- --------------------------------------------------------------------------------
FEDERATED
- --------------------------------------------------------------------------------
STOCK AND
- --------------------------------------------------------------------------------
BOND
- --------------------------------------------------------------------------------
FUND, INC.
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1996
(LOGO) FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
(LOGO)
Cusip 313911109 RECYCLED
8080105 (6/96) PAPER
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Federated
Stock and Bond Fund, Inc., which covers the six-month period from November 1,
1995 through April 30, 1996. The report begins with a discussion by the fund's
portfolio manager, followed by a complete listing of the fund's holdings and its
financial statements.
The fund is managed to help your money grow and earn income over the long term
through a diversified portfolio of high-quality common stocks and bonds. Over
the six-month period ended April 30, 1996, the fund achieved a total return of
7.22%*. Contributing to the total return were distributions of $0.33 per share
in income dividends and $1.28 per share in capital gains. Total net assets
reached $137 million on April 30, 1996.
Thank you for participating in the opportunities of two key financial markets
through Federated Stock and Bond Fund, Inc. As always, we'll continue to provide
you with the highest level of professional service. We invite your questions or
comments.
Sincerely,
LOGO
John F. Donahue
President
June 15, 1996
* Performance quoted represents past performance and is not indicative 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.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
EQUITY
The United States stock market has shown surprising strength in the six months
ended April 30, 1996, with the Standard & Poor's Daily Stock Price Index of 500
Common Stocks (the "S&P 500") rising 13.75%.* Despite a firming of the economy
in the past few months, we continue to expect only modest growth in the economy
and corporate profits over the remainder of 1996. While the second quarter may
reflect real gross domestic product growth of 3.0% or more, several factors
argue for slower growth in the latter half of 1996. Growth in corporate profits
may be 5% or less (annual rate) over the next few quarters. After rising sharply
over the past three months, interest rates appear to be in a trading range of
6.70%-7.00% on the 30-year U.S. Treasury bond. In this environment, the market
does not look particularly cheap, selling at about 17 times estimated 1996
earnings. We must be more selective in identifying companies which have superior
managements dedicated to enhancing shareholder value, and taking strategic
action to achieve this goal. We also have a sharper focus on selling stocks
which have only average prospects and valuation. We have attempted to avoid
stocks selling at price/earnings ratios significantly above their sustainable
growth rates, and pay close attention to the quantitative disciplines that have
served us well over time.
First quarter equity purchases reflect a move to be somewhat more diversified in
the current market environment with modest increases in Energy, Healthcare, and
Utilities. The present equity portion of the portfolio has a balance between
cyclicals and more stable growth, but continues to be more capital
goods-oriented than consumer-oriented as shown below:
Overweights (vs. S&P 500)--Finance, Producer Manufacturing, Technology
Underweights (vs. S&P 500)--Consumer Durables, Consumer Non-Durables, Retail,
Services, Utilities
Major themes in the current equity portfolio are:
(1) Corporate restructuring--companies taking specific action via sales,
spinoffs and/or acquisitions. Examples: AT&T, Westinghouse, CIGNA.
(2) Industry consolidation--beneficiaries industry rationalization because of
excess capacity or the opportunity for economies of scale. Examples:
Chemical Banking, Travelers, Lockheed Martin.
(3) Industry leaders--companies which have a competitive edge because of low
cost and/or superior management. Examples: Mattel, IBP, Nordstrom.
(4) Dominant companies--large dominant leaders. Examples: Citicorp, General
Electric, Philip Morris.
(5) Technology revolution--companies best positioned to participate in the huge
secular growth in information technology and telecommunications. Examples:
IBM, Hewlett Packard, Intel.
* STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS (THE "S&P 500")
is an unmanaged composite index of common stocks in industry, transportation,
and financial and public utility companies.
BOND
The bond portion of the Fund is invested entirely in investment grade fixed
income securities. Among the Fund's primary investments are U.S. Treasuries,
government agency and mortgage-backed securities, and investment grade corporate
bonds.
The six-month period ending April 30, 1996 was generally a negative period for
high quality fixed income securities in that interest rates ended the period at
higher levels. The six-month economic activity, however, was far from consistent
in terms of economic releases or its resulting effect on interest rate
movements.
