BOND INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- -----------
<C> <C> <S> <C>
ASSET-BACKED SECURITIES--1.2%
- -----------------------------------------------------------------------------------
AUTOMOBILE--1.2%
----------------------------------------------------------------
$ 271,480 Premier Auto Trust 1994-2, Class A3, 6.35%, 5/2/2000 $ 272,243
---------------------------------------------------------------- -----------
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $268,977) 272,243
---------------------------------------------------------------- -----------
CORPORATE BONDS--16.9%
- -----------------------------------------------------------------------------------
AUTOMOBILE--1.1%
----------------------------------------------------------------
275,000 Ford Motor Co., Debenture, 7.125%, 11/15/2025 252,348
---------------------------------------------------------------- -----------
BEVERAGE & TOBACCO--3.3%
----------------------------------------------------------------
275,000 Anheuser-Busch Cos., Inc., Note, 7.00%, 9/1/2005 267,647
----------------------------------------------------------------
150,000 PepsiCo, Inc., Debenture, 7.625%, 12/18/1998 153,467
----------------------------------------------------------------
350,000 Philip Morris Cos., Inc., Note, 6.375%, 2/1/2006 323,418
---------------------------------------------------------------- -----------
Total 744,532
---------------------------------------------------------------- -----------
COMMUNICATIONS--2.3%
----------------------------------------------------------------
250,000 Motorola, Inc., Debenture, 7.50%, 5/15/2025 248,945
----------------------------------------------------------------
250,000 Sprint Corp., Note, 8.125%, 7/15/2002 260,450
---------------------------------------------------------------- -----------
Total 509,395
---------------------------------------------------------------- -----------
DRUGS--2.0%
----------------------------------------------------------------
450,000 American Home Products Corp., Note, 7.70%, 2/15/2000 461,556
---------------------------------------------------------------- -----------
FINANCE--2.7%
----------------------------------------------------------------
110,000 Bank of Boston Corp., Sub. Note, 6.625%, 12/1/2005 103,105
----------------------------------------------------------------
500,000 Lehman Brothers Holdings, Inc., Note, 8.50%, 8/1/2015 508,190
---------------------------------------------------------------- -----------
Total 611,295
---------------------------------------------------------------- -----------
FINANCE--AUTOMOTIVE--1.2%
----------------------------------------------------------------
300,000 General Motors Acceptance Corp., Note, 5.625%, 2/15/2001 281,883
---------------------------------------------------------------- -----------
RETAILERS--0.7%
----------------------------------------------------------------
150,000 Penney (J.C.) Co., Inc., Note, 7.375%, 6/15/2004 148,859
---------------------------------------------------------------- -----------
</TABLE>
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
UTILITIES--1.1%
----------------------------------------------------------------
$ 275,000 Duke Power Co., 1st Ref. Mtg., 7.50%, 8/1/2025 $ 255,577
---------------------------------------------------------------- -----------
SOVEREIGN GOVERNMENT--2.5%
----------------------------------------------------------------
300,000 Italy (Republic of), Debenture, 6.875%, 9/27/2023 265,515
----------------------------------------------------------------
300,000 Province of Ontario, Sr. Unsub., 7.00%, 8/4/2005 292,914
---------------------------------------------------------------- -----------
Total 558,429
---------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $3,937,827) 3,823,874
---------------------------------------------------------------- -----------
GOVERNMENT AGENCIES--6.5%
- -----------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--1.7%
----------------------------------------------------------------
200,000 7.23%, 12/17/2002 201,740
----------------------------------------------------------------
175,000 7.90%, 9/19/2001 182,821
---------------------------------------------------------------- -----------
Total 384,561
---------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.8%
----------------------------------------------------------------
390,000 7.50%, 2/11/2002 400,542
---------------------------------------------------------------- -----------
GOVERNMENT AGENCY--3.0%
----------------------------------------------------------------
675,000 Private Export Funding Corp., 7.30%, 1/31/2002 686,455
---------------------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $1,485,369) 1,471,558
---------------------------------------------------------------- -----------
MORTGAGE BACKED SECURITIES--28.1%
- -----------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--9.4%
----------------------------------------------------------------
455,508 6.50%, 2/1/2011 437,429
----------------------------------------------------------------
324,686 7.00%, 5/1/2024 310,909
----------------------------------------------------------------
331,426 7.00%, 6/1/2024 316,303
----------------------------------------------------------------
315,964 8.00%, 7/1/2002 321,392
----------------------------------------------------------------
400,000 8.50%, 3/1/2025 408,624
----------------------------------------------------------------
