[Graphic]
Federated Investors
Federated Stock and Bond Fund, Inc.
SEMI-ANNUAL REPORT
APRIL 30, 1997
FUND INCEPTION 1968
PRESIDENT'S MESSAGE
[Graphic]
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders of Federated
Stock and Bond Fund, Inc. The report covers the six-month period from November
1, 1996, through April 30, 1997. First, you'll find a discussion with portfolio
managers Peter R. Anderson, Senior Vice President, and Joseph Balestrino, Vice
President, Federated Management. Following their discussions detailing both the
stock and bond markets and the fund's strategies, are a series of performance
charts, a complete listing of the fund's holdings, and the financial statements.
Federated Stock and Bond Fund, Inc. is managed to help you participate in two
fundamental financial markets. This diversification between stocks and bonds may
help provide a degree of protection of your capital in uncertain economic times
as you pursue growth of capital and income. The fund's balanced portfolio of
more than 230 stocks and bonds reflects an emphasis on diversification and
quality. At the end of the reporting period, approximately 61% of the fund's
assets were in stocks and 37% in bonds.
During the reporting period, the fund's stock holdings helped the portfolio
weather a volatile bond market. Good income distributions and capital gains
helped the fund produce a total return, based on net asset value, of more than
8.00% across all share classes.*
TOTAL CAPITAL
RETURN INCOME GAINS NAV CHANGE
Class A Shares 8.53% $0.28 $1.91 $18.96 TO $18.31= -3%
Class B Shares 8.18% $0.23 $1.91 $18.96 TO $18.30= -3%
Class C Shares 8.12% $0.23 $1.91 $18.96 TO $18.29= -3%
Thank you for participating in the growth and income potential of Federated
Stock and Bond Fund, Inc. Remember, if you are not already doing so, it is easy
to increase your participation in the performance potential of this diversified
stock and bond portfolio by reinvesting your distributions automatically in
additional fund shares.
As always, we welcome your comments, questions and suggestions.
Sincerely,
[Graphic]
John F. Donahue
President
June 15, 1997
* Performance quoted reflects 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. The total returns for the fund's Class A, B, and C Shares based
on offering price were 2.58%, 2.21%, and 7.06%, respectively.
Investment Review
[Graphic]
Peter R. Anderson
Senior Vice President
Federated Management
[Graphic]
Joseph Balestrino
Vice President
Federated Management
[Graphic]
WHAT ARE YOUR COMMENTS ON THE SURGING YET VOLATILE STOCK MARKET AND THE BOND
MARKET'S WEAKNESS DURING THE REPORTING PERIOD?
The stock market, as measured by The Standard & Poor's Index of 500 Common
Stocks, (the "S&P 500"),* turned in a strong 14.71% total return performance
over the six-month reporting period. Major stock indices continued to reach
all-time highs in the fourth quarter of 1996 as economic conditions -- moderate
growth, stable interest rates, subdued inflation, and rising corporate profits
- -- were favorable for equities.
However, the end of the reporting period was marked by a degree of volatility
that investors have not seen in over five years. Since reaching its record of
816.29 in mid-February, the S&P 500 fell 7.25% through March 31, 1997. While the
S&P's total return in March was -4.11%, the market recovered in April, producing
a one-month total return of 5.97%. Concerns about valuation and possible
earnings disappointments have caused the market to become much more selective,
placing a premium on good "stock picking."
For the bond market, the total return measured by the Lehman Brothers
Government/Corporate Index over the six-month reporting period was a relatively
weak 1.30%.** The reporting period saw the environment for high-quality
fixed-income securities turn from generally positive to negative. The fourth
quarter of 1996 was generally positive, particularly in November, as interest
rates fell significantly across the yield curve in response to slower economic
activity. In particular, housing, consumer debt formation, and auto sales all
pointed toward a business cycle that appeared to be showing signs of aging. In
addition, the national election provided no surprises. The bond market reacted
to this political status quo in a very positive manner.
* The S&P 500 is an unmanaged index of common stocks in industry,
transportation, and financial and public utility companies. Investments
cannot be made in an index.