The first half of the period saw significantly lower interest rates in response
to an apparent slowdown in economic activity at the end of 1995 into the early
part of 1996. During the latter half of the period (early in calender year
1996), most economic releases brought surprises to the upside along with the
potential for heightened inflation. As such, interest rates rose strongly from
February through April 1996, the end of the semi-annual period.
Generally speaking, "spread" product (high quality corporate and mortgage
securities) performed well relative to pure Treasuries over the past six months.
Thus, the increased allocation to "spread" product in the prior fiscal year
served to enhance returns from the fixed income portion of the Fund.
Relative to duration, the Fund has maintained a somewhat defensive position
short of the Lehman Brothers Government/Corporate Index.* The bond duration has
been targeted between 4.0 and 4.5 years over the past six months.
With the current economic expansion now into its sixth consecutive year, the
Fund is keeping an eye toward a general upgrading of the bond portfolio (i.e.,
more government and high quality corporate securities and less medium quality
corporate bonds). In this way, we believe that the bond portion would be
cushioned from an expected "spread widening" should economic releases start to
weaken.
* LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX is comprised of approximately 5,000
issues which include nonconvertible bonds publicly issued by the U.S.
government or its agencies; corporate bonds guaranteed by the U.S. government
and quasi-federal corporations; and publicly issued, fixed rate,
non-convertible domestic bonds of companies in industry, public utilities, and
finance.
FEDERATED STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--44.6%
- -----------------------------------------------------------------------------------
BASIC INDUSTRY--4.4%
----------------------------------------------------------------
61,300 Allegheny Ludlum Corp. $ 1,210,675
----------------------------------------------------------------
10,200 Aluminum Co. of America 636,225
----------------------------------------------------------------
32,500 Barrick Gold Corp. 995,312
----------------------------------------------------------------
19,000 Du Pont (E.I.) de Nemours & Co. 1,527,125
----------------------------------------------------------------
7,000 Eastman Chemical Co. 470,750
----------------------------------------------------------------
17,500 International Paper Co. 697,813
----------------------------------------------------------------
9,300 Newmont Mining Corp. 538,238
---------------------------------------------------------------- ------------
Total 6,076,138
---------------------------------------------------------------- ------------
CONSUMER DURABLES--1.2%
----------------------------------------------------------------
17,300 Ford Motor Co. 620,638
----------------------------------------------------------------
41,875 Mattel, Inc. 1,088,750
---------------------------------------------------------------- ------------
Total 1,709,388
---------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--4.1%
----------------------------------------------------------------
14,100 Avon Products, Inc. 1,253,137
----------------------------------------------------------------
9,100 CPC International, Inc. 629,037
----------------------------------------------------------------
52,500 IBP, Inc. 1,404,375
----------------------------------------------------------------
7,400 Kimberly-Clark Corp. 537,425
----------------------------------------------------------------
19,700 Philip Morris Cos., Inc. 1,775,463
---------------------------------------------------------------- ------------
Total 5,599,437
---------------------------------------------------------------- ------------
ENERGY MINERALS--4.1%
----------------------------------------------------------------
21,700 Chevron Corp. 1,258,600
----------------------------------------------------------------
12,100 Exxon Corp. 1,028,500
----------------------------------------------------------------
35,600 Occidental Petroleum Corp. 916,700
----------------------------------------------------------------
15,200 Texaco, Inc. 1,299,600
----------------------------------------------------------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
<C> <C> <S> <C>
- -----------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------
49,400 USX Corp. $ 1,086,800
---------------------------------------------------------------- ------------
Total 5,590,200
---------------------------------------------------------------- ------------
FINANCE--7.1%
----------------------------------------------------------------
14,800 Allstate Corp. 575,350
----------------------------------------------------------------
14,900 American Express Co. 722,650
----------------------------------------------------------------
13,600 CIGNA Corp. 1,541,900
----------------------------------------------------------------
15,000 Chase Manhattan Corp. 1,033,125
----------------------------------------------------------------
6,200 Chubb Corp. 586,675