309,235 9.00%, 4/1/2022 323,392
---------------------------------------------------------------- -----------
Total 2,118,049
---------------------------------------------------------------- -----------
</TABLE>
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- -----------
<C> <C> <S> <C>
MORTGAGE BACKED SECURITIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--10.7%
----------------------------------------------------------------
$ 574,068 7.00%, 12/1/2025 $ 547,333
----------------------------------------------------------------
435,190 7.00%, 5/1/2024 414,923
----------------------------------------------------------------
278,101 7.00%, 6/1/2009 273,379
----------------------------------------------------------------
414,640 7.00%, 6/1/2024 395,331
----------------------------------------------------------------
325,000 7.50%, 6/1/2011 324,896
----------------------------------------------------------------
457,557 8.50%, 8/1/2023 469,394
---------------------------------------------------------------- -----------
Total 2,425,256
---------------------------------------------------------------- -----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--8.0%
----------------------------------------------------------------
450,000 7.00%, 1/15/2026 428,202
----------------------------------------------------------------
463,917 7.50%, 6/15/2024 453,622
----------------------------------------------------------------
542,553 7.50%, 6/15/2024 530,514
----------------------------------------------------------------
162,290 9.50%, 1/15/2019 174,489
----------------------------------------------------------------
198,360 9.50%, 10/15/2020 212,555
---------------------------------------------------------------- -----------
Total 1,799,382
---------------------------------------------------------------- -----------
TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST $6,322,784) 6,342,687
---------------------------------------------------------------- -----------
U.S. TREASURY SECURITIES--46.0%
- -----------------------------------------------------------------------------------
U.S. TREASURY BONDS--14.4%
----------------------------------------------------------------
750,000 7.25%, 5/15/2004 768,870
----------------------------------------------------------------
2,175,000 7.25%, 5/15/2016 2,190,290
----------------------------------------------------------------
245,000 9.375%, 2/15/2006 288,181
---------------------------------------------------------------- -----------
Total 3,247,341
---------------------------------------------------------------- -----------
U.S. TREASURY NOTES--31.6%
----------------------------------------------------------------
980,000 6.25%, 2/15/2003 953,814
----------------------------------------------------------------
1,020,000 6.50%, 5/15/1997 1,026,059
----------------------------------------------------------------
2,025,000 6.50%, 8/15/1997 2,037,027
----------------------------------------------------------------
500,000 7.00%, 4/15/1999 507,420
----------------------------------------------------------------
</TABLE>
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. TREASURY SECURITIES --CONTINUED
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
----------------------------------------------------------------
$ 1,525,000 7.125%, 10/15/1998 $ 1,551,444
----------------------------------------------------------------
1,000,000 8.875%, 5/15/2000 1,079,220
---------------------------------------------------------------- -----------
Total 7,154,984
---------------------------------------------------------------- -----------
TOTAL U.S. TREASURY SECURITIES (IDENTIFIED COST $10,401,185) 10,402,325
---------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $22,416,142)(A) $22,312,687
---------------------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $22,416,142. The
unrealized depreciation on a federal tax cost basis amounts to $103,455,
which is comprised of $107,708 appreciation and $211,163 depreciation at May
31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($22,599,442) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $22,416,142) $22,312,687
- --------------------------------------------------------------------------------
Cash 882,977
- --------------------------------------------------------------------------------
Income receivable 260,325
- -------------------------------------------------------------------------------- -----------
Total assets 23,455,989
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $844,393
- ---------------------------------------------------------------------
Accrued expenses 12,154
- --------------------------------------------------------------------- --------
Total liabilities 856,547
- -------------------------------------------------------------------------------- -----------
Net Assets $22,599,442
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital for beneficial interests $22,599,442
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest $1,155,382
- ----------------------------------------------------------------------------------- ----------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 40,743
- ----------------------------------------------------------------------
Administrative personnel and services fee 29,176
- ----------------------------------------------------------------------
Custodian fees 8,588
- ----------------------------------------------------------------------
