United States
Securities and Exchange Commission
Washington, D.C. 20549

Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies

811-10625

(Investment Company Act File Number)

Federated Core Trust II, L.P.
---------------------------------------------------------------

(Exact Name of Registrant as Specified in Charter)

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

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

Date of Fiscal Year End: 11/30/06

Date of Reporting Period: Fiscal year ended 11/30/06

Item 1. Reports to Stockholders

CAPITAL APPRECIATION CORE FUND

A PORTFOLIO OF FEDERATED CORE TRUST II, L.P.

ANNUAL SHAREHOLDER REPORT
November 30, 2006

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout Each Period)

YEAR ENDED NOVEMBER 30, PERIOD ENDED

2006 2005 2004 11/30/2003 1
NET ASSET VALUE, BEGINNING OF PERIOD $11.95 $11.21 $10.14 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.24 0.22 2 0.25 0.01
Net realized and unrealized gain on investments 1.76 0.52 0.82 0.13
TOTAL FROM INVESTMENT OPERATIONS 2.00 0.74 1.07 0.14
NET ASSET VALUE, END OF PERIOD $13.95 $11.95 $11.21 $10.14
TOTAL RETURN3 16.74 % 6.60 % 10.55 % 1.40 %

RATIOS TO AVERAGE NET ASSETS:
Net expenses 0.05 %4 0.05 %4 0.05 % 0.05 %5
Net investment income 1.90 % 1.89 % 2.09 % 2.21 %5
Expense waiver/reimbursement6 0.14 % 0.11 % 0.08 % 0.49 %5
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $152,042 $162,139 $197,818 $185,555
Portfolio turnover 137 % 51 % 55 % 8 %

1 Reflects operations for the period from October 28, 2003 (date of initial
investment) to November 30, 2003.

2 Per share numbers have been calculated using the average shares method.

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

4 The net expense ratio is calculated without reduction for fees paid
indirectly for directed brokerage arrangements. The net expense ratios for
the years ended November 30, 2006 and 2005 are 0.04% and 0.05%,
respectively, after taking into account these expense reductions.

5 Computed on an annualized basis.

6 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

SHAREHOLDER EXPENSE EXAMPLE

As a shareholder of the Fund, you incur ongoing costs, to the extent applicable,
management fees, 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 June 1, 2006 to November 30, 2006.

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. 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 ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD1
6/1/2006 11/30/2006

ACTUAL $1,000 $1,139.70 $0.27
HYPOTHETICAL
(ASSUMING A 5% RETURN
BEFORE EXPENSES) $1,000 $1,024.82 $0.25

1 Expenses are equal to the Fund's annualized net expense ratio of 0.05%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect the one-half year period).

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

This report covers Capital Appreciation Core Fund's fiscal year performance
period from December 1, 2005 through November 30, 2006. During this reporting
period, the Fund produced a total return of 16.74%, based on net asset value.
The S&P 500 Index1, the fund's benchmark, returned 14.23% during the reporting
period.

During the reporting period Energy stocks were the best performing stocks (up
27.2%) followed by the Telecommunications Services sector (up 26.1%). Also, up
strongly were the Materials sector (up 21.2%) and the Utilities sector (up
21.0%). The rest of the sector performance ranked as follows: Financials (up
15.0%), Consumer Discretionary (up 14.9%), Industrials (up 12.5%), Consumer
Staples (up 11.5%), Health Care (up 9.9%) and Information Technology (up 6.9%).

The portfolio benefited from stock selection in Pharmaceuticals where the
smaller companies held in the portfolio dramatically outperformed the large
pharmaceutical companies due to positive news regarding their drug research
trials; in Consumer Staples where Diageo PLC significantly outperformed the
sector; and in Telecommunications Services where BellSouth Corp. and AT&T, Inc.
also outperformed the sector. An overweight in the Energy sector also added to
performance. The biggest detriment to relative performance in the year was in
stock selection within the Information Technology sector. EMC Corp. in
particular subtracted from performance. Underweighted positions in Financials
and Consumer Discretionary sectors also detracted from performance as did stock
selection in Consumer Discretionary and Energy sectors.

Top contributors during the year were: Cephalon, Inc., Diageo PLC, Shire PLC,
Bell South Corp., and Deere & Co. Bottom contributors were: EMC Corp., Massey
Energy, Alcan Inc., Tyco International Ltd. and Nike, Inc.

1 The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of 500 stocks representing all major industries.
Investments cannot be made directly in an index.

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. MUTUAL FUND PERFORMANCE CHANGES OVER TIME, AND CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN WHAT IS STATED. FOR CURRENT TO THE MOST RECENT MONTH-END
PERFORMANCE AND AFTER-TAX RETURNS, CALL 1-800-341-7400.

GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,0001 in Capital
Appreciation Core Fund (the "Fund") from October 28, 2003 (start of performance)
to November 30, 2006, compared to the S&P 500 Index (S&P 500).2

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 11/30/2006
1 Year 16.74%
Start of Performance (10/28/2003) 11.36%

1-800-341-7400. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE NOT
FEDERALLY INSURED.

1 Represents a hypothetical investment of $10,000. The Fund's performance
assumes the reinvestment of all dividends and distributions. The S&P 500 has
been adjusted to reflect reinvestment of dividends on securities in the index.
2 The S&P 500 is a capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major industries. The
S&P 500 is not adjusted to reflect sales charges, expenses, or other fees that
the Securities and Exchange Commission requires to be reflected in the Fund's
performance. The index is unmanaged, and unlike the Fund, is not affected by
cashflows. It is not possible to invest directly in an index.

PORTFOLIO OF INVESTMENTS SUMMARY TABLE

At November 30, 2006, the Fund's sector composition1 was as follows:

SECTOR PERCENTAGE OF
TOTAL NET ASSETS
Financials 16.0%
Information Technology 14.7%
Energy 13.3%
Health Care 13.2%
Industrials 12.5%
Consumer Staples 7.3%
Consumer Discretionary 6.8%
Materials 5.6%
Telecommunication Services 4.6%
Utilities 3.5%
Cash Equivalents2 2.4%
Other Assets and Liabilities - Net3 0.1%
TOTAL 100.0%
1 Except for Cash Equivalents and Other Assets and Liabilities, sector
classifications are based upon, and individual portfolio securities are assigned
to, the classifications of the Global Industry Classification Standard (GICS)
except that the adviser assigns a classification to securities not classified by
the GICS and to securities for which the adviser does not have access to the
classification made by the GICS.
2 Cash Equivalents include any investments in money market mutual funds and/or
overnight repurchase agreements.
3 Assets, other than investments in securities, less liabilities. See Statement
of Assets and Liabilities.

PORTFOLIO OF INVESTMENTS

November 30, 2006

SHARES OR VALUE
PRINCIPAL
AMOUNT

COMMON STOCKS-97.5%
CONSUMER DISCRETIONARY-6.8%
66,600 1 Coach, Inc. $ 2,877,786
14,300 1 GameStop Corp. 801,515
69,300 Hilton Hotels Corp. 2,275,119
69,100 McDonald's Corp. 2,900,127
26,500 Target Corp. 1,539,385
TOTAL 10,393,932
CONSUMER STAPLES-7.3%
45,600 Altria Group, Inc. 3,839,976
52,200 Diageo PLC, ADR 4,034,538
123,700 Unilever N.V., ADR 3,276,813
Total 11,151,327
ENERGY-13.3%
46,600 Apache Corp. 3,258,738
70,764 Exxon Mobil Corp. 5,435,383
48,700 Schlumberger Ltd. 3,334,976
31,400 1 Transocean Sedco Forex, Inc. 2,447,630
46,200 1 Weatherford International Ltd. 2,074,842
71,400 XTO Energy, Inc. 3,612,840
TOTAL 20,164,409
FINANCIALS-16.0%
42,300 Ace Ltd. 2,404,332
87,016 American International Group, Inc. 6,118,965
27,000 Chubb Corp. 1,397,520
63,765 Citigroup, Inc. 3,162,107
20,700 Merrill Lynch & Co., Inc. 1,809,801
37,200 MetLife, Inc. 2,184,756
35,800 Morgan Stanley 2,726,528
19,400 Prudential Financial, Inc. 1,580,712
85,200 U.S. Bancorp 2,866,128
TOTAL 24,250,849
HEALTH CARE-13.2%
20,300 1 Cephalon, Inc. 1,519,658
42,500 1 Forest Laboratories, Inc., Class A 2,069,750
21,200 1 Genzyme Corp. 1,365,280
33,800 Johnson & Johnson 2,227,758
40,200 McKesson HBOC, Inc. 1,985,880
45,800 1 Medimmune, Inc. 1,497,202
49,200 Novartis AG, ADR 2,873,772
42,400 1 Sepracor, Inc. 2,366,344
37,600 Shire PLC, ADR 2,278,560
43,900 1 Vertex Pharmaceuticals, Inc. 1,944,770
TOTAL 20,128,974
INDUSTRIALS-12.5%
60,100 1 AGCO Corp. 1,876,923
34,000 Avery Dennison Corp. 2,293,980
69,348 1 Foster Wheeler Ltd. 3,744,792
52,000 Northrop Grumman Corp. 3,480,360
27,600 Trinity Industries, Inc. 1,043,280
54,900 United Technologies Corp. 3,542,697
80,500 Waste Management, Inc. 2,947,105
TOTAL 18,929,137
INFORMATION TECHNOLOGY-14.7%
128,700 1 Cadence Design Systems, Inc. 2,365,506
141,700 1 Cisco Systems, Inc. 3,808,896
66,445 1 Citrix Systems, Inc. 1,909,629
144,800 EMC Corp. Mass 1,898,328
1,500 1 Google, Inc. 727,380
52,100 Hewlett-Packard Co. 2,055,866
18,600 IBM Corp. 1,709,712
33,300 Linear Technology Corp. 1,070,262
115,400 1 Marvell Technology Group Ltd. 2,381,856
102,600 Microsoft Corp. 3,009,258
8,500 1 NVIDIA Corp. 314,415
36,700 Texas Instruments, Inc. 1,084,485
TOTAL 22,335,593
MATERIALS-5.6%
44,100 Praxair, Inc. 2,751,840
14,400 Rio Tinto PLC, ADR 3,090,096
30,700 Vulcan Materials Co. 2,723,704
TOTAL 8,565,640
TELECOMMUNICATION SERVICES-4.6%
138,300 AT&T, Inc. 4,689,753
121,500 Sprint Nextel Corp. 2,370,465
TOTAL 7,060,218
UTILITIES-3.5%
82,200 Consolidated Edison Co. 3,963,684
31,700 SCANA Corp. 1,307,942
TOTAL 5,271,626
TOTAL COMMON STOCKS (IDENTIFIED COST $125,611,448) 148,251,705
REPURCHASE AGREEMENT-2.4%
$ 3,623,000 Interest in $2,000,000,000 joint repurchase agreement 5.32%, dated 11/30/2006 under which 3,623,000
Credit Suisse First Boston LLC will repurchase U.S. Government Agency securities with various
maturities to 8/16/2043 for $2,000,295,556 on 12/1/2006. The market value of the underlying
securities at the end of the period was $2,060,008,358. (AT COST)
TOTAL INVESTMENTS-99.9% (IDENTIFIED COST $129,234,448)2 151,874,705
OTHER ASSETS AND LIABILITIES -NET -0.1% 167,181
TOTAL NET ASSETS -100% $ 152,041,886