----------------------------------------------------------------
17,700 Citicorp 1,393,875
----------------------------------------------------------------
18,714 Dean Witter, Discover & Co. 1,019,913
----------------------------------------------------------------
17,000 Mellon Bank Corp. 913,750
----------------------------------------------------------------
18,000 Providian Corp. 830,250
----------------------------------------------------------------
1,900 Travelers Group, Inc. 52,488
----------------------------------------------------------------
18,866 Travelers Group, Inc. 1,160,259
---------------------------------------------------------------- ------------
Total 9,830,235
---------------------------------------------------------------- ------------
HEALTH CARE--4.3%
----------------------------------------------------------------
15,000 Abbott Laboratories 609,375
----------------------------------------------------------------
8,500 American Home Products Corp. 896,750
----------------------------------------------------------------
11,400 Becton, Dickinson & Co. 919,125
----------------------------------------------------------------
18,800 Bristol-Myers Squibb Co. 1,546,300
----------------------------------------------------------------
11,500 Columbia/HCA Healthcare Corp. 610,938
----------------------------------------------------------------
9,900 Merck & Co., Inc. 598,950
----------------------------------------------------------------
12,800 Smithkline Beecham Corp., ADR 691,200
---------------------------------------------------------------- ------------
Total 5,872,638
---------------------------------------------------------------- ------------
PRODUCER MANUFACTURING--3.5%
----------------------------------------------------------------
10,800 (a) FMC Corp. 749,250
----------------------------------------------------------------
10,600 General Electric Co. 821,500
----------------------------------------------------------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
<C> <C> <S> <C>
- -----------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
----------------------------------------------------------------
15,800 Loews Corp. $ 1,204,750
----------------------------------------------------------------
18,000 Philips Electronics N.V., ADR 645,750
----------------------------------------------------------------
15,900 Textron, Inc. 1,363,425
---------------------------------------------------------------- ------------
Total 4,784,675
---------------------------------------------------------------- ------------
RETAIL TRADE--1.6%
----------------------------------------------------------------
14,700 Nordstrom, Inc. 747,863
----------------------------------------------------------------
29,900 Sears, Roebuck & Co. 1,491,263
---------------------------------------------------------------- ------------
Total 2,239,126
---------------------------------------------------------------- ------------
SERVICES--1.8%
----------------------------------------------------------------
26,600 Baker Hughes, Inc. 844,550
----------------------------------------------------------------
13,000 Gannett Co., Inc. 888,875
----------------------------------------------------------------
13,000 (a) Western Atlas, Inc. 780,000
---------------------------------------------------------------- ------------
Total 2,513,425
---------------------------------------------------------------- ------------
TECHNOLOGY--7.2%
----------------------------------------------------------------
11,300 (a) DST Systems, Inc. 415,275
----------------------------------------------------------------
15,100 (a) Digital Equipment Corp. 902,225
----------------------------------------------------------------
22,900 General Motors Corp., Class E 1,290,988
----------------------------------------------------------------
7,500 Hewlett-Packard Co. 794,063
----------------------------------------------------------------
18,500 Intel Corp. 1,253,375
----------------------------------------------------------------
8,300 International Business Machines Corp. 892,250
----------------------------------------------------------------
15,100 (a) Litton Industries, Inc. 685,163
----------------------------------------------------------------
15,200 Lockheed Martin Corp. 1,225,500
----------------------------------------------------------------
14,800 Raytheon Co. 749,250
----------------------------------------------------------------
16,000 Rockwell International Corp. 936,000
----------------------------------------------------------------
13,300 (a) Seagate Technology, Inc. 771,400
---------------------------------------------------------------- ------------
Total 9,915,489
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
<C> <C> <S> <C>
- -----------------------------------------------------------------------------------
TRANSPORTATION--0.7%
----------------------------------------------------------------
1,900 Consolidated Rail Corp. $ 132,525
----------------------------------------------------------------
10,000 (a) Southern Pacific Railway Co. 250,000
----------------------------------------------------------------
8,400 Union Pacific Corp. 572,250