Amortization of organization expenses 4,053
- ----------------------------------------------------------------------
Trustees' fees and expenses 1,644
- ----------------------------------------------------------------------
Insurance expense 2,796
- ----------------------------------------------------------------------
Auditing fees 14,500
- ----------------------------------------------------------------------
Legal fees 3,501
- ----------------------------------------------------------------------
Portfolio accounting fees 52,728
- ----------------------------------------------------------------------
Registration costs 445
- ----------------------------------------------------------------------
Miscellaneous 987
- ---------------------------------------------------------------------- ---------
Total expenses 159,161
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $(40,743)
- -----------------------------------------------------------
Waiver of administrative personnel and services fee (24,754)
- -----------------------------------------------------------
Waiver of portfolio accounting fees (23,561)
- -----------------------------------------------------------
Reimbursement of expenses (55,998)
- ----------------------------------------------------------- --------
Total waivers and reimbursements (145,056)
- ---------------------------------------------------------------------- ---------
Net expenses 14,105
- ----------------------------------------------------------------------------------- ----------
Net investment income 1,141,277
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments 228,503
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (715,007)
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized loss on investments (486,504)
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $ 654,773
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
MAY 31, 1996 MAY 31, 1995(a)
------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 1,141,277 $ 1,428,528
- -----------------------------------------------------------
Net realized gain on investments 228,503 136,599
- -----------------------------------------------------------
Net change in unrealized appreciation (depreciation) (715,007 ) 611,552
- ----------------------------------------------------------- ----------- --------------
Change in net assets resulting from operations 654,773 2,176,679
- ----------------------------------------------------------- ----------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
- -----------------------------------------------------------
Additions 18,879,856 32,835,501
- -----------------------------------------------------------
Reductions (13,216,042 ) (18,748,092)
- ----------------------------------------------------------- ----------- --------------
Net increase from transactions in investors'
beneficial interest 5,663,814 14,087,409
- ----------------------------------------------------------- ----------- --------------
Total increase in Net Assets 6,318,587 16,264,088
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 16,280,855 16,767
- ----------------------------------------------------------- ----------- --------------
End of period $22,599,442 $ 16,280,855
- ----------------------------------------------------------- ----------- --------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------
Expenses 0.09 % 0.00%*
- -----------------------------------------------------------
Net investment income 7.00 % 7.45%*
- -----------------------------------------------------------
Expense waiver/reimbursement (b) 0.89 % 0.69%*
- -----------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------
Portfolio turnover 43 % 67%
- -----------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 11, 1994 (date of initial
public investment) to May 31, 1995.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INVESTMENT PORTFOLIOS
BOND INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Investment Portfolios (the "Portfolio Series") was organized as a
Massachusetts business trust under a Declaration of Trust dated as of September
29, 1995. The Portfolio Series is currently comprised of one portfolio, the Bond
Index Portfolio (the "Portfolio"). The Declaration of Trust permits the
Portfolio Series to issue an unlimited number of beneficial interests in the
Portfolio. The Portfolio, which began operations on January 2, 1996, is an
open-end diversified management investment company under the Investment Company
Act of 1940 (the "Act"). The investment objective of the Portfolio is to provide
investment results that correspond to the investment performance of the Lehman
Brothers Aggregate Bond Index.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. PREDECESSOR PORTFOLIO--Effective January 2, 1996 (the "Transaction Date") the Portfolio
received all of the assets of Excelsior Institutional Bond Index Fund, a series of
Excelsior Institutional Trust, which had invested all of its assets in Bond Market
Portfolio (the "Predecessor Portfolio"), a portfolio of the St. James Portfolios, having
a market value of $16,913,859, in exchange for shares of beneficial interest in the
Portfolio. These assets represented substantially all of the Predecessor Portfolio's
assets as of the Transaction Date. The Statement of Operations, Statement of Changes in
Net Assets, and Financial Highlights presented herein include the operations and
financial highlights of the Predecessor Portfolio for periods prior to January 2, 1996.