1 Non-income producing security.

2 Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of total net
assets at November 30, 2006.

The following acronym is used throughout this portfolio:

ADR -American Depositary Receipt
See Notes which are an integral part of the Financial Statements

STATEMENT OF ASSETS AND LIABILITIES

November 30, 2006

ASSETS:

Total investments in securities, at value (identified cost $129,234,448) $ 151,874,705
Cash 46
Income receivable 348,437
TOTAL ASSETS 152,223,188
LIABILITIES:
Payable for investments purchased $ 142,367
Payable for custodian fees 2,579
Payable for transfer and dividend disbursing agent fees and expenses 3,224
Payable for Directors'/Trustees' fees 266
Payable for audit fees 17,733
Payable for portfolio accounting fees 7,088
Accrued expenses 8,045
TOTAL LIABILITIES 181,302
Net assets for 10,899,162 shares outstanding $ 152,041,886
NET ASSETS CONSIST OF:
Paid-in capital $ 93,950,098
Net unrealized appreciation of investments 22,640,257
Accumulated net realized gain on investments 24,581,937
Undistributed net investment income 10,869,594
TOTAL NET ASSETS $ 152,041,886
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE
$152,041,886 {divide} 10,899,162 shares outstanding, no par value, unlimited shares authorized $13.95

See Notes which are an integral part of the Financial Statements

STATEMENT OF OPERATIONS

Year Ended November 30, 2006

INVESTMENT INCOME:

Dividends (net of foreign taxes withheld of $24,257) $ 2,715,533
Interest 256,011
TOTAL INCOME 2,971,544
EXPENSES:
Administrative personnel and services fee (Note 5) $ 150,000
Custodian fees 14,102
Transfer and dividend disbursing agent fees and expenses 13,960
Directors'/Trustees' fees 6,295
Auditing fees 19,937
Legal fees 8,340
Portfolio accounting fees 70,815
Insurance premiums 6,944
Taxes 67
Miscellaneous 689
TOTAL EXPENSES 291,149
WAIVER, REIMBURSEMENT AND EXPENSE REDUCTION (NOTE 5) :
Waiver of administrative personnel and services fee $ (150,000)
Reimbursement of other operating expenses (57,297)
Fees paid indirectly from directed brokerage arrangements (16,639)
TOTAL WAIVER, REIMBURSEMENT AND EXPENSE REDUCTION (223,936)
Net expenses 67,213
Net investment income 2,904,331
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 15,254,940
Net change in unrealized appreciation of investments 5,143,798
Net realized and unrealized gain on investments 20,398,738
Change in net assets resulting from operations $ 23,303,069

See Notes which are an integral part of the Financial Statements

STATEMENT OF CHANGES IN NET ASSETS

YEAR ENDED NOVEMBER 30 2006 2005

INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,904,331 $ 3,379,701
Net realized gain on investments 15,254,940 5,684,190
Net change in unrealized appreciation/depreciation of investments 5,143,798 2,406,695
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 23,303,069 11,470,586
SHARE TRANSACTIONS:
Withdrawals (33,400,000) (47,150,000)
Change in net assets (10,096,931) (35,679,414)
NET ASSETS:
Beginning of period 162,138,817 197,818,231
End of period (including undistributed net investment income of $10,869,594 and $ 152,041,886 $ 162,138,817
$7,965,263, respectively)

See Notes which are an integral part of the Financial Statements

NOTES TO FINANCIAL STATEMENTS

November 30, 2006

1. ORGANIZATION
Capital Appreciation Core Fund (the "Fund") is a diversified portfolio of
Federated Core Trust II, L.P. (the "Trust"). The Trust is registered under the
Investment Company Act of 1940, as amended (the "Act"). The Trust is a limited
partnership that was established under the laws of the State of Delaware on
November 13, 2000 and offered only to registered investment companies and other
accredited investors. The Trust consists of three portfolios. The financial
statements included herein are only those of the Fund. The investment objective
of the Fund is to provide capital appreciation.

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

INVESTMENT VALUATION
Market values of the Fund's portfolio securities are determined as follows:

{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market),
if available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Directors (the "Directors") may determine in good faith that another
method of valuing such investments is necessary to appraise their fair
market value;
{circle}for investments in other open-end regulated investment companies,
based on net asset value;

{circle}for fixed-income securities, according to prices as furnished by an
independent pricing service, except that fixed-income securities with
remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Directors.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices are generally intended to be
indicative of the bid prices currently offered to institutional investors for
the securities, except that prices for corporate fixed-income securities traded
in the United States are generally intended to be indicative of the mean between
such bid prices and asked prices. The Directors have approved the use of such
pricing services. A number of pricing services are available, and the Fund may
use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its net asset value,
the Fund values foreign securities using the latest closing price on the
exchange on which they are traded immediately prior to the closing of the NYSE.
Certain foreign currency exchange rates are generally determined at the latest
rate prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Directors, although the actual
calculation may be done by others.

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, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Dividend income is recorded on
the ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at fair value. All net income and gain/loss (realized and
unrealized) will be allocated daily to the shareholders based on their capital
contributions to the Fund. The Fund does not currently intend to declare and pay
distributions.

PREMIUM AND DISCOUNT AMORTIZATION
All premiums and discounts on fixed-income securities are amortized/accreted for
financial statement purposes.

FEDERAL TAXES
As a partnership, the Fund is not subject to U.S. federal income tax. Instead,
each investor reports separately on its own federal income tax return its
allocated portion of the Fund's income, gains, losses, deductions and credits.

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.

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. CONTRIBUTIONS/WITHDRAWALS
Transactions in shares were as follows:

YEAR ENDED NOVEMBER 30 2006 2005

Fair value of withdrawals (2,663,980) (4,089,855 )
TOTAL CHANGE RESULTING
FROM CONTRIBUTIONS/WITHDRAWALS (2,663,980) (4,089,855 )

4. FEDERAL TAX INFORMATION

At November 30, 2006, the cost of investments for federal tax purposes was
$129,234,448. The net unrealized appreciation of investments for federal tax
purposes was $22,640,257. This consists of net unrealized appreciation from
investments for those securities having an excess of value over cost of
$22,864,973 and net unrealized depreciation from investments for those
securities having an excess of cost over value of $224,716.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER FEE
Federated Investment Counseling is the Fund's investment adviser (the
"Adviser"), subject to the oversight of the Directors. The Adviser provides
investment adviser services at no fee. The Adviser may voluntarily choose to
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary reimbursement at any time at its sole discretion. For
the year ended November 30, 2006, the Adviser voluntarily reimbursed $57,297 of
other operating expenses.

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

AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
MAXIMUM ADMINISTRATIVE FEE
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. FASI may voluntarily choose to waive any portion of its
fee. FASI can modify or terminate this voluntary waiver at any time at its sole
discretion. For the year ended November 30, 2006, FASI voluntarily waived its
entire fee.

