison Co., 1st Mtg. Bond, 5.80%, 3/15/2018		4,592,499
	1,180,000		Commonwealth Edison Co., 1st Mtg. Bond, 6.15%, 9/15/2017		1,190,206
	1,310,000		Consolidated Edison Co., Sr. Unsecd. Note, 5.50%, 9/15/2016		1,316,237
	2,390,000		Consolidated Natural Gas Co., 5.00%, 12/1/2014		2,308,280
	2,000,000		Dominion Resources, Inc., Unsecd. Note, 5.95%, 6/15/2035		1,846,370
	2,765,000		Duke Capital Corp., Sr. Note, 6.25%, 2/15/2013		2,811,173
	5,150,000		Enersis S.A., Note, 7.40%, 12/1/2016		5,494,020
	4,410,000	^1,2	Great River Energy, 1st Mtg. Note, 5.829%, 7/1/2017		4,320,126
	5,350,000		MidAmerican Energy Holdings Co., Sr. Unsecd. Note, 5.95%, 5/15/2037		5,039,921
	1,460,000		National Rural Utilities Cooperative Finance Corp., 5.45%, 2/1/2018		1,423,649
	1,160,000		Northern States Power Co., MN, 1st Mtg. Bond, 5.25%, 3/1/2018		1,148,888
	1,835,000		PPL Energy Supply LLC, Sr. Unsecd. Note, 6.00%, 12/15/2036		1,510,230
	1,000,000		PSEG Power LLC, Company Guarantee, 7.75%, 4/15/2011		1,074,048
	1,670,000		PSI Energy, Inc., Bond, 6.05%, 6/15/2016		1,693,731
	1,410,000		Pacific Gas & Electric Co., 6.05%, 3/1/2034		1,361,189
	2,925,000		Pacific Gas & Electric Co., Unsecd. Note, 4.20%, 3/1/2011		2,901,349
	4,000,000		Public Service Electric & Gas Co., 4.00%, 11/1/2008		4,001,128
	2,940,000		Union Electric Co., 6.00%, 4/1/2018		2,912,694
	1,260,000		Virginia Electric & Power Co., Sr. Unsecd. Note, 5.10%, 11/30/2012		1,273,308
	2,020,000		Westar Energy, Inc., 5.875%, 7/15/2036		1,877,140
			TOTAL		51,408,389
Principal Amount or Shares					Value
			CORPORATE BONDS--continued
			Utility - Natural Gas Distributor--0.7%
$	7,395,000		Atmos Energy Corp., 4.00%, 10/15/2009	$	7,315,831
			Utility - Natural Gas Pipelines--0.3%
	3,300,000		Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.80%, 3/15/2035		2,888,299
			TOTAL CORPORATE BONDS (IDENTIFIED COST $733,819,406)		716,202,184
			CORPORATE NOTE--0.4%
			Communications Telecom Wirelines--0.4%
	4,595,000		Telecom Italia Capital, Note, 4.875%, 10/1/2010 (IDENTIFIED COST $4,593,135)		4,573,021
			MORTGAGE-BACKED SECURITIES--0.0%
	12,680		Federal Home Loan Mortgage Corp., Pool C00702, 6.00%, 1/1/2029		12,978
	14,609		Federal Home Loan Mortgage Corp., Pool C00748, 6.00%, 4/1/2029		14,953
	4,559		Federal Home Loan Mortgage Corp., Pool C20263, 6.00%, 1/1/2029		4,666
	8,051		Federal Home Loan Mortgage Corp., Pool C25621, 6.50%, 5/1/2029		8,390
	11,547		Federal Home Loan Mortgage Corp., Pool G10493, 6.00%, 4/1/2011		11,868
	12,307		Federal National Mortgage Association, Pool 313324, 9.00%, 6/1/2017		13,371
	12,687		Federal National Mortgage Association, Pool 323159, 7.50%, 4/1/2028		13,393
	6,604		Federal National Mortgage Association, Pool 421223, 7.00%, 5/1/2028		6,949
	10,824		Federal National Mortgage Association, Pool 429707, 6.50%, 5/1/2013		11,260
	10,696		Federal National Mortgage Association, Pool 430232, 7.00%, 8/1/2028		11,255
	46,266		Federal National Mortgage Association, Pool 439947, 6.50%, 11/1/2028		48,172
	36,478		Federal National Mortgage Association, Pool 489867, 6.50%, 3/1/2029		37,981
	8,571		Government National Mortgage Association, Pool 449491, 7.50%, 12/15/2027		9,157
	4,069		Government National Mortgage Association, Pool 486467, 7.00%, 8/15/2028		4,318
	17,433		Government National Mortgage Association, Pool 780339, 8.00%, 12/15/2023		18,607
	12,443		Government National Mortgage Association, Pool 780340, 9.00%, 11/15/2017		13,601
	11,064		Government National Mortgage Association, Pool 780373, 7.00%, 12/15/2023		11,688
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $242,116)		252,607
Principal Amount or Shares					Value
			MUNICIPALS--0.7%
			Municipal Services--0.7%
$	4,675,000		Pittsburgh, PA Urban Redevelopment Authority, 8.01% Bonds (Alcoa, Inc.), 6/1/2015	$	4,675,608
	2,080,000		Tampa, FL Sports Authority, 8.02% Bonds (GTD BY MBIA Insurance Corp.), 10/1/2026		2,498,205
			TOTAL MUNICIPALS (IDENTIFIED COST $6,782,040)		7,173,813
			GOVERNMENT/AGENCY--0.7%
			Sovereign--0.7%
	6,500,000		United Mexican States, 6.625%, 3/3/2015 (IDENTIFIED COST $6,740,500)		7,029,425
			COMMON STOCK--0.0%
			Utility - Electric--0.0%
	90	³	NRG Energy, Inc. (IDENTIFIED COST $2,041)		3,743
			PREFERRED STOCKS--0.8%
			Financial Institution - Brokerage--0.4%
	130,000		Lehman Brothers Holdings, Inc., Pfd., $2.84 Annual Dividend		4,422,600
			Financial Institution - REITs--0.4%
	80,000		Prologis, Cumulative REIT Perpetual Pfd. Stock, Series C, $4.27 Annual Dividend		4,380,000
			TOTAL PREFERRED STOCKS (IDENTIFIED COST $9,224,680)		8,802,600
			ASSET-BACKED SECURITY--0.0%
			Home Equity Loan--0.0%
	363,720	^1,2	125 Home Loan Owner Trust 1998-1A, Class B1, 9.76%, 2/15/2029 (IDENTIFIED COST $363,549)		290,976
			COLLATERALIZED MORTGAGE OBLIGATION--0.0%
			Non-Agency Mortgage--0.0%
	57,588	^1,2	SMFC Trust Asset-Backed Certificates, 1997-A, Class 4, 7.41%, 1/28/2027 (IDENTIFIED COST $112,141)		37,432
			U.S. TREASURY--0.2%
			Treasury Security--0.2%
	2,500,000	⁴	United States Treasury Note, 4.75%, 3/31/2011 (IDENTIFIED COST $2,483,691)		2,625,832
Shares					Value
			MUTUAL FUNDS--30.2%⁵
	5,512,865		Federated Mortgage Core Portfolio	$	54,467,106
	42,087,757		High Yield Bond Portfolio		272,728,666
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $404,373,227)		327,195,772
			TOTAL INVESTMENTS--99.0% (IDENTIFIED COST $1,168,736,526)⁶		1,074,187,405
			OTHER ASSETS AND LIABILITIES - NET--1.0%⁷		10,895,078
			TOTAL NET ASSETS--100%	$	1,085,082,483

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

Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation/ (Depreciation)
³ U.S. Treasury Notes 5-Year Long Futures	1,100	$120,931,250	September 2008	$(148,579	)
³ U.S. Treasury Notes 2-Year Long Futures	855	$180,084,375	September 2008	$ (83,209	)
³ U.S. Treasury Bond Short Futures	190	$ 21,565,000	September 2008	$ 262,056
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS				$ 30,268

Net Unrealized Appreciation on Futures Contracts is included in "Other Assets and
Liabilities - Net."