B. INVESTMENT VALUATIONS--Listed corporate bonds and other fixed-income and asset backed
securities are valued at the last sale price reported on national securities exchanges.
Unlisted bonds and securities and short-term obligations are valued at the prices
provided by an independent pricing service. Short-term securities obtained with
remaining maturities of sixty days or less may be stated at amortized cost, which
approximates market value.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date. Distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
</TABLE>
FEDERATED INVESTMENT PORTFOLIOS
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
D. REPURCHASE AGREEMENTS--The Portfolio may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to the seller's
agreement to repurchase and the Portfolio's agreement to resell such securities at
mutually agreed upon prices. Securities purchased subject to such repurchase agreements
are deposited with the Portfolio's subcustodian or are maintained in the Federal
Reserve/Treasury book-entry system and must have, at all times, an aggregate market
value of not less than 102% of the repurchase price (including accrued interest).
If the value of the underlying security, including accrued interest, falls below 102% of
the repurchase price plus accrued interest, the Portfolio will require the seller to
deposit additional collateral by the next business day. Default or bankruptcy of the
seller may, however, expose the Portfolio to a risk of loss in the event that the
Portfolio is delayed or prevented from exercising its right to dispose of the underlying
collateral securities or to the extent that proceeds from a sale of the underlying
securities were less than the repurchase price under the agreement.
E. DEFERRED ORGANIZATION EXPENSES--Expenses incurred by the Portfolio have been deferred
and are being amortized over a period not to exceed sixty months beginning with the
commencement of operations of the Portfolio. The service providers to the Portfolio have
agreed to contribute to the Portfolio at the time of any termination, liquidation, or
dissolution of the Portfolio, an amount equal to the unamortized organizational expense
at such time.
The unamortized organizational expenses of the Predecessor Portfolio were reimbursed by
the previous administrator prior to the Transaction Date. Organizational expenses
reflected on the Statement of Operations include those which were amortized by the
Predecessor Portfolio during the period from June 1, 1995 through the Transaction Date.
F. FEDERAL INCOME TAXES--The Portfolio will be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be subject to taxation on its
share of the Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the Portfolio will
be able to satisfy the requirements of Subchapter M of the Internal Revenue Code.
G. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Portfolio's investment
adviser (the "Adviser"), is entitled to receive for its services an annual
investment advisory fee equal to .25% of the Portfolio's average daily net
assets. The Adviser has entered into a subadvisory contract with the United
States Trust Company of New York ("U.S. Trust"). Under the terms of the
subadvisory contract, the Adviser is obligated to pay U.S. Trust an annual
investment advisory fee equal to .12% of
FEDERATED INVESTMENT PORTFOLIOS
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
the Portfolio's average daily net assets. For the period from January 2, 1996 to
May 31, 1996, the Adviser and U.S. Trust have voluntarily agreed to waive all of
their fees which amounted to $17,632.
United States Trust Company of the Pacific Northwest ("U.S. Trust Pacific") was
the investment adviser of the Predecessor Portfolio. For its services, U.S.