EXPENSE REDUCTION
The Fund directs portfolio trades to a broker that in turn pays a portion of the
Fund's operating expenses. For the year ended November 30, 2006, the Fund's
expenses were reduced by $16,639 under these arrangements.

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

6. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, for the year ended November 30, 2006,
were as follows:

Purchases $ 202,203,628
Sales $ 234,327,157

7. LEGAL PROCEEDINGS
Beginning in October 2003, Federated Investors, Inc. and various subsidiaries
thereof (including the advisers and distributor for various investment
companies, collectively, "Federated"), along with various investment companies
sponsored by Federated ("Funds") were named as defendants in several class
action lawsuits now pending in the United States District Court for the District
of Maryland. 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 Securities and Exchange
Commission ("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 and various
Funds have also been named as defendants in several additional lawsuits, the
majority of which 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 has retained the law firm
of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and
the Funds, and their respective counsel, are reviewing the allegations and
intend to defend this litigation. 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.

8. RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, FASB issued 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 is currently evaluating the impact the adoption of FAS
157 will have on the Funds' financial statement disclosures.

9. SUBSEQUENT EVENT
On December 21, 2006, the Trust entered into a $150,000,000 unsecured,
uncommitted discretionary line of credit (LOC) 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.

REPORT OF INDEPENDENT AUDITORS

TO THE BOARD OF DIRECTORS OF FEDERATED CORE TRUST II, L.P. AND SHAREHOLDERS OF
CAPITAL APPRECIATION CORE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Capital Appreciation Core Fund (the "Fund")
(one of the portfolios constituting Federated Core Trust II, L.P.) as of
November 30, 2006, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. We were not engaged to
perform an audit of the Fund's internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Fund's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and financial
highlights, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
Our procedures included confirmation of securities owned as of November 30,
2006, by correspondence with the custodian and brokers or by other appropriate
auditing procedures where replies from brokers were not received. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Capital Appreciation Core Fund, a portfolio of Federated Core Trust II, L.P., at
November 30, 2006, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and its financial highlights for each of the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.

Boston, Massachusetts

January 12, 2007

BOARD OF DIRECTORS AND TRUST OFFICERS

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The following tables give information about each Board member and the senior
officers of the Fund. Where required, the tables separately list Board members
who are "interested persons" of the Fund (i.e., "Interested" Board members) and
those who are not (i.e., "Independent" Board members). Unless otherwise noted,
the address of each person listed is Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA. As of December 31, 2006, the Trust comprised three
portfolios, and the Federated Fund Complex consisted of 45 investment companies
(comprising 148 portfolios). Unless otherwise noted, each Officer is elected
annually. Unless otherwise noted, each Board member oversees all portfolios in
the Federated Fund Complex and serves for an indefinite term. The Fund's
Statement of Additional Information includes additional information about Trust
Directors and is available, without charge and upon request, by calling 1-800-
341-7400.

INTERESTED DIRECTORS BACKGROUND

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS, OTHER DIRECTORSHIPS HELD AND PREVIOUS POSITION(S)
BIRTH DATE
ADDRESS
POSITIONS HELD
WITH TRUST
DATE SERVICE
BEGAN
JOHN F. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated
DONAHUE* Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee.
Birth Date:
July 28, 1924 PREVIOUS POSITIONS: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and
DIRECTOR Chairman and Director, Federated Investment Counseling.
Began serving:
November 2001

J. CHRISTOPHER PRINCIPAL OCCUPATIONS: Principal Executive Officer and President of the Federated Fund Complex; Director or
DONAHUE* Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director,
Birth Date: Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated
April 11, 1949 Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated
PRESIDENT AND Equity Management Company of Pennsylvania and Passport Research, Ltd. (Investment advisory subsidiary of
DIRECTOR Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company.
Began serving:
November 2000 PREVIOUS POSITIONS: President, Federated Investment Counseling; President and Chief Executive Officer, Federated
Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

LAWRENCE D. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of
ELLIS, M.D.* Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and
Birth Date: Internist, University of Pittsburgh Medical Center.
October 11,
1932 OTHER DIRECTORSHIPS HELD: Member, National Board of Trustees, Leukemia Society of America.
3471 Fifth
Avenue PREVIOUS POSITIONS: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.
Suite 1111
Pittsburgh, PA
DIRECTOR
Began serving:
November 2001

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

INDEPENDENT DIRECTORS BACKGROUND

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS, OTHER DIRECTORSHIPS HELD AND PREVIOUS POSITION(S)
BIRTH DATE
ADDRESS
POSITIONS
HELD WITH
TRUST
DATE SERVICE
BEGAN
THOMAS G. PRINCIPAL OCCUPATION: Director or Trustee of the Federated Fund Complex.
BIGLEY
Birth Date: OTHER DIRECTORSHIPS HELD: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director,
February 3, University of Pittsburgh.
1934
15 Old Timber PREVIOUS POSITION: Senior Partner, Ernst & Young LLP.
Trail
Pittsburgh,
PA
DIRECTOR
Began
serving:
November 2001

JOHN T. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment
CONROY, JR. Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida.
Birth Date:
June 23, 1937 PREVIOUS POSITIONS: President, Investment Properties Corporation; Senior Vice President, John R. Wood and
Investment Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development
Properties Corporation.
Corporation
3838 North
Tamiami Trail
Suite 402
Naples, FL
DIRECTOR
Began
serving:
November 2001

NICHOLAS P. PRINCIPAL OCCUPATION: Director or Trustee of the Federated Fund Complex.
CONSTANTAKIS
Birth Date: OTHER DIRECTORSHIPS HELD: Director and Member of the Audit Committee, Michael Baker Corporation (engineering and
September 3, energy services worldwide).
1939
175 Woodshire PREVIOUS POSITION: Partner, Andersen Worldwide SC.
Drive
Pittsburgh,
PA
DIRECTOR
Began
serving:
November 2001

JOHN F. PRINCIPAL OCCUPATION: Director or Trustee of the Federated Fund Complex; Director, WinsorTech.
CUNNINGHAM
Birth Date: OTHER DIRECTORSHIPS HELD: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic
March 5, 1943 business consulting); Trustee Associate, Boston College.
353 El Brillo
Way PREVIOUS POSITIONS: Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of
Palm Beach, the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang
FL Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
DIRECTOR
Began
serving:
November 2001

PETER E. PRINCIPAL OCCUPATION: Director or Trustee of the Federated Fund Complex.
MADDEN
Birth Date: OTHER DIRECTORSHIPS HELD: Board of Overseers, Babson College.
March 16,
1942 PREVIOUS POSITIONS: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and
One Royal Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and
Palm Way Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock
100 Royal Exchange.
Palm Way
Palm Beach,
FL
DIRECTOR
Began
serving:
November 2001

CHARLES F. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Management Consultant.
MANSFIELD,
JR. PREVIOUS POSITIONS: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst &
Birth Date: Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC
April 10, Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance,
1945 Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing,
80 South Road communications and technology).
Westhampton
Beach, NY
DIRECTOR
Began
serving:
November 2001

JOHN E. PRINCIPAL OCCUPATIONS: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated
MURRAY, JR., Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis.
J.D., S.J.D.
Birth Date: OTHER DIRECTORSHIPS HELD: Director, Michael Baker Corp. (engineering, construction, operations and technical
December 20, services).
1932
Chancellor, PREVIOUS POSITIONS: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of
Duquesne Law; Dean and Professor of Law, Villanova University School of Law.
University
Pittsburgh,
PA
DIRECTOR
Began
serving:
November 2001

THOMAS M. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator
O'NEILL Management Company, L.P. (investment and strategic consulting).
Birth Date:
June 14, 1951 OTHER DIRECTORSHIPS HELD: Director, Midway Pacific (lumber); Board of Overseers, Children's Hospital of Boston;
95 Standish Visiting Committee on Athletics, Harvard College.
Street
P.O. Box 2779 PREVIOUS POSITIONS: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet
Duxbury, MA Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner,
DIRECTOR Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; and Credit
Began Analyst and Lending Officer, Fleet Bank.
serving:
October 2006

MARJORIE P. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Public Relations/Marketing
SMUTS Consultant/Conference Coordinator.
Birth Date:
June 21, 1935 PREVIOUS POSITIONS: National Spokesperson, Aluminum Company of America; television producer; President, Marj
4905 Bayard Palmer Assoc.; Owner, Scandia Bord.
Street
Pittsburgh,
PA
DIRECTOR
Began
serving:
November 2001

JOHN S. WALSH PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc.
Birth Date: (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc.
November 28, (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers
1957 Products, Inc.
2604 William
Drive PREVIOUS POSITION: Vice President, Walsh & Kelly, Inc.
Valparaiso,
IN
DIRECTOR
Began
serving:
November 2001

JAMES F. WILL PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Vice Chancellor and President, Saint
Birth Date: Vincent College.
October 12,
1938 OTHER DIRECTORSHIPS HELD: Alleghany Corporation.
Saint Vincent
College PREVIOUS POSITIONS: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive
Latrobe, PA Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.
DIRECTOR
Began
serving:
April 2006