1 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At May 31, 2008, these restricted securities amounted to $102,562,919, which represented 9.5% of total net assets.

2 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Directors (the "Directors"). At May 31, 2008, these liquid restricted securities amounted to $101,033,419, which represented 9.3% of total net assets.

3 Non-income producing security.

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

5 Affiliated companies.

6 The cost of investments for federal tax purposes amounts to $1,172,552,255.

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

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

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

Level 1--quoted prices in active markets for identical securities

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

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

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

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

Valuation Inputs	Investments in Securities	Other Financial Instruments*
Level 1--Quoted Prices	$ 336,002,115	$30,268
Level 2--Other Significant Observable Inputs	738,185,290	0
Level 3--Significant Unobservable Inputs	0	0
TOTAL	$1,074,187,405	$30,268

* Other financial instruments include futures contracts.

The following acronyms are used throughout this portfolio:

GTD	- --Guaranteed
REIT	- --Real Estate Investment Trust

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

May 31, 2008 (unaudited)

Assets:
Total investments in securities, at value, including $327,195,772 of investments in affiliated issuers (Note 5) (identified cost $1,168,736,526)			$	1,074,187,405
Income receivable				12,027,329
Receivable for investments sold				15,047,306
Receivable for shares sold				1,677,250
Receivable for daily variation margin				112,031
TOTAL ASSETS				1,103,051,321
Liabilities:
Payable for investments purchased	$	10,878,050
Payable for shares redeemed		4,964,819
Income distribution payable		1,034,951
Payable for Directors'/Trustees' fees		173
Payable for distribution services fee (Note 5)		206,025
Payable for shareholder services fee (Note 5)		211,366
Bank overdraft		499,679
Accrued expenses		173,775
TOTAL LIABILITIES				17,968,838
Net assets for 125,029,324 shares outstanding			$	1,085,082,483
Net Assets Consist of:
Paid-in capital			$	1,204,077,630
Net unrealized depreciation of investments and futures contracts				(94,518,853	)
Accumulated net realized loss on investments, futures contracts and swap contracts				(24,930,627	)
Undistributed net investment income				454,333
TOTAL NET ASSETS			$	1,085,082,483

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Class A Shares:
Net asset value per share ($601,465,437 ÷ 69,438,021 shares outstanding), no par value, unlimited shares authorized						$8.66
Offering price per share (100/95.50 of $8.66)¹						$9.07
Redemption proceeds per share						$8.66
Class B Shares:
Net asset value per share ($215,753,297 ÷ 24,813,368 shares outstanding), no par value, unlimited shares authorized						$8.70
Offering price per share						$8.70
Redemption proceeds per share (94.50/100 of $8.70)¹						$8.22
Class C Shares:
Net asset value per share ($104,364,374 ÷ 11,999,655 shares outstanding), no par value, unlimited shares authorized						$8.70
Offering price per share						$8.70
Redemption proceeds per share (99.00/100 of $8.70)¹						$8.61
Class F Shares:
Net asset value per share ($163,245,141 ÷ 18,748,929 shares outstanding), no par value, unlimited shares authorized						$8.71
Offering price per share (100/99.00 of $8.71)¹						$8.80
Redemption proceeds per share (99.00/100 of $8.71)¹						$8.62
Institutional Shares:
Net asset value per share ($254,234 ÷ 29,351 shares outstanding), no par value, unlimited shares authorized						$8.66
Offering price per share						$8.66
Redemption proceeds per share						$8.66

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

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended May 31, 2008 (unaudited)

Investment Income:
Dividends (including $13,255,951 received from affiliated issuers (Note 5))			$	13,467,042
Interest (including income on securities loaned of $152,027)				21,633,971
TOTAL INCOME				35,101,013
Expenses:
Investment adviser fee (Note 5)	$	4,075,696
Administrative personnel and services fee (Note 5)		425,308
Custodian fees		24,367
Transfer and dividend disbursing agent fees and expenses		687,128
Directors'/Trustees' fees		10,577
Auditing fees		11,999
Legal fees		11,183
Portfolio accounting fees		90,766
Distribution services fee--Class B Shares (Note 5)		850,243
Distribution services fee--Class C Shares (Note 5)		387,208
Shareholder services fee--Class A Shares (Note 5)		625,234
Shareholder services fee--Class B Shares (Note 5)		283,414
Shareholder services fee--Class C Shares (Note 5)		126,068
Shareholder services fee--Class F Shares (Note 5)		200,426
Account administration fee--Class A Shares		1,372
Account administration fee--Class C Shares		1,191
Account administration fee--Class F Shares		2,152
Share registration costs		38,673
Printing and postage		54,196
Insurance premiums		3,512
Taxes		39,925
Miscellaneous		5,831
TOTAL EXPENSES		7,956,469

Statement of Operations - continued

Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(1,148,066	)
Waiver of administrative personnel and services fee		(11,400	)
Reimbursement of shareholder services fee--Class A Shares		(37,799	)
Reimbursement of shareholder services fee--Class F Shares		(10,349	)
TOTAL WAIVERS AND REIMBURSEMENTS				$	(1,207,614	)
Net expenses							$	6,748,855
Net investment income								28,352,158
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts and Swap Contracts:
Net realized gain on investments (including realized gain of $181,780 on sales of investments in an affiliated issuer (Note 5))								3,792,336
Net realized gain on futures contracts								2,651,547
Net realized gain on swap contracts								1,178,333
Net change in unrealized depreciation of investments								(30,494,739	)
Net change in unrealized depreciation of futures contracts								161,846
Net change in unrealized appreciation of swap contracts								(1,502,187	)
Net realized and unrealized loss on investments, futures contracts and swap contracts								(24,212,864	)
Change in net assets resulting from operations							$	4,139,294

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Six Months Ended (unaudited) 5/31/2008			Year Ended 11/30/2007
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	28,352,158		$	54,029,869
Net realized gain on investments, futures contracts and swap contracts		7,622,216			7,695,290
Net change in unrealized appreciation/depreciation of investments, futures contracts and swap contracts		(31,835,080	)		(15,276,117	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		4,139,294			46,449,042
Distributions to Shareholders:
Distributions from net investment income
Class A Shares		(16,734,753	)		(28,329,205	)
Class B Shares		(5,453,161	)		(11,594,578	)
Class C Shares		(2,504,949	)		(4,432,558	)
Class F Shares		(4,669,904	)		(8,940,583	)
Institutional Shares		(2,524	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(29,365,291	)		(53,296,924	)
Share Transactions:
Proceeds from sale of shares		146,885,514			279,056,135
Net asset value of shares issued to shareholders in payment of distributions declared		23,519,759			42,519,709
Cost of shares redeemed		(141,801,088	)		(270,317,491	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		28,604,185			51,258,353
Change in net assets		3,378,188			44,410,471
Net Assets:
Beginning of period		1,081,704,295			1,037,293,824
End of period (including undistributed net investment income of $454,333 and $1,467,466, respectively)	$	1,085,082,483		$	1,081,704,295

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

May 31, 2008 (unaudited)

1. ORGANIZATION

Federated Investment Series Funds, Inc. (the "Corporation") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Corporation consists of one diversified portfolio, Federated Bond Fund (the "Fund"). The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Institutional Shares are presented separately. The investment objective of the Fund is to provide a high level of current income as is consistent with the preservation of capital.

