BOND INDEX
PORTFOLIOS
SEMI-ANNUAL REPORT
TO INVESTORS
NOVEMBER 30, 1996
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 314204108
(1/97)
BOND INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
ASSET-BACKED SECURITIES -- 0.7%
AUTOMOTIVE -- 0.7%
$ 185,881 Premier Auto Trust 1994-2, Class A3, 6.35%, 5/2/2000 $ 186,578
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $184,167) 186,578
CORPORATE BONDS -- 16.2%
AUTOMOBILE -- 1.0%
275,000 Ford Motor Co., Debenture, 7.125%, 11/15/2025 273,644
BEVERAGE & TOBACCO -- 2.8%
275,000 Anheuser-Busch Cos., Inc., Note, 7.00%, 9/1/2005 281,517
150,000 PepsiCo, Inc., Debenture, 7.625%, 12/18/1998 155,057
350,000 Philip Morris Cos., Inc., Note, 6.375%, 2/1/2006 336,354
Total 772,928
COMMUNICATIONS -- 2.7%
200,000 Lucent Technologies, Inc., Note, 7.25%, 7/15/2006 209,910
250,000 Motorola, Inc., Debenture, 7.50%, 5/15/2025 267,092
250,000 Sprint Corp., Note, 8.125%, 7/15/2002 269,715
Total 746,717
DRUGS -- 0.9%
250,000 American Home Products Corp., Note, 7.70%, 2/15/2000 261,942
FINANCE -- 1.4%
110,000 Bank of Boston Corp., Sub. Note, 6.625%, 12/1/2005 108,822
250,000 Lehman Brothers Holdings, Inc., Note, 8.50%, 8/1/2015 271,547
Total 380,369
FINANCE - AUTOMOTIVE -- 1.0%
300,000 General Motors Acceptance Corp., Note, 5.625%, 2/15/2001 292,773
FOOD PRODUCTS -- 1.3%
350,000 Nabisco, Inc., Unsecd. Note, 8.00%, 1/15/2000 367,283
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS -- CONTINUED
RETAILERS -- 2.2%
$ 300,000 Penney (J.C.) Co., Inc., Note, 7.375%, 6/15/2004 $ 313,986
300,000 Wal-Mart Stores, Inc., Unsecd. Note, 7.50%, 5/15/2004 319,848
Total 633,834
SOVEREIGN GOVERNMENT -- 1.9%
300,000 Italy (Republic of), Debenture, 6.875%, 9/27/2023 294,348
250,000 Quebec, Province of, Debenture, 7.125%, 2/9/2024 244,798
Total 539,146
UTILITIES -- 1.0%
275,000 Duke Power Co., 1st Ref. Mtg., 7.50%, 8/1/2025 280,038
TOTAL CORPORATE BONDS (IDENTIFIED COST $4,418,940) 4,548,674
GOVERNMENT AGENCIES -- 5.4%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.4%
200,000 7.23%, 12/17/2002 201,968
175,000 7.90%, 9/19/2001 188,727
Total 390,695
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 1.5%
390,000 7.50%, 2/11/2002 414,983
GOVERNMENT AGENCY -- 2.5%
675,000 Private Export Funding Corp., 7.30%, 1/31/2002 710,748
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $1,484,936) 1,516,426
MORTGAGE BACKED SECURITIES -- 28.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 8.0%
455,147 6.50%, 2/1/2011 441,946
322,029 7.00%, 5/1/2024 321,926
317,440 7.00%, 6/1/2024 316,843
497,823 7.50%, 6/1/2026 504,598
397,909 8.50%, 3/1/2025 415,317
245,836 9.00%, 4/1/2022 262,619
Total 2,263,249
PRINCIPAL
AMOUNT VALUE
MORTGAGE BACKED SECURITIES -- CONTINUED
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 11.8%
$ 269,401 7.00%, 6/1/2009 $ 272,543
421,472 7.00%, 5/1/2024 419,892
377,333 7.00%, 6/1/2024 375,563
311,997 7.50%, 6/1/2011 318,527
245,850 7.50%, 2/1/2026 248,692
278,232 8.00%, 7/1/2002 286,665
425,110 8.50%, 8/1/2023 446,498
550,112 8.50%, 10/1/2026 573,316
357,045 9.00%, 6/1/2025 377,796
Total 3,319,492
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 8.3%
504,601 7.50%, 6/15/2024 513,588
448,714 7.50%, 6/15/2024 456,288
491,799 7.50%, 6/15/2026 498,866
475,000 8.00%, 8/15/2026 489,545
140,230 9.50%, 1/15/2019 152,719
195,179 9.50%, 10/15/2020 212,439
Total 2,323,445
TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST $7,668,135) 7,906,186
U.S. TREASURY SECURITIES -- 48.0%
U.S. TREASURY BONDS -- 16.2%
1,250,000 7.25%, 5/15/2004 1,344,725
2,675,000 7.25%, 5/15/2016 2,912,834
245,000 9.375%, 2/15/2006 301,963
Total 4,559,522
U.S. TREASURY NOTES -- 31.8%
1,425,000 5.875%, 8/15/1998 1,432,125
805,000 6.25%, 2/15/2003 819,337
PRINCIPAL
AMOUNT VALUE
U.S. TREASURY SECURITIES -- CONTINUED
U.S. TREASURY NOTES -- CONTINUED
$ 1,075,000 6.50%, 5/31/2001 $ 1,103,391
1,800,000 7.00%, 4/15/1999 1,854,000
825,000 7.125%, 10/15/1998 847,432
1,000,000 8.875%, 5/15/2000 1,097,660
1,700,000 9.00%, 5/15/1998 1,781,549
Total 8,935,494
TOTAL U.S. TREASURY SECURITIES (IDENTIFIED COST $13,176,976) 13,495,016
(a)REPURCHASE AGREEMENT -- 0.6%
165,000 BT Securities Corp., 5.72%, dated 11/29/1996, due 12/2/1996
(AT AMORTIZED COST) 165,000
TOTAL INVESTMENTS (IDENTIFIED COST $27,098,154)(b) $ 27,817,880
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(b) The cost of investments for federal tax purposes amounts to $27,098,154.