OFFICERS

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS AND PREVIOUS POSITION(S)
BIRTH DATE
POSITIONS
HELD WITH
TRUST
DATE BEGAN
SERVING
JOHN W. PRINCIPAL OCCUPATIONS: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman,
MCGONIGLE Executive Vice President, Secretary and Director, Federated Investors, Inc.
Birth Date:
October 26, PREVIOUS POSITIONS: Trustee, Federated Investment Management Company and Federated Investment Counseling;
1938 Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
EXECUTIVE
VICE
PRESIDENT AND
SECRETARY
Began
serving:
November 2000

RICHARD A. PRINCIPAL OCCUPATIONS: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice
NOVAK President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.,
Birth Date: Edgewood Services, Inc. and Southpointe Distribution Services, Inc.
December 25,
1963 PREVIOUS POSITIONS: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services
TREASURER Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur
Began Andersen & Co.
serving:
January 2006

RICHARD B. PRINCIPAL OCCUPATIONS: Vice Chairman or Vice President of some of the Funds in the Federated Fund Complex; Vice
FISHER Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp.
Birth Date:
May 17, 1923 PREVIOUS POSITIONS: President and Director or Trustee of some of the Funds in the Federated Fund Complex;
VICE CHAIRMAN Executive Vice President, Federated Investors, Inc. and Director and Chief Executive Officer, Federated Securities
Began Corp.
serving:
August 2002

BRIAN P. PRINCIPAL OCCUPATIONS: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice
BOUDA President and Chief Compliance Officer of Federated Investors, Inc.; and Chief Compliance Officer of its
Birth Date: subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar
February 28, Association of Wisconsin.
1947
CHIEF
COMPLIANCE
OFFICER AND
SENIOR VICE
PRESIDENT
Began
serving:
August 2004

STEPHEN F. PRINCIPAL OCCUPATIONS: Chief Investment Officer of this Fund and various other Funds in the Federated Fund
AUTH Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp.
Birth Date: and Federated Equity Management Company of Pennsylvania.
September 3,
1956 PREVIOUS POSITIONS: Executive Vice President, Federated Investment Management Company, and Passport Research, Ltd.
CHIEF (Investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services
INVESTMENT Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior
OFFICER Managing Director and Portfolio Manager, Prudential Investments.
Began
serving:
May 2004

TODD A. Todd A. Abraham is Vice President of the Trust. Mr. Abraham has been a Portfolio Manager since 1995 and a Vice
ABRAHAM President of the Fund's Adviser since 1997. Mr. Abraham joined Federated in 1993 as an Investment Analyst and
Birth Date: served as Assistant Vice President of the Fund's Adviser from 1995 to 1997. Mr. Abraham served as a Portfolio
February 10, Analyst at Ryland Mortgage Co. from 1992-1993. Mr. Abraham is a Chartered Financial Analyst and received his
1966 M.B.A. in Finance from Loyola College.
VICE
PRESIDENT
Began
serving:
May 2004

DAVID P. David P. Gilmore is Vice President of the Trust. Mr. Gilmore joined Federated in August 1997 as an Investment
GILMORE Analyst. He was promoted to Senior Investment Analyst in July 1999 and became a Vice President of the Fund's
Birth Date: Adviser in July 2001. Mr. Gilmore was a Senior Associate with Coopers & Lybrand from January 1992 to May 1995.
November 11, Mr. Gilmore is a Chartered Financial Analyst and attended the University of Virginia, where he earned his M.B.A.,
1970 from September 1995 to May 1997. Mr. Gilmore has a B.S. from Liberty University.
VICE
PRESIDENT
Began
serving:
May 2004

IHAB SALIB Ihab Salib is Vice President of the Trust. Mr. Salib joined Federated in April 1999 as a Senior Fixed-Income
Birth Date: Trader/Assistant Vice President of the Fund's Adviser. In July 2000, he was named a Vice President of the Fund's
December 14, Adviser. He has served as a Portfolio Manager since January 2002. From January 1994 through March 1999, Mr. Salib
1964VICE VICE was employed as a Senior Global Fixed-Income Analyst with UBS Brinson, Inc. Mr. Salib received his B.A. with a
PRESIDENT major in Economics from Stony Brook University.
Began
serving:
May 2006

EVALUATION AND APPROVAL OF ADVISORY CONTRACT

CAPITAL APPRECIATION CORE FUND (THE "FUND")
The Fund's Board reviewed the Fund's investment advisory contract at meetings
held in May 2006. The Board's decision regarding the contract reflects the
exercise of its business judgment on whether to continue the existing
arrangements. The Fund is distinctive in that it is designed for the efficient
management of a particular asset class and is made available for investment only
to other Federated funds and a limited number of other accredited investors. In
addition, the Adviser does not charge an investment advisory fee for its
services although it or its affiliates may receive compensation for managing
assets invested in the Fund.

Prior to the meeting, the Adviser had recommended that the Federated Funds
appoint 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 appointed by the Funds 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, which the Board considered,
along with other information, in deciding to approve the advisory contract.

As previously noted, the Adviser does not charge an investment advisory fee for
its services; however, the Board did consider compensation and benefits received
by the Adviser, including 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. The Board is also
familiar with 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 the Fund grows
larger; any indirect benefits that may accrue to the Adviser and its affiliates
as a result of the Adviser's relationship with the 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 like services and costs 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 from
supplying such services. The Board was aware of these considerations and was
guided by them in its review of the Fund's advisory contract to the extent they
are 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 the advice of 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 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 has 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, personnel and processes;
investment and operating strategies; the Fund's short- and long-term
performance, and comments on the reasons for performance; the Fund's investment
objectives; the Fund's overall expense structure; the use and allocation of
brokerage commissions derived from trading the Fund's portfolio securities (if
any); the nature, quality and extent of the advisory and other services provided
to the Fund by the Adviser and its affiliates; 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.

The Board also received financial information about Federated, including reports
on the compensation and benefits Federated derived from its relationships with
the Federated funds. Because the Adviser does not charge an investment advisory
fee for its services, these reports generally cover 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 as well as
waivers of fees and/or reimbursements of expenses. In order for a fund to be
competitive in the marketplace, Federated and its affiliates frequently waive
non-advisory fees and/or reimburse other expenses and have indicated to the
Board their intention to do so in the future, where appropriate.

The Board also reviewed profitability information for Federated and other
publicly held fund management companies, provided by the Senior Officer, who
noted the limited availability of such information, and concluded that
Federated's profit margins did not appear to be excessive.

The Senior Officer also made recommendations relating to the organization and
availability of data and verification of processes for purposes of implementing
future evaluations which the Adviser has agreed to implement.

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 relevant to every Federated fund, nor did the Board consider any one of
them to be determinative. In particular, due to the unusual nature of the Fund
as primarily an internal product with no advisory fee, the Board does not
consider the assessment of whether economies of scale would be realized if the
Fund were to grow to some sufficient size to be relevant. 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 arrangement.

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

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 the EDGAR
database on 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.)

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.

Cusip 31409R201

30038 (1/07)

EMERGING MARKETS FIXED INCOME CORE FUND

ANNUAL SHAREHOLDER REPORT
November 30, 2006

FINANCIAL HIGHLIGHTS

SHAREHOLDER EXPENSE EXAMPLE

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

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

REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS AND TRUST OFFICERS

EVALUATION AND APPROVAL OF ADVISORY CONTRACT

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

QUARTERLY PORTFOLIO SCHEDULE

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout Each Period)

YEAR ENDED PERIOD ENDED
NOVEMBER 30,

2006 2005 2004 2003 11/30/2002 1
NET ASSET VALUE, BEGINNING OF PERIOD $18.08 $15.91 $14.39 $10.98 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.34 2 1.29 2 0.91 0.85 0.83
Net realized and unrealized gain on 1.27 0.88 0.61 2.56 0.15
investments, options, swaps, futures
contracts and foreign currency
transactions
TOTAL FROM INVESTMENT OPERATIONS 2.61 2.17 1.52 3.41 0.98
NET ASSET VALUE, END OF PERIOD $20.69 $18.08 $15.91 $14.39 $10.98
TOTAL RETURN3 14.44 % 13.64 % 10.56 % 31.06 % 9.80 %

RATIOS TO AVERAGE NET ASSETS:
Net expenses 0.05 % 0.05 % 0.05 % 0.05 % 0.05 %4
Net investment income 6.94 % 7.54 % 7.80 % 8.85 % 10.58 %4
Expense waiver/reimbursement5 0.09 % 0.08 % 0.21 % 0.23 % 0.42 %4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $422,057 $350,521 $146,778 $131,056 $80,515
Portfolio turnover 75 % 23 % 54 % 97 % 178 %

1 Reflects operations for the period from January 14, 2002 (date of initial
investment) to November 30, 2002.

2 Per share numbers have been calculated using the average shares method.

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

SHAREHOLDER EXPENSE EXAMPLE

As a shareholder of the Fund, you incur ongoing costs, including, to the extent
applicable, management fees, 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 June 1, 2006 to November 30, 2006.

BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD1
6/1/2006 11/30/2006

ACTUAL $1,000 $1,117.20 $0.27
HYPOTHETICAL (ASSUMING A 5%
RETURN BEFORE EXPENSES) $1,000 $1,024.82 $0.25

1 Expenses are equal to the Fund's annualized net expense ratio of 0.05%,
multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

Emerging Markets Fixed Income Core Fund's1 total return, based on net asset
value, for the 12-month reporting period was 14.44%. The total return of the
Lehman Brothers Emerging Market Index2 (LEMI), a broad-based securities market
index, was 11.53% during the 12-month reporting period.