Effective January 28, 2008, the Fund began offering Institutional Shares.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in portfolios of Federated Core Trust (Core Trust), which is managed by Federated Investment Management Company, the Fund's adviser. Core Trust is an open-end management investment company, registered under the Act, available only to registered investment companies and other institutional investors. The investment objective of High Yield Bond Portfolio, a portfolio of Core Trust, is to seek high current income. The investment objective of Federated Mortgage Core Portfolio, a portfolio of Core Trust, is to provide total return. Federated Investors, Inc. receives no advisory or administrative fees from the Funds within the Core Trust. Income distributions from Core Trust are declared daily and paid monthly, and are recorded by the Fund as dividend income. Capital gain distributions, if any, from Core Trust are declared and paid annually, and are recorded by the Fund as capital gains. The performance of the Fund is directly affected by the performance of the Core Trust. A copy of the Core Trust's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the SEC's public reference room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

Pursuant to a separate Exemptive Order issued by the SEC, the Fund may invest in Prime Value Obligations Fund (PVOF) which is managed by Federated Investment Management Company. PVOF is an open-end management investment company, registered under the Act. The investment objective of PVOF is to provide current income consistent with stability of principal and liquidity. Income distributions from PVOF are declared daily and paid monthly. Capital gain distributions, if any, are declared annually, and are recorded by the Fund as capital gains received. A copy of PVOF's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the SEC's public reference room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid monthly. 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 each class may bear certain expenses unique to that class such as account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gains and Losses

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

Federal Taxes

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

Other Taxes

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

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Swap Contracts

Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or "swapped" between parties are generally calculated with respect to a "notional amount" for a predetermined period of time. The Fund may enter into interest rate, total return, credit default and other swap agreements. The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value," of the reference obligation in exchange for the reference obligation. The Fund may be either the buyer or seller in a credit default swap transaction. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in Net receivable or payable for swap contracts on the Statement of Assets and Liabilities, and periodic payments are reported as Net realized gain on swap contracts in the Statement of Operations. For the six months ended May 31, 2008, the Fund had net realized gains on swap contracts of $1,178,333.

At May 31, 2008, the Fund had no outstanding swap contracts.

Futures Contracts

The Fund may purchase and sell financial futures contracts to manage cashflows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. For the six months ended May 31, 2008, the Fund had net realized gains on futures contracts of $2,651,547.

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

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds and government securities to qualified brokers. The Fund normally receives cash collateral for securities loaned that is invested in an affiliated money market fund. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the securities lending agent, as a fee for its services under the program, and the Fund, according to agreed-upon rates.

As of May 31, 2008, the Fund had no outstanding securities on loan.

Restricted Securities

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

Additional information on restricted securities, excluding securities purchased under Rule 144A that have been deemed liquid by the Directors, held at May 31, 2008, is as follows:

Security		Acquisition Date		Acquisition Cost
Fertinitro Finance, Company Guarantee, 8.29%, 4/1/2020		5/14/1999		$1,443,791

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis.

3. CAPITAL STOCK

The following tables summarize capital stock activity:

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	11,543,003		$	101,438,102		21,829,441		$	192,578,199
Shares issued to shareholders in payment of distributions declared	1,587,081			13,830,226		2,678,067			23,593,028
Shares redeemed	(8,362,366	)		(73,397,891	)	(13,476,652	)		(118,641,035	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	4,767,718		$	41,870,437		11,030,856		$	97,530,192

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	1,375,958		$	12,151,745		2,299,704		$	20,342,056
Shares issued to shareholders in payment of distributions declared	503,849			4,409,363		1,039,064			9,192,457
Shares redeemed	(3,617,697	)		(31,902,677	)	(9,457,866	)		(83,706,969	)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(1,737,890	)	$	(15,341,569	)	(6,119,098	)	$	(54,172,456	)

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	1,843,371		$	16,262,519		3,684,759		$	32,656,180
Shares issued to shareholders in payment of distributions declared	177,663			1,554,681		307,123			2,717,541
Shares redeemed	(1,431,066	)		(12,605,803	)	(3,236,882	)		(28,653,048	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	589,968		$	5,211,397		755,000		$	6,720,673

	Six Months Ended 5/31/2008					Year Ended 11/30/2007
Class F Shares:	Shares			Amount		Shares			Amount
Shares sold	1,898,581		$	16,780,459		3,771,478		$	33,479,700
Shares issued to shareholders in payment of distributions declared	424,947			3,722,967		792,428			7,016,683
Shares redeemed	(2,707,531	)		(23,894,717	)	(4,438,946	)		(39,316,439	)
NET CHANGE RESULTING FROM CLASS F SHARE TRANSACTIONS	(384,003	)	$	(3,391,291	)	124,960		$	1,179,944

	Period Ended 5/31/2008¹					Year Ended 11/30/2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	29,061		$	252,689		- --		$	- --
Shares issued to shareholders in payment of distributions declared	290			2,522		- --			- --
Shares redeemed	- --			- --		- --			- --
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	29,351		$	255,211		- --		$	- --
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	3,265,144		$	28,604,185		5,791,718		$	51,258,353

1 Reflects operations from January 28, 2008 (date of initial investment) to May 31, 2008.

4. FEDERAL TAX INFORMATION

At May 31, 2008, the cost of investments for federal tax purposes was $1,172,552,255. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation resulting from futures contracts was $98,364,850. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $10,038,187 and net unrealized depreciation from investments for those securities having an excess of cost over value of $108,403,037.

At November 30, 2007, the Fund had a capital loss carryforward of $25,827,082 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year		Expiration Amount
2008		$ 2,000,841
2010		$15,739,984
2011		$ 2,824,073
2014		$ 5,262,184

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated Investment Management Company is the Fund's investment adviser (the "Adviser"). 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. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended May 31, 2008, the Adviser waived $1,128,345 of its fee.

Pursuant to a settlement with the New York Attorney General, the Adviser has agreed to waive investment adviser fees in compliance with an Assurance of Discontinuance dated November 17, 2005. The net adviser fee was reduced to 0.5557% effective January 1, 2006 and may not be increased until after December 31, 2010.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended May 31, 2008, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $11,400 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class B 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 B Shares		0.75%
Class C Shares		0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended May 31, 2008, FSC retained $73,638 of fees paid by the Fund. On November 15, 2007, the Directors approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on January 31, 2008. For the six months ended May 31, 2008, the Fund's Class A Shares did not incur a distribution services fee.

Sales Charges

For the six months ended May 31, 2008, FSC retained $50,501 in sales charges from the sale of Class A Shares. FSC also retained $3,828 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares, Class C Shares and Class F 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 shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended May 31, 2008, FSSC voluntarily reimbursed $48,148 of shareholder services fees. For the six months ended May 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares (after the voluntary waivers and reimbursements) will not exceed 0.99%, 1.79%, 1.79%, 1.02% and 0.79%, respectively, for the fiscal year ending November 30, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through January 31, 2009.