** Lehman Brothers Government/Corporate is an unmanaged index comprised of
approximately 5,000 issues which include non-convertible 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. This index is unmanaged and investments cannot be
made in an index.
However, the first quarter of 1997 proved to be a very negative environment for
high-quality fixed-income securities. December 1996 set the stage as interest
rates reversed course and rose, partly reflecting profit-taking as well as a
re-emergence of housing growth. Throughout the first quarter of 1997 and the end
of the reporting period, the overall economy exhibited strength that surpassed
even the most aggressive of forecasts. Particularly surprising was the
resurgence of consumer spending activity that quickly translated into stronger
housing statistics. As a result, interest rates rose across the entire maturity
spectrum, creating absolute negative total returns for many high-quality
fixed-income portfolios.
[Graphic]
HOW DID THE FUND PERFORM FOR ITS SHAREHOLDERS DURING THE SIX-MONTH REPORTING
PERIOD FROM NOVEMBER 1, 1996, THROUGH APRIL 30, 1997?
For the six-month reporting period, the fund's Class A, B, and C Shares produced
a total return of 8.53%, 8.18%, and 8.12%, respectively, based on net asset
value.*
Since its inception in 1968, the fund has continued to show solid, long-term
results. For example, annualized total returns, based on net asset value, for
Class A Shares for the five-year, ten-year, and since inception (12/31/68)
periods ended April 30, 1997, were 11.32%, 9.53%, and 8.71%, respectively.**
[Graphic]
DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE FUND'S STOCK AND BOND HOLDINGS
DURING THE REPORTING PERIOD?
In the current environment, our emphasis on valuation and quality in our stock
selection process has served our shareholders well. Leadership among market
sectors has been shifting with TECHNOLOGY, a former leader, under considerable
pressure since late January. We reduced exposure to the Technology sector last
year, based on our valuation screens, and should continue to be underweighted.
Strong revenue growth for many technology companies appears to be slowing a bit.
However, we still like this sector long-term and will be looking for
opportunities to add some quality names. FINANCE is another sector with a
favorable long-term outlook. We have been market weighted in this sector
emphasizing unique, well-managed companies that we believe will be winners via
restructuring and industry consolidation. During the first quarter of 1997, we
also increased exposure to the RETAIL and TRANSPORTATION sectors, based on
valuation and an improving fundamental outlook.
* 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. The total returns for the fund's Class A, B, and C Shares based
on offering price were 2.58%, 2.21%, and 7.06%, respectively.
** Annualized total returns for the fund's Class A Shares based on offering
price for the five-year, ten-year, and since inception (12/31/68) periods
ended April 30, 1997, were 10.07%, 8.91%, and 8.49%, respectively.
Recent stock additions include the following companies:
INGERSOLL-RAND CO. (1.3% of portfolio): This diversified manufacturer appears to
be integrating the Clark acquisition effectively. The company also has many
late-cycle businesses, such as pumps and valves that are used by the oil and
chemical industries to increase plant capacity. The valuation of Ingersoll is
attractive versus more cyclical machinery stocks.
BEVERLY ENTERPRISES, INC. (0.7% of portfolio): Beverly is one of the
largest, long-term health care facility operators. The stock appears
attractively valued based on the company's cost-cutting program and
favorable demographics.
K-MART CORP. (1.1% of portfolio): A classic turnaround possibility, K-Mart paid
down substantial amounts of debt in 1996, refocused on a high frequency store
concept to increase store visits, and successfully increased customer
satisfaction. While the firm still has a number of hurdles to clear, the
risk/reward tradeoff at these levels appears to be quite favorable.
PACCAR, INC. (0.6% of portfolio): PACCAR is the market leader in the manufacture
of Class 8 (big rig) trucks. The stock appears attractively valued, given an
apparent bottoming of orders in late 1996. In addition, PACCAR made a good
acquisition of a European truck manufacturer that will increase its presence
internationally.