During the 12-month reporting period, the most significant factors affecting the
fund's performance relative to the LEMI were (1) the credit quality of the
portfolio securities (which indicate the risk that securities will default); (2)
the duration3 of its portfolio (which indicates the portfolio's price
sensitivity to interest rates); and (3) the allocation of securities to
corporate credits versus sovereign credits.

MARKET OVERVIEW
Emerging debt markets had a solid performance during the reporting period due to
a number of global macroeconomic factors such as low real interest rate
environment, continued positive global growth, high commodity prices supported
by solid global demand and general improvement in credit quality of the asset
class.

Despite significant increases in short-term interest rates in the U.S., global
real interest rates remained low which, in turn, contributed to continued
economic growth in key markets such as the U.S., China, India and renewed growth
signs in Japan and Europe. Higher global growth increases demand not only for
hard commodities including oil/gas and base metals whose primary suppliers are
emerging market countries, but also for soft commodities such as agricultural
products, for which some emerging countries are key suppliers. On top of the
positive impact from higher export revenues from commodities and intermediate
products, emerging economies have had material improvements in fiscal policy
which has translated into reduced borrowing requirements and higher sovereign
credit ratings. During the reporting period some of the larger emerging
economies such as Brazil, Mexico and Russia have reduced the amount of external
public sector debt via repayment operations of external and multilateral
liabilities. In light of these favorable macroeconomic conditions (and most
especially a relatively low global interest rate environment), demand for
emerging market bonds increased over the reporting period, which further
contributed to the positive relative performance of the asset class versus other
sectors of the global fixed income market.

CREDIT QUALITY
During the reporting period, as compared to the LEMI, fund management allocated
more of its portfolio to countries with clear prospects for improvements in
sovereign credit quality such as Brazil, Mexico, Peru and Russia,4 and less to
countries with only marginal prospects for improvement such as Turkey, the
Philippines and Panama. Fund management anticipated continued improvement in
credit quality for the asset class in general because of the factors mentioned
above in the market overview. In fact, those countries selected for larger
allocations in the fund received one notch credit rating upgrade by at least one
of the major rating agencies during the year, while those with lower allocations
had no credit rating changes over the same period.

Additionally, because of low inflationary pressures in the U.S., short-term
interest rates in the U.S. increased at a gradual pace which allowed emerging
debt markets -primarily lower quality credits- to remain as an attractive
investment alternative for global investors. The fund's combination of selected
high and low quality credits greatly contributed to the fund's performance
relative to the LEMI.

DURATION
During most of the reporting period, fund management allocated a larger
percentage of the sovereign bonds from each country owned by the fund to
securities with longer duration than the equivalent sub-indices in LEMI. With
the anticipation of a larger adjustment to lower interest rates for longer
duration securities, the fund was positioned to benefit from bonds with longer
duration and potentially larger bond price movements. This strategy was
implemented in various stages during the year, to adjust for periods of greater
or reduced market uncertainty regarding the U.S. and global economic outlooks
and expectations for monetary policy actions primarily in the U.S. which have
immediate impact on emerging markets.

LOCAL MARKETS
During the reporting period, fund management increased the percentage of the
portfolio allocated to local currency denominated securities in emerging
markets. These investments are considered off-index. With good prospects for
economic growth and declining inflation rates in countries such as Mexico and
Brazil, local market securities strongly benefited from declining nominal and
real interest rates and appreciation of the currency. The fund's investments in
local market securities were positive contributors to fund performance during
the reporting period.

CORPORATE CREDITS
Corporate credits, also represented in the LEMI, are a core component of the
fund's portfolio of investments. The corporate portfolio is represented by
companies with strong position in each of its markets, in some cases on a global
basis. One particular factor that contributed to fund performance was the fund's
allocation to corporate issuers within the commodities sector (and, in
particular, the oil and gas sub-sectors). Overall, the fund's allocation to
corporate credits resulted in outperformance with respect to the sovereign
credits in the portfolio.

1 Prices of emerging markets securities can be significantly more volatile than
the prices of securities in developed countries.
2 The LEMI tracks total returns for external-currency-denominated debt
instruments of the emerging markets: Brady bonds, loans, Eurobonds, and
U.S. dollar-denominated local market instruments. Countries covered are
Argentina, Brazil, Bulgaria, Ecuador, Mexico, Morocco, Nigeria, Panama, Peru,
the Philippines, Poland, Russia, and Venezuela. The LEMI is not adjusted to
reflect sales charges, expenses, or other fees that the Securities and Exchange
Commission (SEC) requires to be reflected in the fund's performance. Indexes are
unmanaged, and it is not possible to invest directly in an index.
3 Duration is a measure of a security's price sensitivity to changes in interest
rates. Securities with longer durations are more sensitive to changes in
interest rates than securities with shorter durations. For purposes of this
Management Discussion of Fund Performance, duration is determined using a third-
party analytical system.
4 International investing involves special risks including currency risk,
increased volatility of foreign securities, political risks and differences in
auditing and other financial standards.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE WHICH IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. MUTUAL FUND PERFORMANCE CHANGES OVER TIME AND CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN WHAT IS STATED. FOR CURRENT TO THE MOST RECENT MONTH END
PERFORMANCE,

CALL 1-800-341-7400.

GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,0001 in Emerging
Markets Fixed Income Core Fund (the "Fund") from January 14, 2002 (start of
performance) to November 30, 2006, compared to the Lehman Brothers Emerging
Market Index (LEMI)2.

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 11/30/2006
1 Year 14.44%
Start of Performance (1/14/2002) 16.07%

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE WHICH IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. MUTUAL FUND PERFORMANCE CHANGES OVER TIME AND CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN WHAT IS STATED. FOR CURRENT TO THE MOST RECENT MONTH-END
PERFORMANCE AND AFTER-TAX RETURNS, CALL 1-800-341-7400. RETURNS SHOWN DO NOT
REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. MUTUAL FUNDS ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.

1 Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LEMI has been adjusted to reflect reinvestment of dividends on securities in
the index.
2 The LEMI tracks total returns for external-currency-denominated debt
instruments of the emerging markets. The LEMI is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. The index is unmanaged, and, unlike the Fund, is not
affected by cashflows. It is not possible to invest directly in an index.

PORTFOLIO OF INVESTMENTS SUMMARY TABLE

At November 30, 2006, the Fund's issuer country and currency exposure
composition1 were as follows:

COUNTRY COUNTRY EXPOSURE AS CURRENCY EXPOSURE AS A
AS A PERCENTAGE PERCENTAGE OF TOTAL
OF TOTAL NET ASSETS NET ASSETS

Brazil 18.6 % 1.5%
Mexico 13.5 % 5.8%
Russia 13.1 % 0.0%
Philippines 8.8 % 0.0%
Venezuela 5.2 % 0.0%
Peru 4.7 % 0.0%
Colombia 4.6 % 0.0%
Turkey 4.5 % 0.0%
Argentina 3.9 % 0.0%
Ecuador 2.8 % 0.0%
Uruguay 2.4 % 0.0%
Kazakhstan 2.0 % 0.0%
Indonesia 1.7 % 0.0%
El Salvador 0.9 % 0.0%
Belize 0.5 % 0.0%
Hong Kong 0.5 % 0.0%
Dominican Republic 0.5 % 0.0%
Guatemala 0.5 % 0.0%
United States 0.2 %2 80.9%
Ukrainian SSR 0.2 % 0.0%
Euro 0.0 % 0.9%
Cash Equivalents3 10.3 % 10.3%
Other Assets and 0.6 % 0.6%
Liabilities-Net4
TOTAL 100.0 % 100.0%

1 This table depicts the fund's exposure to various countries and currencies
through its investment in foreign fixed income securities. With respect to
foreign corporate fixed- income securities, country allocations are based
primarily on the country in which the issuing company (the "Issuer") is
incorporated. However, the Fund's adviser may allocate the Issuer to a
country based on other factors such as the location of the Issuer's office,
the location of the principal trading market for the Issuer's securities or
the country from which a majority of the Issuer's revenue is derived.

2 Consists of non-U.S. dollar denominated fixed income securities issued by
an entity domiciled in the United States.

3 Cash Equivalents include any investments in money market mutual funds
and/or overnight repurchase agreements. This does not include cash held in
the Fund that is denominated in foreign currencies. See the Statement of
Assets and Liabilities for information regarding the Fund's foreign cash
position.