General

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

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the six months ended May 31, 2008, the Adviser reimbursed $19,721. Transactions with affiliated companies during the six months ended May 31, 2008 were as follows:

Affiliates	Balance of Shares Held 11/30/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 5/31/2008	Value	Dividend Income
Federated Mortgage Core Portfolio	5,950,087	165,702	602,924	5,512,865	$ 54,467,106	$ 1,654,234
High Yield Bond Portfolio	36,623,572	5,464,185	- --	42,087,757	272,728,666	11,269,614
Prime Value Obligations Fund, Institutional Shares	78,466,951	68,463,012	146,929,963	- --	- --	332,103
TOTAL OF AFFILIATED TRANSACTIONS	121,040,610	74,092,899	147,532,887	47,600,622	$327,195,772	$13,255,951

6. INVESTMENT TRANSACTIONS

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

Purchases		$	162,329,803
Sales		$	62,694,886

7. LINE OF CREDIT

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

8. INTERFUND LENDING

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

9. LEGAL PROCEEDINGS

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

10. RECENT ACCOUNTING PRONOUNCEMENTS

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

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

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED BOND FUND (THE "FUND")

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

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

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

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

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

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

For the periods ending December 31, 2007, the Fund's performance for the three-year period was above the median of the relevant peer group, and the Fund's performance fell below the median of the relevant peer group for the one-year period. 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 reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate. In this regard, it was noted that the Adviser has agreed to a reduction of 19 basis points in the Fund's advisory fee at least through December 31, 2010.

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

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

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

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

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

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

Federated Securities Corp., Distributor

Cusip 31420F103
Cusip 31420F202
Cusip 31420F301
Cusip 31420F400

2072302 (7/08)

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

Federated
World-Class Investment Manager

Federated Bond Fund

A Portfolio of Federated Investment Series Funds, Inc.

SEMI-ANNUAL SHAREHOLDER REPORT

May 31, 2008

Institutional Shares

Not FDIC Insured * May Lose Value * No Bank Guarantee

financial Highlights

(For a Share Outstanding Throughout the Period)

	Period Ended (unaudited)
	5/31/2008	¹
Net Asset Value, Beginning of Period	$8.86
Income From Investment Operations:
Net investment income	0.17
Net realized and unrealized gain (loss) on investments, futures contracts and swap contracts	(0.20	)
TOTAL FROM INVESTMENT OPERATIONS	(0.03	)
Less Distributions:
Distributions from net investment income	(0.17	)
Net Asset Value, End of Period	$8.66
Total Return²	(0.35	)%

Ratios to Average Net Assets:
Net expenses³	0.80	%⁴
Net investment income	6.13	%⁴
Expense waiver/reimbursement⁵	0.22	%⁴
Supplemental Data:
Net assets, end of period (000 omitted)	$254
Portfolio turnover⁶	12	%

1 Reflects operations for the period from January 28, 2008 (date of initial investment) to May 31, 2008.

4 Computed on an annualized basis.

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

6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the six months ended May 31, 2008.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2007¹ to May 31, 2008.

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. 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.

	Beginning Account Value 12/1/2007	Ending Account Value 5/31/2008	Expenses Paid During Period¹
Actual	$1,000	$ 997.70	$2.73
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,022.27	$2.76

1 "Actual" expense information is for the period from January 28, 2008 (date of initial investment) to May 31, 2008. Actual expenses are equal to the Fund's annualized net expense ratio of 0.80%, multiplied by 125/366 (to reflect the period from initial investment to May 31, 2008). "Hypothetical" expense information is presented on the basis of the full one-half year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 183/366 (to reflect the full half-year period).

Portfolio of Investments Summary Table

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

Security Type		Percentage of Total Net Assets²
Corporate Debt Securities		90.6%
Mortgage-Backed Securities³		5.3%
Municipal Securities		0.7%
Foreign Governments/Agencies		0.7%
U.S. Treasury and Agency Securities⁴		0.6%
Asset-Backed Securities⁵		0.0%
Derivative Contracts^5,6		0.0%
Other Security Types⁷		0.8%
Cash Equivalents⁸		0.7%
Other Assets and Liabilities--Net⁹		0.6%
TOTAL		100.0%

1 See the Fund's Prospectus and Statement of Additional Information for a description of these security types.

3 For purposes of this table, mortgage-backed securities include mortgage-backed securities guaranteed by Government Sponsored Entities (GSEs) and adjustable rate mortgage-backed securities.

4 For purposes of this table, U.S. Treasury and Agency Securities do not include mortgage-backed securities guaranteed by GSEs.

5 Represents less than 0.1%.

7 Other Security Types consist of common stock and preferred stock.

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

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

Portfolio of Investments

May 31, 2008 (unaudited)