---------------------------------------------------------------- ------------
Total 954,775
---------------------------------------------------------------- ------------
UTILITIES--4.6%
----------------------------------------------------------------
25,500 AT&T Corp. 1,561,875
----------------------------------------------------------------
23,800 CMS Energy Corp. 693,175
----------------------------------------------------------------
15,900 (a) Columbia Gas System, Inc. 773,137
----------------------------------------------------------------
25,000 Enron Corp. 1,006,250
----------------------------------------------------------------
14,800 FPL Group, Inc. 638,250
----------------------------------------------------------------
36,000 MCI Communications Corp. 1,059,750
----------------------------------------------------------------
25,300 TECO Energy, Inc. 588,225
---------------------------------------------------------------- ------------
Total 6,320,662
---------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $45,522,649) 61,406,188
---------------------------------------------------------------- ------------
PREFERRED STOCKS--3.5%
- -----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--0.9%
----------------------------------------------------------------
203,800 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 1,222,800
---------------------------------------------------------------- ------------
FINANCE--1.5%
----------------------------------------------------------------
25,900 Merrill Lynch & Co., Inc., STRYPES, Series MGIC, $3.12 1,350,038
----------------------------------------------------------------
9,700 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 705,675
---------------------------------------------------------------- ------------
Total 2,055,713
---------------------------------------------------------------- ------------
PRODUCER MANUFACTURING--1.1%
----------------------------------------------------------------
81,500 Westinghouse Electric Corp., PEPS, Series C, $1.30 1,487,375
---------------------------------------------------------------- ------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $4,504,381) 4,765,888
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--14.8%
- -----------------------------------------------------------------------------------
BANKING--0.7%
----------------------------------------------------------------
$ 1,000,000 Bayerische Landesbank- NY, Note, 6.20%, 2/9/2006 $ 930,430
---------------------------------------------------------------- ------------
CONSUMER DURABLES--1.6%
----------------------------------------------------------------
1,000,000 Chrysler Auburn Hills, Deb., 12.00%, 5/1/2020 1,444,640
----------------------------------------------------------------
750,000 Smurfit Capital, Note, 6.75%, 11/20/2005 713,475
---------------------------------------------------------------- ------------
Total 2,158,115
---------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--0.9%
----------------------------------------------------------------
1,281,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 1,219,781
---------------------------------------------------------------- ------------
EDUCATION--0.8%
----------------------------------------------------------------
1,000,000 Harvard University, Revenue Bonds, 8.125%, 4/15/2007 1,078,220
---------------------------------------------------------------- ------------
FINANCE--5.0%
----------------------------------------------------------------
1,250,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 1,361,287
----------------------------------------------------------------
1,250,000 CNA Financial Corp., Deb., 7.25%, 11/15/2023 1,137,650
----------------------------------------------------------------
1,000,000 Legg Mason, Inc., Note, 6.50%, 2/15/2006 930,820
----------------------------------------------------------------
1,000,000 Norwest Financial, Inc., Note, 6.23%, 9/1/1998 996,440
----------------------------------------------------------------
1,375,000 Salomon, Inc., Sr. Note, 7.02%, 9/25/1998 1,380,101
----------------------------------------------------------------
1,000,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 1,033,540
---------------------------------------------------------------- ------------
Total 6,839,838
---------------------------------------------------------------- ------------
HEALTH CARE--0.8%
----------------------------------------------------------------
1,000,000 Columbia/HCA Healthcare Corp., Note, 9.00%, 12/15/2014 1,125,330
---------------------------------------------------------------- ------------
MINING--0.8%
----------------------------------------------------------------
1,000,000 Joy Technologies, Inc., Sr. Note, 10.25%, 9/1/2003 1,107,980
---------------------------------------------------------------- ------------
PRODUCER MANUFACTURING--0.7%
----------------------------------------------------------------
1,000,000 General Electric Co., Deb., 7.875%, 5/1/1996 1,000,380
---------------------------------------------------------------- ------------
RETAIL TRADE--0.8%
----------------------------------------------------------------