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

PORTFOLIO OF INVESTMENTS

November 30, 2006

PRINCIPAL VALUE IN U.S. DOLLARS
AMOUNT

CORPORATE BONDS-23.9%
AEROSPACE & DEFENSE-0.5%
$ 2,000,000 1,2 Embraer Overseas Ltd., Sr. Unsecd. Note, 6.375%, 1/24/2017 $ 2,012,000
BANKING-3.5%
4,100,000 1,2 Banco Credito del Peru, Sub. Note, 6.95%, 11/7/2021 4,168,840
1,200,000 1,2 Kazkommerts International BV, Company Guarantee, Series 144A, 8.00%, 11/3/2015 1,251,000
2,500,000 1,2 Turanalem Finance BV, Bank Guarantee, 8.50%, 2/10/2015 2,609,375
3,000,000 1,2 Turanalem Finance BV, Series 144A, 7.75%, 4/25/2013 3,067,500
3,500,000 1,2 VTB Capital SA, Bond, 6.25%, 6/30/2035 3,521,525
TOTAL 14,618,240
BROADCAST RADIO & TV-1.1%
3,800,000 Grupo Televisa S.A., Sr. Note, 8.50%, 3/11/2032 4,682,170
CHEMICALS & PLASTICS-0.4%
1,250,000 Braskem SA, Series REGS, 11.75%, 1/22/2014 1,568,750
CONTAINER & GLASS PRODUCTS-0.6%
600,000 Vitro SA, Sr. Note, Series EXCH, 11.375%, 5/15/2007 600,000
1,950,000 Vitro SA, Note, Series, 11.75%, 11/1/2013 2,081,625
TOTAL 2,681,625
FOOD PRODUCTS-0.5%
2,000,000 1,2 JBS SA, Company Guarantee, Series 144A, 10.50%, 8/4/2016 2,093,000
HOTELS, MOTELS, INNS & CASINOS-0.6%
2,500,000 1,2 Grupo Posadas SA de C.V., Sr. Note, 8.75%, 10/4/2011 2,618,750
LEISURE & ENTERTAINMENT-1.0%
2,000,000 1,2 Cap Cana SA, Series 144A, 9.625%, 11/3/2013 2,025,000
1,100,000 1,2 Galaxy Entertainment Finance Co. Ltd., Company Guarantee, 10.42%, 12/15/2010 1,182,500
900,000 1,2 Galaxy Entertainment Finance Co. Ltd., Company Guarantee, 9.875%, 12/15/2012 965,250
TOTAL 4,172,750
METALS & MINING-2.0%
3,350,000 1,2 Adaro Finance BV, Company Guarantee, Series 144A, 8.50%, 12/8/2010 3,450,500
900,000 Grupo Minero Mexico, 9.25%, 4/1/2028 1,080,000
3,850,000 Vale Overseas Ltd., 6.875%, 11/21/2036 3,955,875
TOTAL 8,486,375
OIL & GAS-7.6%
10,850,000 1,2 Gaz Capital SA, Note, Series 144A, 8.625%, 4/28/2034 13,969,375
4,960,000 1,2 Gazprom, Note, Series 144A, 9.625%, 3/1/2013 5,929,680
2,750,000 1,2 Gazprom, Series 144A, 5.03%, 2/25/2014 3,661,995
7,180,000 1,2 Petrozuata Finance, Inc., Company Guarantee, Series 144A, 8.22%, 4/1/2017 7,108,200
1,420,000 1,2 Tengizchevroil LLP, Series 144A, 6.124%, 11/15/2014 1,432,780
TOTAL 32,102,030
SOVEREIGN-0.2%
700,000 Colombia, Government of, Bond, 10.375%, 1/28/2033 983,500
STEEL-1.6%
2,700,000 1,2 CSN Islands IX Corp., Sr. Note, Series 144A, 10.00%, 1/15/2015 3,111,750
3,200,000 1,2 CSN Islands VIII Corp., Company Guarantee, Series 144A, 9.75%, 12/16/2013 3,600,000
TOTAL 6,711,750
TELECOMMUNICATIONS & CELLULAR-3.4%
9,500,000 America Movil S.A. de C.V., Bond, 9.00%, 1/15/2016 891,380
791,000 Axtel SA, 11.00%, 12/15/2013 881,965
3,000,000 1,2 Mobile Telesystems, Series 144A, 8.375%, 10/14/2010 3,165,000
5,400,000 Philippine Long Distance Telephone Co., Sr. Unsub., 11.375%, 5/15/2012 6,655,500
3,000,000 Telefonos de Mexico, Note, Series WI, 5.50%, 1/27/2015 2,954,130
TOTAL 14,547,975
UTILITIES-0.9%
3,200,000 1,2 National Power Corp., Foreign Gov't. Guarantee, Series 144A, 9.63%, 8/23/2011 3,623,411
TOTAL CORPORATE BONDS (IDENTIFIED COST $94,654,838) 100,902,326

GOVERNMENTS/AGENCIES-65.2%

SOVEREIGN-65.2%
15,964,304 Argentina, Government of, Note, 8.28%, 12/31/2033 16,315,519
1,500,000 Brazil, Government of, 8.875%, 4/15/2024 1,860,000
1,500,000 Brazil, Government of, 10.00%, 1/1/2012 6,614,262
28,204,000 Brazil, Government of, Bond, 8.25%, 1/20/2034 34,042,228
9,000,000 Brazil, Government of, Note, 8.75%, 2/4/2025 11,070,000
7,600,000 Brazil, Government of, Unsub., 11.00%, 8/17/2040 10,134,600
5,800,000 Colombia, Government of, 7.375%, 9/18/2037 6,075,500
5,650,000 Colombia, Government of, Bond, 8.125%, 5/21/2024 6,418,400
2,600,000 Colombia, Government of, Bond, 11.75%, 2/25/2020 3,731,000
2,200,000 Colombia, Government of, Note, 7.375%, 1/27/2017 2,351,800
3,250,000 El Salvador, Government of, Bond, 8.25%, 4/10/2032 3,867,500
1,750,000 1,2 Guatemala, Government of, Note, 9.25%, 8/1/2013 2,045,750
3,200,000 1,2 Indonesia, Government of, 8.50%, 10/12/2035 3,888,000
94,938,900 Mexico, Government of, 8.00%, 12/7/2023 8,739,641
84,299,900 Mexico, Government of, Bond, 8.00%, 12/19/2013 7,786,359
63,451,300 Mexico, Government of, Bond, 10.00%, 12/5/2024 6,951,359
10,700,000 Mexico, Government of, Note, 4.625%, 10/8/2008 10,593,000
12,200,000 Peru, Government of, Bond, 8.75%, 11/21/2033 15,768,500
4,600,000 Philippines, Government of, 9.375%, 1/18/2017 5,606,250
3,250,000 Philippines, Government of, 9.875%, 1/15/2019 4,200,625
5,700,000 Philippines, Government of, Bond, 7.75%, 1/14/2031 6,362,625
3,000,000 Philippines, Government of, Bond, 9.50%, 10/21/2024 3,847,500
5,280,000 Philippines, Government of, Sr. Note, 9.50%, 2/2/2030 6,943,200
5,820,000 Republic of Ecuador, 9.375%, 12/15/2015 5,820,000
6,400,000 Republic of Ecuador, 10.00%, 8/15/2030 5,968,000
4,198,000 Republica Oriental del Uruguay, 7.625%, 3/21/2036 4,460,375
22,250,000 Russia, Government of, Unsub., 5.00%, 3/31/2030 25,225,937
14,015,000 Turkey, Government of, 6.875%, 3/17/2036 13,261,694
5,650,000 Turkey, Government of, Note, 7.375%, 2/5/2025 5,748,875
600,000 Ukraine, Government of, Bond, 7.65%, 6/11/2013 648,000
340,764 Ukraine, Government of, Sr. Note, 11.00%, 3/15/2007 345,688
6,000,000 United Mexican States, 7.50%, 4/8/2033 7,131,000
5,000,000 Uruguay, Government of, Note, 8.00%, 11/18/2022 5,600,000
3,000,000 Venezuela, Government of, 0.000%, 4/15/2020 1,005,000
6,450,000 Venezuela, Government of, 9.375%, 1/13/2034 8,230,200
6,150,000 Venezuela, Government of, Note, 7.65%, 4/21/2025 6,502,087
TOTAL GOVERNMENTS/AGENCIES (IDENTIFIED COST $256,426,560) 275,160,474
Repurchase Agreement-10.3%
43,267,000 Interest in $2,000,000,000 joint repurchase agreement 5.32%, dated 11/30/2006 under which 43,267,000
Credit Suisse First Boston Corp. will repurchase U.S. Government Agency securities with
various maturities to 8/16/2043 for $2,000,295,556 on 12/1/2006. The market value of the
underlying securities at the end of the period was $2,060,008,358. (AT COST)
TOTAL INVESTMENTS-99.4%(IDENTIFIED COST $394,348,398)3 419,329,800
OTHER ASSETS AND LIABILITIES -NET -0.6% 2,727,612
TOTAL NET ASSETS -100% $ 422,057,412

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 November 30, 2006,
these restricted securities amounted to $80,501,181, which represented
19.1% 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. At November 30,
2006, these liquid restricted securities amounted to $80,501,181, which
represented 19.1% of total net assets.