Principal Amount					Value
			CORPORATE BONDS--66.0%
			Basic Industry - Chemicals--1.2%
$	3,760,000		Albemarle Corp., Sr. Note, 5.10%, 2/1/2015	$	3,560,067
	1,530,000		Du Pont (E.I.) de Nemours & Co., 5.00%, 1/15/2013		1,548,438
	1,900,000	¹	Fertinitro Finance, Company Guarantee, 8.29%, 4/1/2020		1,529,500
	2,365,000		RPM International, Inc., 6.50%, 2/15/2018		2,377,390
	2,500,000		Praxair, Inc., 4.625%, 3/30/2015		2,430,019
	1,525,000		Rohm & Haas Co., 6.00%, 9/15/2017		1,503,048
			TOTAL		12,948,462
			Basic Industry - Metals & Mining--2.1%
	2,500,000		Alcoa, Inc., Note, 5.55%, 2/1/2017		2,380,711
	1,370,000	^1,2	ArcelorMittal, 6.125%, 6/1/2018		1,344,968
	3,760,000		BHP Finance (USA), Inc., 5.00%, 12/15/2010		3,799,232
	5,000,000		Barrick Gold Corp., 4.875%, 11/15/2014		4,760,280
	3,325,000	^1,2	Codelco, Inc., Bond, 5.625%, 9/21/2035		2,987,845
	4,050,000		Newmont Mining Corp., Company Guarantee, 5.875%, 4/1/2035		3,442,388
	2,500,000		Xstrata Canada Corp., 6.00%, 10/15/2015		2,432,543
	1,500,000	^1,2	Xstrata Finance Canada Ltd., Unsecd. Note, 5.50%, 11/16/2011		1,486,330
			TOTAL		22,634,297
			Basic Industry - Paper--1.7%
	2,600,000		International Paper Co., 4.25%, 1/15/2009		2,597,381
	6,980,000		Louisiana-Pacific Corp., 8.875%, 8/15/2010		6,948,499
	2,850,000		Pope & Talbot, Inc., 8.375%, 6/1/2013		334,875
	4,500,000		Westvaco Corp., 7.65%, 3/15/2027		4,457,579
	3,750,000		Weyerhaeuser Co., Deb., 7.375%, 3/15/2032		3,742,484
			TOTAL		18,080,818
			Capital Goods - Aerospace & Defense--0.7%
	3,650,000	^1,2	BAE Systems Holdings, Inc., 5.20%, 8/15/2015		3,476,048
	1,210,000		Lockheed Martin Corp., Sr. Note, 4.121%, 3/14/2013		1,174,491
	2,840,000		Raytheon Co., Unsecd. Note, 5.375%, 4/1/2013		2,900,150
			TOTAL		7,550,689
Principal Amount					Value
			CORPORATE BONDS--continued
			Capital Goods - Building Materials--0.5%
$	5,500,000		Masco Corp., Note, 5.875%, 7/15/2012	$	5,308,227
			Capital Goods - Diversified Manufacturing--1.7%
	2,940,000		Briggs & Stratton Corp., Company Guarantee, 8.875%, 3/15/2011		3,042,900
	2,065,000		Dover Corp., Note, 5.45%, 3/15/2018		2,029,226
	2,020,000		Harsco Corp., 5.75%, 5/15/2018		1,988,126
	2,600,000		Hubbell, Inc., 5.95%, 6/1/2018		2,584,389
	1,580,000	^1,2	Hutchison Whampoa Ltd., 6.50%, 2/13/2013		1,638,708
	2,630,000		Textron Financial Corp., 5.40%, 4/28/2013		2,606,863
	3,230,000	^1,2	Textron Financial Corp., Jr. Sub. Note, 6.00%, 2/15/2067		2,565,595
	2,025,000		Thomas & Betts Corp., Note, 7.25%, 6/1/2013		2,067,930
			TOTAL		18,523,737
			Capital Goods - Environmental--0.1%
	500,000		Republic Services, Inc., Note, 6.086%, 3/15/2035		463,661
	600,000		Republic Services, Inc., Note, 6.75%, 8/15/2011		623,730
			TOTAL		1,087,391
			Communications - Media & Cable--2.1%
	900,000		Comcast Corp., 7.05%, 3/15/2033		932,817
	4,700,000		Comcast Corp., 7.125%, 6/15/2013		4,955,365
	5,480,000		Comcast Corp., Company Guarantee, 6.50%, 1/15/2017		5,623,794
	4,630,000		Cox Communications, Inc., Unsecd. Note, 4.625%, 1/15/2010		4,596,520
	5,010,000		Cox Communications, Inc., Unsecd. Note, 5.45%, 12/15/2014		4,873,548
	2,250,000		Time Warner Cable, Inc., Sr. Unsecd. Note, 5.85%, 5/1/2017		2,162,946
			TOTAL		23,144,990
			Communications - Media Noncable--0.9%
	615,000		British Sky Broadcasting Group PLC, 8.20%, 7/15/2009		637,920
	6,880,000		Grupo Televisa S.A., 6.625%, 3/18/2025		6,811,888
	2,590,000		News America, Inc., 6.65%, 11/15/2037		2,563,099
			TOTAL		10,012,907
			Communications - Telecom Wireless--1.4%
	6,540,000		AT&T Wireless Services, Inc., 8.75%, 3/1/2031		7,894,266
	3,100,000		America Movil S.A.B. de C.V., Note, 5.75%, 1/15/2015		3,092,870
Principal Amount					Value
			CORPORATE BONDS--continued
			Communications - Telecom Wireless--continued
$	800,000		Vodafone Group PLC, 5.35%, 2/27/2012	$	809,903
	2,960,000		Vodafone Group PLC, Note, 5.625%, 2/27/2017		2,923,235
			TOTAL		14,720,274
			Communications - Telecom Wirelines--3.3%
	3,810,000		BellSouth Corp., 5.20%, 9/15/2014		3,814,465
	2,620,000		Citizens Communications Co., 9.00%, 8/15/2031		2,436,600
	995,000		Embarq Corp., 6.738%, 6/1/2013		978,725
	4,940,000	^1,2	KT Corp., Note, 5.875%, 6/24/2014		4,989,783
	3,870,000		SBC Communications, Inc., 5.10%, 9/15/2014		3,854,032
	1,390,000		Telefonica SA, Company Guarantee, 7.045%, 6/20/2036		1,469,720
	5,030,000		Telefonica SA, Sr. Note, 5.855%, 2/4/2013		5,084,530
	7,050,000		Telefonos de Mexico, Note, 4.50%, 11/19/2008		7,069,388
	1,000,000		Verizon Communications, Inc., 6.10%, 4/15/2018		1,027,668
	4,931,000		Verizon Global Funding, Note, 7.25%, 12/1/2010		5,297,897
			TOTAL		36,022,808
			Consumer Cyclical - Automotive--1.9%
	3,560,000	^1,2	American Honda Finance Corp., 4.625%, 4/2/2013		3,480,755
	2,490,000		DaimlerChrysler North America Holding Corp., 6.50%, 11/15/2013		2,600,390
	7,740,000		DaimlerChrysler North America Holding Corp., Note, 4.875%, 6/15/2010		7,786,410
	2,100,000		General Motors Corp., Note, 9.45%, 11/1/2011		1,732,500
	4,800,000	^1,2	Nissan Motor Acceptance Corp., Sr. Unsecd. Note, 5.625%, 3/14/2011		4,772,578
			TOTAL		20,372,633
			Consumer Cyclical - Entertainment--1.0%
	4,020,000		International Speedway Corp., 4.20%, 4/15/2009		4,028,278
	2,500,000		Time Warner, Inc., 5.50%, 11/15/2011		2,479,172
	3,800,000		Walt Disney Co., Note, 5.70%, 7/15/2011		3,961,004
			TOTAL		10,468,454
			Consumer Cyclical - Lodging--0.1%
	1,530,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.00%, 12/1/2016		1,359,358
			Consumer Cyclical - Retailers--1.1%
	2,036,667	^1,2	CVS Caremark Corp., Pass Thru Cert., 5.298%, 1/11/2027		1,869,401
	500,000		CVS Caremark Corp., Sr. Note, 5.75%, 8/15/2011		511,185
	4,350,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.75%, 6/1/2017		4,304,918
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Cyclical - Retailers--continued
$	2,180,000		Costco Wholesale Corp., 5.30%, 3/15/2012	$	2,248,584
	900,000		JC Penney Corp., Inc., Sr. Unsecd. Note, 5.75%, 2/15/2018		820,172
	2,560,000		Target Corp., Note, 5.875%, 7/15/2016		2,585,979
			TOTAL		12,340,239
			Consumer Cyclical - Services--0.8%
	7,475,000		Boston University, 7.625%, 7/15/2097		8,814,371
			Consumer Non-Cyclical - Food/Beverage--1.3%