1,000,000 Penney (J.C.) Co., Inc., Deb., 9.45%, 7/15/2002 1,087,100
---------------------------------------------------------------- ------------
SERVICES--0.9%
----------------------------------------------------------------
1,300,000 (b) Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 1,300,000
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
CORPORATE BONDS--CONTINUED
<C> <C> <S> <C>
- -----------------------------------------------------------------------------------
SOVEREIGN GOVERNMENT--0.4%
----------------------------------------------------------------
$ 500,000 Kingdom of Sweden, Deb., 10.25%, 11/1/2015 $ 623,910
---------------------------------------------------------------- ------------
TECHNOLOGY--0.6%
----------------------------------------------------------------
335,000 Analog Devices, Inc., Conv. Bond, 3.50%, 12/1/2000 382,010
----------------------------------------------------------------
400,000 Solectron Corp., Conv. Bond, 6.00%, 3/1/2006 395,500
---------------------------------------------------------------- ------------
Total 777,510
---------------------------------------------------------------- ------------
UTILITIES--0.8%
----------------------------------------------------------------
1,000,000 Michigan Bell Telephone Co., Deb., 7.85%, 1/15/2022 1,042,810
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $20,104,944) 20,291,404
---------------------------------------------------------------- ------------
COLLATERALIZED MORTGAGE OBLIGATIONS--0.7%
- -----------------------------------------------------------------------------------
1,000,000 Prudential Home Mortgage Security 1993-32, Series 1992-32, Class
A-6, 7.50%, 10/25/2022 980,120
---------------------------------------------------------------- ------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $957,500) 980,120
---------------------------------------------------------------- ------------
GOVERNMENT OBLIGATIONS--18.1%
- -----------------------------------------------------------------------------------
GOVERNMENT AGENCIES SECURITIES--1.0%
----------------------------------------------------------------
500,000 Federal Home Loan Bank, Deb., 4.35%, 1/15/1998 489,685
----------------------------------------------------------------
1,000,000 Federal National Mortgage Association, 0/8.62%, 3/9/2022 878,570
---------------------------------------------------------------- ------------
Total 1,368,255
---------------------------------------------------------------- ------------
MORTGAGE-BACKED SECURITIES--4.1%
----------------------------------------------------------------
373,221 Federal Home Loan Mortgage Corp., 8.50%, 8/1/1996 375,665
----------------------------------------------------------------
153,019 Federal Home Loan Mortgage Corp., 8.50%, 5/1/1996 154,021
----------------------------------------------------------------
103,799 Federal Home Loan Mortgage Corp., 8.50%, 5/1/1996 104,478
----------------------------------------------------------------
129,636 Federal Home Loan Mortgage Corp., 8.50%, 6/1/1996 130,485
----------------------------------------------------------------
99,544 Federal Home Loan Mortgage Corp., 8.50%, 5/1/1996 100,196
----------------------------------------------------------------
12,720 Federal Home Loan Mortgage Corp., 8.50%, 6/1/1996 12,803
----------------------------------------------------------------
229,317 Federal Home Loan Mortgage Corp., 8.50%, 7/1/1996 230,819
----------------------------------------------------------------
53,183 Federal Home Loan Mortgage Corp., 8.50%, 7/1/1996 53,532
----------------------------------------------------------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
GOVERNMENT OBLIGATIONS--CONTINUED
<C> <C> <S> <C>
- -----------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
----------------------------------------------------------------
$ 5,518 Federal Home Loan Mortgage Corp., 8.50%, 5/1/1997 $ 5,554
----------------------------------------------------------------
93,936 Federal Home Loan Mortgage Corp., 8.50%, 5/1/1996 94,551
----------------------------------------------------------------
583,607 Federal National Mortgage Association, 9.00%, 11/1/2021 609,864
----------------------------------------------------------------
837,194 Federal National Mortgage Association, 7.00%, 11/1/2007 807,356
----------------------------------------------------------------
35,402 Federal National Mortgage Association, 7.50%, 9/1/2023 34,982
----------------------------------------------------------------
366,635 Government National Mortgage Association, 9.50%, 12/15/2020 392,867
----------------------------------------------------------------
837,660 Government National Mortgage Association, 8.00%, 9/15/2024 848,901
----------------------------------------------------------------
980,309 Government National Mortgage Association, 6.50%, 5/15/2024 917,795
----------------------------------------------------------------
702,257 Government National Mortgage Association, 9.50%, 2/15/2025 752,503
---------------------------------------------------------------- ------------
Total 5,626,372
---------------------------------------------------------------- ------------