3 The cost of investments for federal tax purposes amounts to $394,810,548.

At November 30, 2006, the Fund had the following outstanding swap contracts:

CREDIT REFERENCE ENTITY BUY/SELL PAY/RECEIVE EXPIRATION DATE NOTIONAL AMOUNT APPRECIATION/
DEFAULT SWAPS FIXED RATE (DEPRECIATION)
COUNTERPARTY
<c> <c>
JP Morgan Chase Republic of Hungary 4.75%,2/3/2015 Buy 0.300% 11/20/2011 $3,500,000 $(10,195)
JP Morgan Chase Dow Jones CDX Index Buy 1.400% 12/20/2011 35,000,000 -
JP Morgan Chase Bolivarian Republic of Venezuela 9.25%, Sell 1.460% 11/20/2011 3,500,000 (91)
9/15/2027
TOTAL SWAPS $(10,286)

Note: The categories of investments are shown as a percentage of total net
assets at November 30, 2006.

See Notes which are an integral part of the Financial Statements

STATEMENT OF ASSETS AND LIABILITIES

November 30, 2006

ASSETS:

Investments in securities $ 376,062,800
Investments in repurchase agreements 43,267,000
Total investments in securities, at value (identified cost $394,348,398) $ 419,329,800
Cash denominated in foreign currencies (identified cost $73,517) 75,295
Cash 187
Income receivable 6,476,903
Receivable for investments sold 35,000,000
TOTAL ASSETS 460,882,185
LIABILITIES:
Payable for investments purchased $ 38,749,002
Net payable for swap contracts 7,030
Accrued expenses 68,741
TOTAL LIABILITIES 38,824,773
Net assets for 20,394,356 shares outstanding $ 422,057,412
NET ASSETS CONSIST OF:
Paid-in capital $ 293,731,916
Net unrealized appreciation of investments and translation of assets and liabilities 24,969,615
in foreign currency
Accumulated net realized gain on investments, options, swap contracts, futures 34,115,588
contracts and foreign currency transactions
Undistributed net investment income 69,240,293
TOTAL NET ASSETS $ 422,057,412
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE
$422,057,412 {divide} 20,394,356 shares outstanding $20.69

See Notes which are an integral part of the Financial Statements

STATEMENT OF OPERATIONS

Year Ended November 30, 2006

INVESTMENT INCOME:

Interest (net of foreign taxes withheld of $16,109) $ 25,074,705
EXPENSES:
Administrative personnel and services fee (Note 5) $ 285,356
Custodian fees 88,191
Transfer and dividend disbursing agent fees and expenses 14,712
Directors'/Trustees' fees 8,682
Auditing fees 29,614
Legal fees 9,122
Portfolio accounting fees 60,327
Insurance premiums 10,253
Taxes 75
Miscellaneous 4,140
TOTAL EXPENSES 510,472
WAIVER AND REIMBURSEMENT (NOTE 5):
Waiver of administrative personnel and services fee $ (285,356 )
Reimbursement of other operating expenses (28,354 )
TOTAL WAIVER AND REIMBURSEMENT (313,710 )
Net expenses 196,762
Net investment income 24,877,943
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, SWAP CONTRACTS
AND FUTURES CONTRACTS:
Net realized gain on investments and foreign currency transactions 12,977,510
(net of foreign taxes withheld of $29,351)
Net realized gain on swap contracts 66,500
Net realized gain on futures contracts 80,812
Net change in unrealized appreciation of investments and 10,126,118
translation of assets and liabilities in foreign currency
Net change in unrealized depreciation on swap contracts (10,286 )
Net realized and unrealized gain on investments, swap contracts, 23,240,654
futures contracts and transaction of assets and liabilities in
foreign currency
Change in net assets resulting from operations $ 48,118,597

See Notes which are an integral part of the Financial Statements

STATEMENT OF CHANGES IN NET ASSETS

YEAR ENDED NOVEMBER 30 2006 2005

INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 24,877,943 $ 20,465,747
Net realized gain on investments, swaps, futures contracts and foreign currency 13,124,822 10,538,431
transactions
Net change in unrealized appreciation/depreciation of investments, swaps and 10,115,832 5,336,708
translation of assets and liabilities in foreign currency
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 48,118,597 36,340,886
SHARE TRANSACTIONS:
Contributions 130,984,000 298,508,368
Withdrawals (107,566,000 ) (131,106,041 )
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 23,418,000 167,402,327
Change in net assets 71,536,597 203,743,213
NET ASSETS:
Beginning of period 350,520,815 146,777,602
End of period (including undistributed net investment income of $69,240,293 and $ 422,057,412 $ 350,520,815
$44,362,350, respectively)

See Notes which are an integral part of the Financial Statements

NOTES TO FINANCIAL STATEMENTS

November 30, 2006

1. ORGANIZATION
Emerging Markets Fixed Income Core Fund (the "Fund") is a non-diversified
portfolio of Federated Core Trust II, L.P. (the "Trust"). The Trust is
registered under the Investment Company Act of 1940, as amended (the "Act"). The
Trust is a limited partnership that was established under the laws of the State
of Delaware on November 13, 2000 and offered only to registered investment
companies and other accredited investors. The Trust consists of three
portfolios. The financial statements included herein are only those of the Fund.
The Fund's primary investment objective is to achieve a total return on its
assets. Its secondary investment objective is to achieve a high level of income.
The Fund pursues these objectives by investing primarily in emerging market
fixed-income securities.

INVESTMENT VALUATION
Market values of the Fund's portfolio securities are determined as follows:

{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;

{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Directors (the "Directors") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;

{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;

{circle}for investments in other open-end regulated investment companies,
based on net asset value;

{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities with
remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost;

{circle}prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors; and

{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Directors.

Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Directors have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.

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 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, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. All net income and gain/loss
(realized and unrealized) will be allocated daily to the shareholders based on
their capital contributions to the Fund. The Fund does not currently intend to
declare and pay distributions.

PREMIUM AND DISCOUNT AMORTIZATION
All premiums and discounts on fixed income securities are amortized/accreted for
financial statement purposes.

SWAP CONTRACTS
The Fund may enter into swap contracts. A swap is an exchange of cash payments
between the Fund and another party, which is based on a specific financial
index. The value of the swap is adjusted daily and the change in value is
recorded as unrealized appreciation or depreciation. When a swap contract is
closed, the Fund recognizes a realized gain or loss. For the year ended
November 30, 2006, the Fund had a realized gain of $66,500 on swap contracts.

The Fund may enter into credit default swap agreements. The "buyer" in a credit
default contract 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
references obligation in exchange for the reference obligation. A Fund may be
either the buyer or seller in a credit default swap transaction. If a Fund is a
buyer and no event of default occurs, the Fund will lose its investment and
recover nothing. However, if an event of default occurs, the Fund will receive
the full notional value of the reference of the reference obligation that may
have little or no value. As a seller, a Fund receives a fixed rate of income
throughout the term of the contract, which typically is between six months and
three years, provided that there is no default event. If an event of default
occurs, the seller must pay the buyer the full notional value of the reference
obligation. The maximum exposure to loss of the notional value of credit default
swaps outstanding at November 30, 2006 for the Fund is $3,500,000. Credit
default swap transactions involve greater risks than if a Fund had invested in
reference obligation directly. The cash paid or received on a credit default
swap is recognized as realized gains or losses when a payment is paid or
received. Swaps are marked-to-market daily based upon quotations from market
makers and the change in value, if any, is recorded as unrealized gain or loss
in the Statement of Operations.

Risks may arise upon entering into these agreements from the potential inability
of the counterparties to meet the terms of their contract and from unanticipated
changes in the value of the financial index on which the swap agreement is
based. The Fund uses swaps for hedging purposes to reduce its exposure to
interest rate fluctuations.

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

FUTURES CONTRACTS
The Fund purchases and sells bond interest rate futures contracts to manage cash
flows, enhance yield, and to potentially reduce transactions costs. Upon
entering into a bond interest rate 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
year ended November 30, 2006, the Fund had net realized gains on futures
contracts of $80,812.

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

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

At November 30, 2006, the Fund had no outstanding foreign currency commitments.

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

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

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

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. CONTRIBUTIONS/WITHDRAWALS
Transactions in shares were as follows:

YEAR ENDED NOVEMBER 30 2006 2005

Proceeds from contributions 6,720,393 17,702,635
Fair value of withdrawals (5,711,452) (7,541,829)
TOTAL CHANGE RESULTING FROM
CONTRIBUTIONS/WITHDRAWALS 1,008,941 10,160,806

4. FEDERAL TAX INFORMATION

At November 30, 2006, the cost of investments for federal tax purposes was
$394,810,548. The net unrealized appreciation of investments for federal tax
purposes excluding any unrealized appreciation resulting from changes in foreign
currency exchange rates and swap contracts was $24,519,252. This consists of net
unrealized appreciation from investments for those securities having an excess
of value over cost of $25,475,956 and net unrealized depreciation from
investments for those securities having an excess of cost over value of
$956,704.

The difference between book-basis and tax-basis net unrealized appreciation is
attributable to differing treatments for discount accretion/premium amortization
on debt securities.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER FEE
Federated Investment Counseling, is the Fund's investment adviser (the
"Adviser"), subject to the oversight of the Directors. The Adviser provides
investment adviser services at no fee. The Adviser may voluntarily choose to
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this reimbursement at any time at its sole discretion.