Trust Pacific was entitled to receive an annual advisory fee equal to 0.25% of
the average daily net assets of the Predecessor Portfolio. U.S. Trust Pacific
delegated the daily management of the Predecessor Portfolio to U.S. Trust, which
was entitled to receive from U.S. Trust Pacific an annual subadvisory fee equal
to 0.25% of the average daily net assets of the Predecessor Portfolio. U.S.
Trust Pacific and U.S. Trust voluntarily agreed to waive all of their investment
advisory fees and reimburse certain operating expenses of the Predecessor
Portfolio. The investment advisory fee waivers and expense reimbursements
totaled $23,111 and $55,998 for the period from June 1, 1995 to January 2, 1996,
and $47,955 and $83,454 for the period from July 11, 1994 to May 31, 1995.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Portfolio with administrative services and personnel. The FAS fee is based upon
.05% on the first $1 billion of average aggregate daily net assets of the
Portfolio, subject to an annual minimum fee of $60,000. FAS earned and
voluntarily agreed to waive its entire fee of $24,754 for the period from
January 2, 1996 to May 31, 1996
Administrative and portfolio accounting services were provided to the
Predecessor Portfolio by Signature Financial Services, Inc. ("Signature"). For
their services Signature received fees of $33,589 for the period from June 1,
1995 to January 2, 1996.
PORTFOLIO ACCOUNTING FEES--Federated Services Company ("FServ"), an affiliate of
FAS, maintains the Portfolio's accounting records for which it receives a fee.
The fee is based on the level of the Portfolio's average daily net assets for
the period, plus out of pocket expenses. FServ voluntarily agreed to waive its
entire fee ($23,561) for the period from January 2, 1996 to May 31, 1996.
CUSTODIAN--Investors Bank & Trust Company ("IBT") serves as custodian of the
Portfolio's assets pursuant to a Custody Agreement between IBT and the
Portfolio. For services provided thereunder by IBT, the Portfolio has agreed to
pay IBT a fee as agreed upon from time to time.
Effective June 5, 1996, State Street Bank & Trust Company became the custodian
of the Portfolio's assets.
GENERAL--Certain of the Officers and Trustees of the Portfolio Series are
Officers and Directors or Trustees of the above companies.
FEDERATED INVESTMENT PORTFOLIOS
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
(4) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term investments, for the
year ended May 31, 1996 were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
COST OF PURCHASES $14,846,827
- ------------------------------------------------------------------------------- -----------
PROCEEDS FROM SALES $ 6,826,814
- ------------------------------------------------------------------------------- -----------
</TABLE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Investors of the
BOND INDEX PORTFOLIO:
We have audited the accompanying statements of assets and liabilities of the
Bond Index Portfolio, a series of Federated Investment Portfolio, as of May 31,
1996, and the related statement of operations and the statement of changes in
net assets for the year ended. These financial statements are the responsibility
of the Portfolio's management. Our responsibility is to express an opinion on
these financial statements based on our audit. The financial statements of St.
James Portfolio, the predecessor portfolio, for the year ended May 31, 1995,
were audited by other auditors whose report dated July 25, 1995, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bond Index Portfolio at May 31,
1996, the results of its operations and the changes in its net assets for the
year then ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
July 18, 1996
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
J. Christopher Donahue Chairman
Thomas G. Bigley J. Christopher Donahue
John T. Conroy, Jr. President
William J. Copeland Edward C. Gonzales
James E. Dowd Executive Vice President
Lawrence D. Ellis, M.D. John W. McGonigle
Edward L. Flaherty, Jr. Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. David Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts S. Elliott Cohan
Assistant Secretary
</TABLE>
- -------------------------------------------------------------------------------
BOND INDEX
- -------------------------------------------------------------------------------
PORTFOLIO
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ANNUAL REPORT
TO INVESTORS
MAY 31, 1996
[LOGO] FEDERATED INVESTORS ------------------------------
FEDERATED INVESTORS TOWER ------------------------------
PITTSBURGH, PA 15222-3779
[LOGO] ------------------------------
Cusip 314204108 RECYCLED
G01854-01 PAPER