	2,550,000		Bottling Group LLC, Note, 5.50%, 4/1/2016		2,560,534
	2,420,000		General Mills, Inc., Note, 5.70%, 2/15/2017		2,444,045
	1,180,000		Kellogg Co., 4.25%, 3/6/2013		1,147,524
	1,460,000		Kellogg Co., Sr. Unsub., 5.125%, 12/3/2012		1,478,765
	2,000,000		Kraft Foods, Inc., 5.625%, 11/1/2011		2,021,605
	740,000		Kraft Foods, Inc., Note, 6.25%, 6/1/2012		758,562
	920,000		PepsiCo, Inc., 4.65%, 2/15/2013		931,681
	3,220,000	^1,2	SABMiller PLC, Note, 6.50%, 7/1/2016		3,295,723
			TOTAL		14,638,439
			Consumer Non-Cyclical - Health Care--1.0%
	2,200,000		Anthem, Inc., 6.80%, 8/1/2012		2,263,439
	1,530,000		Baxter International, Inc., 6.25%, 12/1/2037		1,521,307
	1,960,000	^1,2	Covidien International Finance SA, 6.55%, 10/15/2037		1,954,282
	1,660,000		Thermo Electron Corp., Sr. Unsecd. Note, 5.00%, 6/1/2015		1,555,228
	4,000,000		UnitedHealth Group, Inc., Bond, 6.00%, 2/15/2018		3,900,589
			TOTAL		11,194,845
			Consumer Non-Cyclical - Pharmaceuticals--1.2%
	3,370,000		Abbott Laboratories, 5.15%, 11/30/2012		3,461,686
	4,485,000		Eli Lilly & Co., Bond, 5.20%, 3/15/2017		4,458,654
	3,660,000		Genentech, Inc., Note, 4.75%, 7/15/2015		3,609,643
	1,920,000		Pharmacia Corp., Sr. Deb., 6.50%, 12/1/2018		2,074,953
			TOTAL		13,604,936
			Consumer Non-Cyclical - Products--0.5%
	500,000		Philips Electronics NV, 4.625%, 3/11/2013		494,676
	1,960,000		Philips Electronics NV, 5.75%, 3/11/2018		1,935,884
	2,950,000		Whirlpool Corp., 5.50%, 3/1/2013		2,897,460
			TOTAL		5,328,020
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Non-Cyclical - Supermarkets--0.1%
$	1,310,000		Kroger Co., Bond, 6.90%, 4/15/2038	$	1,347,690
			Consumer Non-Cyclical - Tobacco--0.3%
	2,910,000		Philip Morris International, Inc., 5.65%, 5/16/2018		2,850,073
			Energy - Independent--1.8%
	4,240,000		Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.95%, 9/15/2016		4,279,525
	460,000		Canadian Natural Resources Ltd., 4.90%, 12/1/2014		440,119
	5,890,000		Canadian Natural Resources Ltd., 5.85%, 2/1/2035		5,259,359
	1,500,000	^1,2	Lukoil International Finance BV, 6.356%, 6/7/2017		1,436,250
	495,000		Pemex Project Funding Master, 5.75%, 12/15/2015		513,761
	3,450,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		3,861,930
	1,881,600	^1,2	Ras Laffan Liquified Natural Gas, 3.437%, 9/15/2009		1,878,539
	440,000		XTO Energy, Inc., 6.375%, 6/15/2038		423,214
	775,000		XTO Energy, Inc., 6.75%, 8/1/2037		783,656
	1,135,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.25%, 8/1/2017		1,158,232
			TOTAL		20,034,585
			Energy - Integrated--1.7%
	4,100,000		Conoco, Inc., 7.25%, 10/15/2031		4,623,563
	3,000,000		Husky Oil Ltd., Company Guarantee, 8.90%, 8/15/2028		3,030,915
	450,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		504,272
	4,650,000		Petro-Canada, Bond, 5.35%, 7/15/2033		3,859,468
	220,000		Petro-Canada, Deb., 7.00%, 11/15/2028		220,431
	2,380,079	^1,2	Qatar Petroleum, 5.579%, 5/30/2011		2,419,118
	4,150,000	^1,2	StatoilHydro ASA, 5.125%, 4/30/2014		4,147,425
			TOTAL		18,805,192
			Energy - Oil Field Services--0.6%
	3,080,000		Enbridge, Inc., Sr. Note, 5.60%, 4/1/2017		2,980,595
	210,000		Noble Drilling Corp., Sr. Note, 7.50%, 3/15/2019		237,048
	100,000		Weatherford International Ltd., 6.00%, 3/15/2018		100,531
	2,700,000		Weatherford International Ltd., 7.00%, 3/15/2038		2,806,312
			TOTAL		6,124,486
			Energy - Refining--0.2%
	1,665,000		Valero Energy Corp., 7.50%, 4/15/2032		1,696,051
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Banking--11.3%
$	4,000,000		Astoria Financial Corp., Note, 5.75%, 10/15/2012	$	3,759,786
	5,000,000	^1,2	Barclays Bank PLC, 5.926%, 12/31/2049		4,302,054
	4,180,000		Capital One Capital IV, 6.745%, 2/17/2037		3,339,335
	4,050,000		Capital One Financial Corp., Note, 7.125%, 8/1/2008		4,072,541
	6,460,000		Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 3/5/2038		6,478,508
	2,876,000		Colonial BancGroup, Inc., Note, 6.375%, 12/1/2015		2,469,514
	5,350,000		Corp Andina De Fomento, Bond, 7.375%, 1/18/2011		5,732,251
	4,720,000		Credit Suisse First Boston USA, Inc., Sr. Note, 5.50%, 8/16/2011		4,834,371
	6,000,000		HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035		5,142,919
	2,200,000		HSBC Finance Corp., 4.75%, 4/15/2010		2,203,986
	2,770,000		HSBC Finance Corp., 5.00%, 6/30/2015		2,662,301
	3,500,000		Hudson United Bancorp, 7.00%, 5/15/2012		3,705,727
	1,500,000		J.P. Morgan Chase & Co., Sr. Note, 6.00%, 1/15/2018		1,503,524
	870,000		J.P. Morgan Chase & Co., Sub. Deb., 8.00%, 4/29/2027		988,443
	13,900,000		J.P. Morgan Chase & Co., Sub. Note, 5.125%, 9/15/2014		13,688,535
	3,975,000		Manufacturers & Traders Trust Co., Sub. Note, 5.629%, 12/1/2021		3,450,783
	5,000,000		Marshall & Ilsley Bank, Milwaukee, Sr. Note, 4.40%, 3/15/2010		4,981,451
	1,790,000		Northern Trust Corp., Sr. Note, 5.30%, 8/29/2011		1,807,669
	1,170,000		PNC Funding Corp., Sub. Note, 5.625%, 2/1/2017		1,104,740
	4,020,000		PNC Funding Corp., Sub. Note, 7.50%, 11/1/2009		4,177,017
	2,520,000		Popular North America, Inc., 5.65%, 4/15/2009		2,467,181
	10,511,111	^1,2	Regional Diversified Funding, 9.25%, 3/15/2030		11,617,595
	3,870,000		Sovereign Bancorp, Inc., Sr. Note, 4.80%, 9/1/2010		3,614,572
	1,700,000		State Street Bank and Trust Co., Sub. Note, 5.30%, 1/15/2016		1,610,569
	5,580,000		U.S. Bank, N.A., Sub. Note, 4.95%, 10/30/2014		5,545,527
	5,000,000		Wachovia Bank N.A., 4.80%, 11/1/2014		4,804,436
	3,440,000		Wachovia Bank N.A., Sub. Note, 4.875%, 2/1/2015		3,261,266
	500,000		Wachovia Corp., 5.75%, 2/1/2018		484,653
	500,000		Washington Mutual Bank, 5.125%, 1/15/2015		412,336
	2,400,000		Washington Mutual Bank, Sub. Note, 6.875%, 6/15/2011		2,252,902
	3,550,000		Wilmington Trust Corp., Sub. Note, 8.50%, 4/2/2018		3,768,902
	3,370,000		Zions Bancorp, Sub. Note, 5.50%, 11/16/2015		2,800,595
			TOTAL		123,045,989
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Brokerage--5.8%
$	4,750,000		Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.25%, 2/1/2018	$	5,059,230
	8,060,000		Blackrock, Inc., 6.25%, 9/15/2017		8,101,207
	1,500,000		Eaton Vance Corp., 6.50%, 10/2/2017		1,534,298
	4,255,000	^1,2	FMR Corp., Bond, 7.57%, 6/15/2029		4,656,324
	2,900,000		Goldman Sachs Group, Inc., 6.125%, 2/15/2033		2,666,584