TREASURY SECURITIES--13.0%
----------------------------------------------------------------
4,000,000 United States Treasury Bond, 11.625%, 11/15/2004 5,271,440
----------------------------------------------------------------
3,540,000 United States Treasury Bond, 7.25%, 5/15/2016 3,610,340
----------------------------------------------------------------
6,460,000 United States Treasury Bond, 8.875%, 2/15/2019 7,752,323
----------------------------------------------------------------
1,070,000 United States Treasury Bond, 9.375%, 2/15/2006 1,274,412
---------------------------------------------------------------- ------------
Total 17,908,515
---------------------------------------------------------------- ------------
TOTAL GOVERNMENT OBLIGATIONS (IDENTIFIED COST $23,193,152) 24,903,142
---------------------------------------------------------------- ------------
SHORT-TERM MUNICIPALS--0.7%
- -----------------------------------------------------------------------------------
1,000,000 Kansas City, MO Redevelopment Authority, 7.65% Bonds (FSA LOC),
11/1/2018 (at amortized cost) 960,720
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
(C) REPURCHASE AGREEMENTS--16.6%
- -----------------------------------------------------------------------------------
$22,885,000 BT Securities Corporation, 5.35%, dated 4/30/1996, due 5/1/1996
(AT AMORTIZED COST) $22,885,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $118,128,346)(D) $136,192,462
---------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At the end of the period, these securities amounted
to $1,300,000 which represents 0.9% of net assets.
(c) 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.
(d) The cost of investments for federal tax purposes amounts to $118,128,346.
The net unrealized appreciation of investments on a federal tax basis
amounts to $18,064,116 which is comprised of $18,826,496 appreciation and
$762,380 depreciation at April 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($137,597,593) at April 30, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
ADR -- American Depository Receipt
FSA -- Financial Security Assurance
LOC -- Letter of Credit
PEPS -- Participating Equity Preferred Stock
STRYPES -- Structured Yield Product Exchangeable for Stock
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $ 22,885,000
- -----------------------------------------------------------------
Investments in securities 113,307,462
- ----------------------------------------------------------------- ------------
Total investments in securities, at value
(identified and tax cost $118,128,346) $136,192,462
- --------------------------------------------------------------------------------
Income receivable 1,083,175
- --------------------------------------------------------------------------------
Receivable for investments sold 1,302,336
- --------------------------------------------------------------------------------
Receivable for shares sold 62,471
- --------------------------------------------------------------------------------
Deferred expenses 7,392
- -------------------------------------------------------------------------------- ------------
Total assets 138,647,836
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $ 957,641
- -----------------------------------------------------------------
Payable for shares redeemed 1,200
- -----------------------------------------------------------------
Payable to Bank 53,739
- -----------------------------------------------------------------
Accrued expenses 37,663
- ----------------------------------------------------------------- ------------
Total liabilities 1,050,243
- -------------------------------------------------------------------------------- ------------
Net Assets for 7,628,183 shares outstanding $137,597,593
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $111,174,732
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 18,064,117
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 5,736,720
- --------------------------------------------------------------------------------
Undistributed net investment income 2,622,024
- -------------------------------------------------------------------------------- ------------
Total Net Assets $137,597,593
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------
$137,597,593 / 7,628,183 shares outstanding $18.04
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Investment Income:
- ---------------------------------------------------------------------------------------------
Dividends $ 882,730
- ---------------------------------------------------------------------------------------------
Interest 2,325,228
- --------------------------------------------------------------------------------------------- ----------
Total income 3,207,958
- ---------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------
Investment advisory fee $ 518,434
- --------------------------------------------------------------------------------
Administrative personnel and services fee 62,158
- --------------------------------------------------------------------------------
Custodian fees 14,033
- --------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 49,524