TELE-COMMUNICATIONS, INC. (1.2% of portfolio): The stock of TCI, the largest
cable TV operator in the U.S., has been under severe pressure for three years as
growth has stalled. Strategy has now focused on boosting cash flow, and getting
out of non-core businesses.
Regarding bonds, the portfolio's duration was maintained within a narrow range,
with a target just slightly shy of a pure neutral position. No significant
duration changes are anticipated over the near term.
[Graphic]
WHAT WERE THE FUND'S TOP TEN HOLDINGS IN STOCKS AND BONDS AS OF APRIL 30, 1997,
AND HOW ARE THE FUND'S HOLDINGS DIVERSIFIED BY INDUSTRY AND QUALITY?
The top holdings and sector weightings were as follows:
STOCKS
PERCENTAGE
SECURITY NAME OF STOCK PORTFOLIO
Unilever N.V. 2.7%
PepsiCo, Inc. 2.5%
CIGNA Corp. 2.2%
Dayton-Hudson Corp. 2.2%
Marsh & McLennan Cos., Inc. 2.1%
Ingersoll-Rand Co. 2.1%
Tele-Communications, Inc., Class A 2.0%
MCI Communications Corp. 2.0%
Wal-Mart Stores, Inc. 2.0%
ITT Industries, Inc. 2.0%
Total percentage of stock portfolio 21.8%
SECTOR WEIGHTINGS
PERCENTAGE PERCENTAGE
ASSET CLASS OF PORTFOLIO OF S&P 500
Finance 15.5% 14.7%
Health Care 12.9% 11.1%
Consumer Non-Durables 12.1% 12.5%
Energy Minerals 11.6% 8.8%
Utilities 11.1% 9.5%
Technology 10.0% 15.0%
Retail Trade 7.1% 4.4%
Producer Manufacturing 6.8% 7.6%
Basic Industry 4.4% 5.9%
Consumer Durables 3.6% 3.5%
Services 2.6% 5.0%
Transportation 2.3% 1.4%
BONDS
PERCENTAGE
NAME, COUPON RATE, MATURITY DATE OF PORTFOLIO
Philip Morris, 6.00% due 07/15/01;
7.750% due 01/15/27 4.4%
CNA Financial Corp., 7.250% due 11/15/23 3.3%
Bank of Montreal, 7.80% due 04/01/07 2.8%
Trans Ocean Container, 12.250% due 07/01/04 2.7%
American General Corp., 9.625% due 02/01/18 2.5%
Loewen Group Int'l, 8.25% due 04/15/03 2.4%
Delphi Funding, 9.310% due 03/25/27 2.3%
Reliance Industries Ltd., 8.250% due 01/15/27 2.2%
Husky Oil Ltd., 7.125% due 11/15/06 2.2%
Conseco, Inc., 10.50% due 12/15/04 2.1%
Total percentage of bond portfolio 26.9%
QUALITY COMPOSITION (CORPORATE HOLDINGS)
PERCENTAGE
OF PORTFOLIO
AAA 11.16%
AA 9.32%
A 29.84%
BBB 27.04%
BB 9.82%
B 12.82%
[Graphic]
WHAT IS YOUR OUTLOOK FOR THE MARKETS AS WE APPROACH MID-YEAR?
Concerning stocks, our valuation work does not reflect any sectors of meaningful
undervaluation. The diversification of the fund and attention to valuation help
to provide a defensive posture to the portfolio, which we believe is appropriate
in the current market. We expect that 1997 will be a challenging year for equity
investors, and superior results, in our opinion, will be based on stock
selection.
Turning to bonds, with the Federal Reserve Board (the "Fed") having raised
interest rates, one must be somewhat cautious, at least over the near term. A
one-time interest rate hike is never the odds-on bet. On the other hand, with
low inflation, the real rate of return on the long 30-year Treasury bond is well
over 400 basis points, far in excess of historical norms. In this environment,
we will be closely monitoring inflation indicators and may look to extend
duration should the real rates of return available in today's marketplace
persist. Even Fed Chairman Alan Greenspan has made specific note of high real
rates and emphatically noted that "1997 is not 1994," which leads us to not
anticipate a prolonged period of rising interest rates.