The net unrealized appreciation of investments on a federal tax basis
amounts to $719,726 which is comprised of $730,214 appreciation and $10,488
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($28,117,876) at November 30, 1996.
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $27,098,154) $ 27,817,880
Cash 2,114
Income receivable 305,523
Total assets 28,125,517
LIABILITIES:
Accrued expenses 7,641
Net Assets $ 28,117,876
NET ASSETS CONSIST OF:
Paid in capital for beneficial interests $ 28,117,876
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1996 (UNAUDITED)
INVESTMENT INCOME:
Interest $ 916,705
EXPENSES:
Investment advisory fee $ 32,207
Administrative personnel and services fee 30,000
Custodian fees 5,274
Auditing fees 4,386
Legal fees 2,000
Portfolio accounting fees 28,629
Share registration costs 900
Miscellaneous 1,624
Total expenses 105,020
Waivers and reimbursements --
Waiver of investment advisory fee $(32,207)
Reimbursement of other operating expenses by Adviser (47,048)
Total waivers and reimbursements (79,255)
Net expenses 25,765
Net investment income 890,940
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 38,995
Net change in unrealized appreciation of investments 823,181
Net realized and unrealized gain on investments 862,176
Change in net assets resulting from operations $ 1,753,116
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BOND INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1996 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 890,940 $ 1,141,277
Net realized gain on investments 38,995 228,503
Net change in unrealized appreciation (depreciation) 823,181 (715,007)
Change in net assets resulting from operations 1,753,116 654,773
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Additions 17,973,137 18,879,856
Reductions (14,207,819) (13,216,042)
Net increase from transactions in investors' beneficial interest 3,765,318 5,663,814
Total increase in Net Assets 5,518,434 6,318,587
NET ASSETS:
Beginning of period 22,599,442 16,280,855
End of period $28,117,876 $22,599,442
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INVESTMENT PORTFOLIOS
BOND INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996 (UNAUDITED)
1. ORGANIZATION
Federated Investment Portfolios (the "Portfolio Series") was organized as a
Massachusetts business trust under a Declaration of Trust dated September
29, 1995. The Portfolio Series is currently comprised of one portfolio, 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, as amended (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.
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 St. James Portfolios, having a market value of $16,913,859, in
exchange for shares of beneficial interest in the Portfolio. These assets
acquired 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 Selected Financial Data presented herein include
the operations and Selected Financial Data of the Predecessor Portfolio for
the periods prior to January 2, 1996.
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 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.
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 investors are recorded on the ex-dividend date.
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles.
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 custodian 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.
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.
OTHER -- Investment transactions are accounted for on the trade date.
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Research Corp., the Portfolio's
investment adviser (the "Adviser"), is entitled to receive for its services
an annual investment advisory fee equal to 0.25% 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 0.12% of the Portfolio's average
daily net assets. For the six months ended November 30, 1996, the Adviser
and U.S. Trust have voluntarily agreed to waive all of their fees.
ADMINISTRATIVE FEE -- Federated Administrative Services, Inc. ("FAS")
provides the Portfolio with administrative personnel and services. The FAS
fee is based upon 0.05% on the first $1 billion of average aggregate daily
net assets of the Portfolio, subject to an annual minimum fee of $60,000.
PORTFOLIO ACCOUNTING FEE -- 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.
CUSTODIAN -- Effective June 5, 1996, State Street Bank & Trust Company
became the custodian of the Portfolio's assets for which it receives a fee.
Prior to June 5, 1996, Investors Bank & Trust Company ("IBT") served as
custodian of the Portfolio's assets pursuant to a Custody Agreement between
IBT and the Portfolio.
GENERAL -- Certain of the Officers and Trustees of the Portfolio Series are
Officers and Directors or Trustees of the above companies.
4. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term investments, for
the six months ended November 30, 1996 were as follows:
COST OF PURCHASES $ 14,463,718
PROCEEDS FROM SALES $ 9,951,920
5. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1996 1996 1995(a)
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20%* 0.09% 0.00%*
Net investment income 6.99%* 7.00% 7.45%*
Expense waiver/reimbursement(b) 0.62%* 0.89% 0.69%*
SUPPLEMENTAL DATA
Portfolio turnover 40% 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.
TRUSTEES
John F. Donahue
J. Christopher Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
J. Christopher Donahue
President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Victor R. Siclari
Assistant Secretary