- --------------------------------------------------------------------------------
Directors'/Trustees' fees 4,914
- --------------------------------------------------------------------------------
Auditing fees 8,128
- --------------------------------------------------------------------------------
Legal fees 6,491
- --------------------------------------------------------------------------------
Portfolio accounting fees 26,210
- --------------------------------------------------------------------------------
Shareholder services fee 171,685
- --------------------------------------------------------------------------------
Share registration costs 18,462
- --------------------------------------------------------------------------------
Printing and postage 20,930
- --------------------------------------------------------------------------------
Insurance premiums 2,002
- --------------------------------------------------------------------------------
Taxes 11,286
- --------------------------------------------------------------------------------
Miscellaneous 2,548
- -------------------------------------------------------------------------------- ---------
Total expenses 916,805
- --------------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------------------
Waiver of investment advisory fee $(82,828)
- ---------------------------------------------------------------------
Waiver of shareholder services fee (96,143)
- --------------------------------------------------------------------- --------
Total waivers (178,971)
- -------------------------------------------------------------------------------- ---------
Net expenses 737,834
- --------------------------------------------------------------------------------------------- ----------
Net investment income 2,470,124
- --------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------
Net realized gain on investments 5,663,685
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,461,411
- --------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 7,125,096
- --------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $9,595,220
- --------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 2,470,124 $ 4,746,653
- -----------------------------------------------------------
Net realized gain (loss) on investments ($5,663,685 and
$9,527,257 net gains, respectively, as computed for
federal tax purposes) 5,663,685 9,527,257
- -----------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,461,411 7,067,004
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 9,595,220 21,340,914
- ----------------------------------------------------------- --------------- ---------------
NET EQUALIZATION CREDITS (DEBITS)-- 61,865 (98,118)
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Distributions from net investment income (2,443,968) (4,670,579)
- -----------------------------------------------------------
Distributions from net realized gains (9,454,029) (700,551)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to
shareholders (11,897,997) (5,371,130)
- ----------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS (EXCLUSIVE OF AMOUNTS ALLOCATED TO NET
INVESTMENT INCOME)--
- -----------------------------------------------------------
Proceeds from sale of shares 17,303,430 28,842,050
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 9,401,832 3,810,223
- -----------------------------------------------------------
Cost of shares redeemed (21,535,553) (39,237,007)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 5,169,709 (6,584,734)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets 2,928,797 9,286,932
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 134,668,796 125,381,864
- ----------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment
income
of $2,622,024 and $2,534,003, respectively) $ 137,597,593 $ 134,668,796
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED OCTOBER 31, YEAR ENDED DECEMBER 31,
APRIL 30, ------------------------------------------------------------- --------------------------------------
1996 1995 1994 1993 1992 1991 1990(A) 1989 1988 1987 1986
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD $ 18.38 $16.25 $16.87 $15.91 $15.74 $13.60 $15.11 $14.94 $14.89 $15.34 $15.24
- -------
INCOME
FROM
INVESTMENT
OPERATIONS
- -------
Net
investment
income 0.33 0.63 0.51 0.55 0.65 0.74 1.37 0.91 0.85 0.81 0.85
- -------
Net
realized
and
unrealized
gain
(loss) on
investments 0.94 2.21 (0.59) 1.58 0.39 2.17 (2.22) 0.91 0.52 (0.24) 1.17
- ------- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
from
investment
operations 1.27 2.84 (0.08) 2.13 1.04 2.91 (0.85) 1.82 1.37 0.57 2.02
- ------- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
LESS
DISTRIBUTIONS
- -------
Distributions
from net
investment
income (0.33) (0.62) (0.54) (0.56) (0.68) (0.77) (0.66) (0.94) (0.86) (0.79) (0.86)
- -------
Distributions
from net
realized
gain on
investment
transactions (1.28) (0.09) -- (0.61) (0.19) -- -- (0.71) (0.46) (0.23) (1.06)
- ------- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
distributions (1.61) (0.71) (0.54) (1.17) (0.87) (0.77) (0.66) (1.65) (1.32) (1.02) (1.92)
- ------- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET
ASSET
VALUE,
END OF
PERIOD $ 18.04 $18.38 $16.25 $16.87 $15.91 $15.74 $13.60 $15.11 $14.94 $14.89 $15.34
- ------- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL
RETURN
(B) 7.22% 17.99% (0.48%) 14.10% 7.94% 21.78% (5.90%) 12.46% 9.28% 3.58% 13.77%
- -------
RATIOS
TO
AVERAGE
NET
ASSETS
- -------
Expenses 1.07%* 1.07% 1.06% 1.04% 1.04% 1.01% 1.01%* 1.01% 1.00% 1.00% 1.00%
- -------
Net
investment
income 3.60%* 3.71% 3.23% 3.49% 4.15% 4.91% 5.77%* 5.82% 5.53% 5.07% 5.43%
- -------
Expense
waiver/
reimbursement
(c) 0.26%* 0.31% 0.07% 0.20% 0.21% 0.45% 0.54%* 0.51% 0.39% 0.22% 0.30%
- -------
SUPPLEMENTAL
DATA
- -------
Net
assets,
end of
period
(000
omitted) $137,598 $134,669 $125,382 $124,583 $95,387 $88,534 $79,003 $88,367 $90,504 $92,105 $75,441
- -------
Average
commission
rate
paid 0.18% -- -- -- -- -- -- -- -- -- --
- -------
Portfolio
turnover 26% 68% 45% 51% 43% 72% 49% 26% 131% 110% 40%
- -------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the ten month period ended October 31,1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) 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 STOCK AND BOND FUND, INC.
(FORMERLY, STOCK AND BOND FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Stock and Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The investment objectives of the Fund
are to provide relative safety of capital with the possibility of long-term
growth of capital and income.
The Board of Directors approved a change in the name of the Fund as follows:
<TABLE>
<CAPTION>
EFFECTIVE DATE NEW NAME
------------------------- -------------------------------------------------
<S> <C>
March 31, 1996 Federated Stock and Bond Fund, Inc.
</TABLE>
(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.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
the repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
EQUALIZATION--The Fund follows the accounting practice known as
equalization. With equalization, a portion of the proceeds from sales and
costs of redemptions of fund shares (equivalent, on a per share basis, to
the amount of undistributed net investment income on the date of the
transaction) is credited or charged to undistributed net investment income.
As a result, undistributed net investment income per share is unaffected by
sales or redemptions of fund shares.
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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. Many restricted securities may
be resold in the secondary market in transactions exempt from registration.
In some cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the Board of
Trustees. The Fund will not incur any registration costs upon such resales.
Restricted securities are valued at amortized cost in accordance with Rule
2a-7 under the Investment Company Act of 1940.
Additional information on each restricted security held at April 30, 1996,
is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
------------------------------ ---------------- ----------------
<S> <C> <C>
Loewen Group Int'l, Sr, Note 3/20/96 $1,300,000
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles 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 the trade date.
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
(3) CAPITAL STOCK
At April 30, 1996, there were 2,000,000,000 shares of $ 0.001 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
----------------- -----------------
SHARES SHARES
----------------- -----------------
<S> <C> <C>
- ---------------------------------------------------
Shares sold 973,035 1,746,255
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 543,632 233,136
- ---------------------------------------------------
Shares redeemed (1,216,390) (2,369,562)
- --------------------------------------------------- --------------- ---------------
Net change resulting from share transactions 300,277 (390,171)
- --------------------------------------------------- --------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to (a) a maximum of 0.55% of the average daily net assets of the Fund, and
(b) 4.50% of the gross income of the Fund, excluding capital gains or losses.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company, serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
FEDERATED STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Directors of the Fund are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $30,497,393
- ------------------------------------------------------------------------------ -----------
SALES $35,074,475
- ------------------------------------------------------------------------------ -----------
</TABLE>
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley President
John T. Conroy, Jr. J. Christopher Donahue
William J. Copeland Executive Vice President
James E. Dowd Edward C. Gonzales
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Peter E. Madden Executive Vice President,
Gregor F. Meyer Treasurer and Secretary
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts Douglas L. Hein
Assistant Treasurer
J. Crilley Kelly
Assistant Secretary
</TABLE>
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 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.