MAXIMUM ADMINISTRATIVE FEE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
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

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

6. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, for the year ended November 30, 2006,
were as follows:

Purchases $ 266,214,555
Sales $ 245,729,788

7. CONCENTRATION OF CREDIT RISK

Compared to diversified mutual funds, the fund may invest a higher percentage of
its assets among fewer issuers of portfolio securities. This increases the
fund's risk by magnifying the impact (positively or negatively) that any one
issuer has on the fund's share price and performance. The fund invests in
securities of non-U.S. issuers. The political or economic developments within a
particular country or region may have an adverse effect on the ability of
domiciled issuers to meet their obligations. Additionally, political or economic
developments may have an effect on the liquidity and volatility of portfolio
securities and currency holdings.

8. LEGAL PROCEEDINGS
Beginning in October 2003, Federated Investors, Inc. and various subsidiaries
thereof (including the advisers and distributor for various investment
companies, collectively, "Federated"), along with various investment companies
sponsored by Federated ("Funds") were named as defendants in several class
action lawsuits now pending in the United States District Court for the District
of Maryland. 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 Securities and Exchange
Commission ("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 and various
Funds have also been named as defendants in several additional lawsuits, the
majority of which 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 has retained the law firm
of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and
the Funds, and their respective counsel, are reviewing the allegations and
intend to defend this litigation. 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.

9. RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, FASB issued 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 is currently evaluating the impact the adoption of FAS
157 will have on the Funds' financial statement disclosures.

REPORT OF INDEPENDENT AUDITORS

TO THE BOARD OF DIRECTORS OF FEDERATED CORE TRUST II, L.P. AND
SHAREHOLDERS OF EMERGING MARKETS FIXED INCOME CORE FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Emerging Markets Fixed Income Core Fund (the
"Fund"), one of the portfolios constituting Federated Core Trust II, L.P.,
including the portfolio of investments, as of November 30, 2006, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein. These financial statement
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Emerging Markets Fixed Income Core Fund, a portfolio of Federated Core Trust II,
L.P., at November 30, 2006, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of periods indicated therein,
in conformity with accounting principles generally accepted in the United
States.

Boston, Massachusetts

January 12, 2007

BOARD OF DIRECTORS AND TRUST OFFICERS

INTERESTED DIRECTORS BACKGROUND

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS,
BIRTH DATE OTHER DIRECTORSHIPS HELD AND PREVIOUS POSITION(S)
ADDRESS
POSITIONS HELD
WITH TRUST
DATE SERVICE
BEGAN
JOHN F. PRINCIPAL OCCUPATIONS: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated
DONAHUE* Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee.
Birth Date:
July 28, 1924 PREVIOUS POSITIONS: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and
DIRECTOR Chairman and Director, Federated Investment Counseling.
Began serving:
November 2001

INDEPENDENT DIRECTORS BACKGROUND

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS,
BIRTH DATE OTHER DIRECTORSHIPS HELD AND PREVIOUS POSITION(S)
ADDRESS
POSITIONS
HELD WITH
TRUST
DATE SERVICE
BEGAN
THOMAS G. PRINCIPAL OCCUPATION: Director or Trustee of the Federated Fund Complex.
BIGLEY
Birth Date: OTHER DIRECTORSHIPS HELD: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director,
February 3, University of Pittsburgh.
1934
15 Old Timber PREVIOUS POSITION: Senior Partner, Ernst & Young LLP.
Trail
Pittsburgh,
PA
DIRECTOR
Began
serving:
November 2001

OFFICERS

NAME PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS AND PREVIOUS POSITION(S)
BIRTH DATE
POSITIONS
HELD WITH
TRUST
DATE SERVICE
BEGAN
JOHN W. PRINCIPAL OCCUPATIONS: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman,
MCGONIGLE Executive Vice President, Secretary and Director, Federated Investors, Inc.
Birth Date:
October 26, PREVIOUS POSITIONS: Trustee, Federated Investment Management Company and Federated Investment Counseling;
1938 Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
EXECUTIVE
VICE
PRESIDENT
AND SECRETARY
Began
serving:
November 2000

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

IHAB SALIB Ihab Salib is Vice President of the Trust. Mr. Salib joined Federated in April 1999 as a Senior Fixed-Income
Birth Date: Trader/Assistant Vice President of the Fund's Adviser. In July 2000, he was named a Vice President of the Fund's
December 14, Adviser. He has served as a Portfolio Manager since January 2002. From January 1994 through March 1999, Mr. Salib
1964 was employed as a Senior Global Fixed-Income Analyst with UBS Brinson, Inc. Mr. Salib received his B.A. with a
VICE major in Economics from Stony Brook University.
PRESIDENT
Began
serving:
May 2006

EVALUATION AND APPROVAL OF ADVISORY CONTRACT

EMERGING MARKETS FIXED INCOME CORE FUND
The Fund's Board reviewed the Fund's investment advisory contract at meetings
held in May 2006. The Board's decision regarding the contract reflects the
exercise of its business judgment on whether to continue the existing
arrangements. The Fund is distinctive in that it is designed for the efficient
management of a particular asset class and is made available for investment only
to other Federated funds and a limited number of other accredited investors. In
addition, the Adviser does not charge an investment advisory fee for its
services although it or its affiliates may receive compensation for managing
assets invested in the Fund.

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 the EDGAR database on the SEC's
website at www.sec.gov.

QUARTERLY PORTFOLIO SCHEDULE

Cusip 31409R102

28172 (1/07)

Item 2. Code of Ethics

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

(d) Not Applicable

(e) Not Applicable

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

Item 3. Audit Committee Financial Expert

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

Item 4. Principal Accountant Fees and Services

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

Fiscal year ended 2006 - $34,500

Fiscal year ended 2005 - $33,766

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

Fiscal year ended 2006 - $0

Fiscal year ended 2005 - $161

Fiscal year ended 2005 - Transfer agent testing.

Amount requiring approval of the registrant's audit committee pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $443
respectively. Fiscal year ended 2005 - Sarbanes Oxley sec. 302
procedures.

Fiscal year ended 2006 - $0

Fiscal year ended 2005 - $0

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

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

Fiscal year ended 2006 - $0

Fiscal year ended 2005 - $0

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

(e)(1) Audit Committee Policies regarding Pre-approval of Services.

The Audit Committee is required to pre-approve audit and
non-audit services performed by the independent auditor in order to assure that
the provision of such services do not impair the auditor's independence. Unless
a type of service to be provided by the independent auditor has received general
pre-approval, it will require specific pre-approval by the Audit Committee. Any
proposed services exceeding pre-approved cost levels will require specific
pre-approval by the Audit Committee.

Certain services have the general pre-approval of the Audit
Committee. The term of the general pre-approval is 12 months from the date of
pre-approval, unless the Audit Committee specifically provides for a different
period. The Audit Committee will annually review the services that may be
provided by the independent auditor without obtaining specific pre-approval from
the Audit Committee and may grant general pre-approval for such services. The
Audit Committee will revise the list of general pre-approved services from time
to time, based on subsequent determinations. The Audit Committee will not
delegate its responsibilities to pre-approve services performed by the
independent auditor to management.

The Audit Committee has delegated pre-approval authority to
its Chairman. The Chairman will report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Committee will designate another
member with such pre-approval authority when the Chairman is unavailable.

AUDIT SERVICES

The annual Audit services engagement terms and fees will be subject to
the specific pre-approval of the Audit Committee. The Audit Committee must
approve any changes in terms, conditions and fees resulting from changes in
audit scope, registered investment company (RIC) structure or other matters.

In addition to the annual Audit services engagement specifically
approved by the Audit Committee, the Audit Committee may grant general
pre-approval for other Audit Services, which are those services that only the
independent auditor reasonably can provide. The Audit Committee has pre-approved
certain Audit services, all other Audit services must be specifically
pre-approved by the Audit Committee.

AUDIT-RELATED SERVICES

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

TAX SERVICES

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

ALL OTHER SERVICES

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

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

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

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

PRE-APPROVAL FEE LEVELS

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

PROCEDURES

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

(e)(2) Percentage of services identified in items 4(b) through 4(d) that were
approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X:

4(b)

Fiscal year ended 2006 - 0%

Fiscal year ended 2005 - 0%

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

4(c)

Fiscal year ended 2006 - 0%

Fiscal year ended 2005 - 0%

4(d)

Fiscal year ended 2006 - 0%

Fiscal year ended 2005 - 0%

(f) NA

(g) Non-Audit Fees billed to the registrant, the registrant's investment
adviser, and certain entities controlling, controlled by or under
common control with the investment adviser:

Fiscal year ended 2006 - $17,035

Fiscal year ended 2005 - $26,284

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

Item 5. Audit Committee of Listed Registrants

Not Applicable

Item 6. Schedule of Investments

Not Applicable

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

Not Applicable

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

Not Applicable

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

Not Applicable

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

Not Applicable

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

SIGNATURES

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

Registrant Federated Core Trust II, L.P.

By /S/ _______Richard A. Novak__________________________________
(insert name and title)

Richard A. Novak, Principal Financial Officer
Date January 23, 2007

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

By /S/ ___J. Christopher Donahue________________________________
J. Christopher Donahue, Principal Executive Officer Date
January 23, 2007

By /S/ ___Richard A. Novak______________________________________

Richard A. Novak, Principal Financial Officer
Date January 23, 2007