	190,000		Goldman Sachs Group, Inc., Note, Series MTNB, 7.35%, 10/1/2009		198,201
	2,100,000		Goldman Sachs Group, Inc., Sub. Note, 6.345%, 2/15/2034		1,821,404
	8,140,000		Invesco Ltd., Note, 4.50%, 12/15/2009		8,044,074
	1,150,000		Janus Capital Group, Inc., Sr. Note, 6.25%, 6/15/2012		1,119,128
	1,375,000		Janus Capital Group, Inc., Sr. Note, 6.70%, 6/15/2017		1,315,372
	1,200,000		Lehman Brothers Holdings, Inc., 5.75%, 5/17/2013		1,147,450
	1,500,000		Lehman Brothers Holdings, Inc., 7.875%, 8/15/2010		1,546,820
	3,000,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.50%, 7/19/2017		2,762,871
	2,800,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 7/17/2037		2,445,054
	2,745,000		Merrill Lynch & Co., Inc., Note, 4.125%, 9/10/2009		2,753,279
	3,170,000		Merrill Lynch & Co., Inc., Sr. Unsecd. Note, 6.05%, 8/15/2012		3,149,706
	1,500,000		Morgan Stanley, Sr. Unsecd. Note, 5.95%, 12/28/2017		1,425,029
	2,450,000		Morgan Stanley, Sr. Unsecd. Note, 6.00%, 4/28/2015		2,414,936
	7,350,000		Morgan Stanley, Sr. Unsecd. Note, 6.625%, 4/1/2018		7,296,649
	1,020,000		Nuveen Investments, 5.00%, 9/15/2010		897,600
	1,020,000		Nuveen Investments, 5.50%, 9/15/2015		729,300
	1,834,166	^1,2	World Financial, Pass Thru Cert., Series 96 WFP, 6.91%, 9/1/2013		1,859,083
			TOTAL		62,943,599
			Financial Institution - Finance Noncaptive--3.4%
	6,930,000		American Express Credit Corp., 5.875%, 5/2/2013		6,960,688
	5,000,000		American International Group, Inc., Sr. Note, 4.70%, 10/1/2010		4,967,934
	4,295,000		Berkshire Hathaway, Inc., Company Guarantee, 4.85%, 1/15/2015		4,302,524
	2,920,000		Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.30%, 5/10/2017		2,145,911
	8,820,000		General Electric Capital Corp., 5.625%, 5/1/2018		8,738,880
	115,000		Heller Financial, Inc., Note, 7.375%, 11/1/2009		120,548
	1,500,000	^1,2	ILFC E-Capital Trust I, 5.90%, 12/21/2065		1,236,054
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--continued
$	3,100,000		International Lease Finance Corp., 4.875%, 9/1/2010	$	3,071,377
	1,670,000		International Lease Finance Corp., 6.625%, 11/15/2013		1,634,606
	3,250,000		Susa Partnership LP, 8.20%, 6/1/2017		3,627,377
			TOTAL		36,805,899
			Financial Institution - Insurance - Health--0.3%
	810,000		Aetna US Healthcare, 5.75%, 6/15/2011		829,572
	2,060,000		CIGNA Corp., 6.35%, 3/15/2018		2,063,269
			TOTAL		2,892,841
			Financial Institution - Insurance - Life--1.6%
	2,750,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		3,005,493
	2,950,000	^1,2	Pacific Life Global Funding, Note, 5.15%, 4/15/2013		2,938,966
	4,000,000	^1,2	Pacific LifeCorp., Bond, 6.60%, 9/15/2033		3,916,696
	2,280,000		Prudential Financial, Inc., 5.15%, 1/15/2013		2,244,854
	1,530,000		Prudential Financial, Inc., 6.625%, 12/1/2037		1,488,440
	3,950,000	^1,2	Union Central Life Insurance Co., Note, 8.20%, 11/1/2026		4,275,203
			TOTAL		17,869,652
			Financial Institution - Insurance - P&C--2.0%
	2,940,000		ACE INA Holdings, Inc., 5.60%, 5/15/2015		2,884,108
	3,170,000		ACE INA Holdings, Inc., Sr. Note, 5.70%, 2/15/2017		3,112,993
	540,000		CNA Financial Corp., 6.50%, 8/15/2016		530,076
	1,370,000		CNA Financial Corp., Note, 6.00%, 8/15/2011		1,381,677
	770,000		Chubb Corp., Sr. Note, 5.75%, 5/15/2018		759,834
	1,710,000		Horace Mann Educators Corp., Sr. Note, 6.85%, 4/15/2016		1,792,505
	4,000,000	^1,2	Liberty Mutual Group, Inc., Unsecd. Note, 5.75%, 3/15/2014		3,860,997
	1,220,000		The Travelers Cos., Inc., Bond, 6.25%, 3/15/2067		1,070,336
	265,000		The Travelers Cos., Inc., Sr. Unsecd. Note, 5.50%, 12/1/2015		260,602
	1,000,000	^1,2	USF&G Corp., 8.312%, 7/1/2046		1,015,308
	5,610,000	^1,2	ZFS Finance USA Trust I, Jr. Sub. Note, 6.15%, 12/15/2065		5,116,309
			TOTAL		21,784,745
			Financial Institution - REITs--0.7%
	1,500,000		Equity One, Inc., Bond, 6.00%, 9/15/2017		1,304,212
	1,535,000		Liberty Property LP, 6.625%, 10/1/2017		1,458,375
	185,000		Mack-Cali Realty Corp., Note, 7.25%, 3/15/2009		187,480
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - REITs--continued
$	1,430,000		Simon Property Group LP, 6.125%, 5/30/2018	$	1,393,575
	430,000		Simon Property Group, Inc., 6.35%, 8/28/2012		439,791
	2,330,000		Simon Property Group, Inc., Note, 5.60%, 9/1/2011		2,334,359
			TOTAL		7,117,792
			Foreign-Local-Government--0.8%
	7,900,000		Hydro Quebec, Sr. Deb., 6.30%, 5/11/2011		8,441,876
			Municipal Services--0.4%
	1,825,000	^1,2	Army Hawaii Family Housing, 5.524%, 6/15/2050		1,532,014
	2,980,000	^1,2	Camp Pendleton & Quantico Housing LLC, 5.572%, 10/1/2050		2,532,911
			TOTAL		4,064,925
			Sovereign--0.6%
	3,500,000		Sweden, Government of, 10.25%, 11/1/2015		4,009,615
	2,715,000		United Mexican States, Series MTNA, 6.75%, 9/27/2034		2,934,915
			TOTAL		6,944,530
			Technology--2.3%
	1,400,000		BMC Software, Inc., 7.25%, 6/1/2018		1,397,560
	1,780,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.50%, 2/22/2016		1,801,801
	1,100,000		Dell Computer Corp., Deb., 7.10%, 4/15/2028		1,132,566
	3,030,000		Fiserv, Inc., Sr. Note, 6.80%, 11/20/2017		3,052,860
	6,175,000		Harris Corp., 5.95%, 12/1/2017		6,099,810
	1,500,000		Hewlett-Packard Co., Note, 5.40%, 3/1/2017		1,487,217
	965,000		IBM Corp., Deb., 8.375%, 11/1/2019		1,180,550
	1,250,000		IBM Corp., Sr. Note, 5.70%, 9/14/2017		1,272,240
	2,330,000		KLA-Tencor Corp., 6.90%, 5/1/2018		2,284,951
	5,120,000		Oracle Corp., 6.50%, 4/15/2038		5,131,256
			TOTAL		24,840,811
			Transportation - Airlines--0.3%
	710,000		Southwest Airlines Co., 6.50%, 3/1/2012		716,239
	1,995,000		Southwest Airlines Co., Deb., 7.375%, 3/1/2027		2,015,229
			TOTAL		2,731,468
			Transportation - Railroads--1.1%
	1,200,000		Burlington Northern Santa Fe Corp., 4.875%, 1/15/2015		1,134,525
	2,247,406		Burlington Northern Santa Fe Corp., Pass Thru Cert., 7.57%, 1/2/2021		2,418,061
	3,150,000		Canadian Pacific RR, 7.125%, 10/15/2031		3,044,384
Principal Amount					Value
			CORPORATE BONDS--continued
			Transportation - Railroads--continued
$	655,000		Norfolk Southern Corp., Note, 6.75%, 2/15/2011	$	680,857
	1,000,000	^1,2	Norfolk Southern Corp., Sr. Unsecd. Note, 5.75%, 4/1/2018		994,249
	3,580,000		Union Pacific Corp., 4.875%, 1/15/2015		3,436,721
			TOTAL		11,708,797
			Transportation - Services--0.4%
	3,080,000	^1,2	Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017		2,787,774
	1,570,000		FedEx Corp., Note, 5.50%, 8/15/2009		1,594,995
			TOTAL		4,382,769
			Utility - Electric--4.7%
	1,530,000		Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.95%, 12/15/2036		1,312,203
	4,670,000		Commonwealth Edison Co., 1st Mtg. Bond, 5.80%, 3/15/2018		4,592,499
	1,180,000		Commonwealth Edison Co., 1st Mtg. Bond, 6.15%, 9/15/2017		1,190,206
	1,310,000		Consolidated Edison Co., Sr. Unsecd. Note, 5.50%, 9/15/2016		1,316,237
	2,390,000		Consolidated Natural Gas Co., 5.00%, 12/1/2014		2,308,280
	2,000,000		Dominion Resources, Inc., Unsecd. Note, 5.95%, 6/15/2035		1,846,370
	2,765,000		Duke Capital Corp., Sr. Note, 6.25%, 2/15/2013		2,811,173
	5,150,000		Enersis S.A., Note, 7.40%, 12/1/2016		5,494,020
	4,410,000	^1,2	Great River Energy, 1st Mtg. Note, 5.829%, 7/1/2017		4,320,126
	5,350,000		MidAmerican Energy Holdings Co., Sr. Unsecd. Note, 5.95%, 5/15/2037		5,039,921
	1,460,000		National Rural Utilities Cooperative Finance Corp., 5.45%, 2/1/2018		1,423,649
	1,160,000		Northern States Power Co., MN, 1st Mtg. Bond, 5.25%, 3/1/2018		1,148,888
	1,835,000		PPL Energy Supply LLC, Sr. Unsecd. Note, 6.00%, 12/15/2036		1,510,230
	1,000,000		PSEG Power LLC, Company Guarantee, 7.75%, 4/15/2011		1,074,048
	1,670,000		PSI Energy, Inc., Bond, 6.05%, 6/15/2016		1,693,731
	1,410,000		Pacific Gas & Electric Co., 6.05%, 3/1/2034		1,361,189
	2,925,000		Pacific Gas & Electric Co., Unsecd. Note, 4.20%, 3/1/2011		2,901,349
	4,000,000		Public Service Electric & Gas Co., 4.00%, 11/1/2008		4,001,128
	2,940,000		Union Electric Co., 6.00%, 4/1/2018		2,912,694
	1,260,000		Virginia Electric & Power Co., Sr. Unsecd. Note, 5.10%, 11/30/2012		1,273,308
	2,020,000		Westar Energy, Inc., 5.875%, 7/15/2036		1,877,140
			TOTAL		51,408,389
Principal Amount or Shares					Value
			CORPORATE BONDS--continued
			Utility - Natural Gas Distributor--0.7%
$	7,395,000		Atmos Energy Corp., 4.00%, 10/15/2009	$	7,315,831
			Utility - Natural Gas Pipelines--0.3%
	3,300,000		Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.80%, 3/15/2035		2,888,299
			TOTAL CORPORATE BONDS (IDENTIFIED COST $733,819,406)		716,202,184
			CORPORATE NOTE--0.4%
			Communications Telecom Wirelines--0.4%
	4,595,000		Telecom Italia Capital, Note, 4.875%, 10/1/2010 (IDENTIFIED COST $4,593,135)		4,573,021
			MORTGAGE-BACKED SECURITIES--0.0%
	12,680		Federal Home Loan Mortgage Corp., Pool C00702, 6.00%, 1/1/2029		12,978
	14,609		Federal Home Loan Mortgage Corp., Pool C00748, 6.00%, 4/1/2029		14,953
	4,559		Federal Home Loan Mortgage Corp., Pool C20263, 6.00%, 1/1/2029		4,666
	8,051		Federal Home Loan Mortgage Corp., Pool C25621, 6.50%, 5/1/2029		8,390
	11,547		Federal Home Loan Mortgage Corp., Pool G10493, 6.00%, 4/1/2011		11,868
	12,307		Federal National Mortgage Association, Pool 313324, 9.00%, 6/1/2017		13,371
	12,687		Federal National Mortgage Association, Pool 323159, 7.50%, 4/1/2028		13,393
	6,604		Federal National Mortgage Association, Pool 421223, 7.00%, 5/1/2028		6,949
	10,824		Federal National Mortgage Association, Pool 429707, 6.50%, 5/1/2013		11,260
	10,696		Federal National Mortgage Association, Pool 430232, 7.00%, 8/1/2028		11,255
	46,266		Federal National Mortgage Association, Pool 439947, 6.50%, 11/1/2028		48,172
	36,478		Federal National Mortgage Association, Pool 489867, 6.50%, 3/1/2029		37,981
	8,571		Government National Mortgage Association, Pool 449491, 7.50%, 12/15/2027		9,157
	4,069		Government National Mortgage Association, Pool 486467, 7.00%, 8/15/2028		4,318
	17,433		Government National Mortgage Association, Pool 780339, 8.00%, 12/15/2023		18,607
	12,443		Government National Mortgage Association, Pool 780340, 9.00%, 11/15/2017		13,601
	11,064		Government National Mortgage Association, Pool 780373, 7.00%, 12/15/2023		11,688
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $242,116)		252,607
Principal Amount or Shares					Value
			MUNICIPALS--0.7%
			Municipal Services--0.7%
$	4,675,000		Pittsburgh, PA Urban Redevelopment Authority, 8.01% Bonds (Alcoa, Inc.), 6/1/2015	$	4,675,608
	2,080,000		Tampa, FL Sports Authority, 8.02% Bonds (GTD BY MBIA Insurance Corp.), 10/1/2026		2,498,205
			TOTAL MUNICIPALS (IDENTIFIED COST $6,782,040)		7,173,813
			GOVERNMENT/AGENCY--0.7%
			Sovereign--0.7%
	6,500,000		United Mexican States, 6.625%, 3/3/2015 (IDENTIFIED COST $6,740,500)		7,029,425
			COMMON STOCK--0.0%
			Utility - Electric--0.0%
	90	³	NRG Energy, Inc. (IDENTIFIED COST $2,041)		3,743
			PREFERRED STOCKS--0.8%
			Financial Institution - Brokerage--0.4%
	130,000		Lehman Brothers Holdings, Inc., Pfd., $2.84 Annual Dividend		4,422,600
			Financial Institution - REITs--0.4%
	80,000		Prologis, Cumulative REIT Perpetual Pfd. Stock, Series C, $4.27 Annual Dividend		4,380,000
			TOTAL PREFERRED STOCKS (IDENTIFIED COST $9,224,680)		8,802,600
			ASSET-BACKED SECURITY--0.0%
			Home Equity Loan--0.0%
	363,720	^1,2	125 Home Loan Owner Trust 1998-1A, Class B1, 9.76%, 2/15/2029 (IDENTIFIED COST $363,549)		290,976
			COLLATERALIZED MORTGAGE OBLIGATION--0.0%
			Non-Agency Mortgage--0.0%
	57,588	^1,2	SMFC Trust Asset-Backed Certificates, 1997-A, Class 4, 7.41%, 1/28/2027 (IDENTIFIED COST $112,141)		37,432
			U.S. TREASURY--0.2%
			Treasury Security--0.2%
	2,500,000	⁴	United States Treasury Note, 4.75%, 3/31/2011 (IDENTIFIED COST $2,483,691)		2,625,832
Shares					Value
			MUTUAL FUNDS--30.2%⁵
	5,512,865		Federated Mortgage Core Portfolio	$	54,467,106
	42,087,757		High Yield Bond Portfolio		272,728,666
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $404,373,227)		327,195,772
			TOTAL INVESTMENTS--99.0% (IDENTIFIED COST $1,168,736,526)⁶		1,074,187,405
			OTHER ASSETS AND LIABILITIES - NET--1.0%⁷		10,895,078
			TOTAL NET ASSETS--100%	$	1,085,082,483

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

Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation/ (Depreciation)
³ U.S. Treasury Notes 5-Year Long Futures	1,100	$120,931,250	September 2008	$(148,579	)
³ U.S. Treasury Notes 2-Year Long Futures	855	$180,084,375	September 2008	$ (83,209	)
³ U.S. Treasury Bond Short Futures	190	$ 21,565,000	September 2008	$ 262,056
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS				$ 30,268