TWO WAYS YOU MAY SEEK TO INVEST FOR SUCCESS IN
FEDERATED STOCK AND BOND FUND, INC.
INITIAL INVESTMENT:
IF YOU HAD MADE AN INITIAL INVESTMENT OF $29,000 IN THE CLASS A SHARES OF
FEDERATED STOCK AND BOND FUND, INC. ON 12/31/68, REINVESTED DIVIDENDS AND
CAPITAL GAINS, AND DIDN'T REDEEM ANY SHARES, YOUR ACCOUNT WOULD BE WORTH
$292,034 ON 4/30/97. YOU WOULD HAVE EARNED AN 8.49%* AVERAGE ANNUAL TOTAL RETURN
FOR THE 29-YEAR INVESTMENT LIFESPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 3/31/97, the Class A Shares' average annual one-year, five-year, and
ten-year total returns were 7.07%, 9.75%, and 8.50%, respectively. Class B
Shares' average annual total return since inception (8/30/96) was 5.69%. Class C
Shares' average annual one-year and since inception (4/19/93) total returns were
9.97% and 6.48%, respectively.**
[Graphic]
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50%
sales charge applicable to an initial investment in Class A Shares.
** The total return stated takes into account the 5.50% sales charge for Class A
Shares, the 5.50% contingent deferred sales charge for Class B Shares and the
1.00% contingent deferred sales charge for Class C Shares.
Data quoted represents past performance and does not guarantee future
results. Investment return and principal value will fluctuate so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
FEDERATED STOCK AND BOND FUND, INC.
ONE STEP AT A TIME:
$1,000 INVESTED EACH YEAR FOR 29 YEARS (REINVESTING ALL DIVIDENDS AND
CAPITAL GAINS) GREW TO $168,330.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Federated
Stock and Bond Fund, Inc. on 12/31/68, reinvested your dividends and capital
gains, and didn't redeem any shares, you would have invested only $29,000, but
your account would have reached a total value of $168,330 by 4/30/97. You would
have earned an average annual total return of 10.50%.*
A practical investment plan helps you pursue long term growth of capital and
income through a balanced portfolio of stocks and bonds. Through systematic
investing, you buy shares on a regular basis and reinvest all earnings. This
investment plan works for you even if you invest only $1,000 annually. You can
take it one step at a time. Put time, money and compounding to work!
[Graphic]
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regardless of changing
price levels, the investor should consider whether or not to continue
purchases through periods of low price levels.
FEDERATED STOCK AND BOND FUND, INC.
HYPOTHETICAL INVESTOR PROFILE: INVESTING FOR A COLLEGE EDUCATION
David and Joan Rice are a fictional couple who, like many shareholders, are
searching for a way to make their money grow over time.
David and Joan are planning for the college education of their child. On April
30, 1987, they invested $5,000 in the Class A Shares of Federated Stock and Bond
Fund, Inc. Since then, David and Joan have made additional investments of $250
every month.
As this chart shows, over 10 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $35,000 has grown to $61,675.
This represents a 9.66% average annual total return.* For the Rices, a dedicated
program of monthly investment really paid off.
[Graphic]
* This hypothetical scenario is provided for illustrative purposes only and
does not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.
FEDERATED STOCK AND BOND FUND, INC.
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES
VALUE
COMMON STOCKS -- 61.0%
<C> <S> <C>
BASIC INDUSTRY -- 2.7%
13,500 Betz Laboratories, Inc.
$ 864,000
11,000 Dow Chemical
Co. 933,625
77,500 LTV
Corp. 1,017,187
29,500 Morton International,
Inc. 1,235,313
Total 4,050,125
CONSUMER DURABLES -- 2.2%
12,000 General Motors
Corp. 694,500
33,000 Martin Marietta
Materials 899,250
72,000 Rubbermaid,
Inc. 1,728,000
Total 3,321,750
CONSUMER NON-DURABLES -- 7.4%
10,400 CPC International,
Inc. 859,300
20,600 Kimberly-Clark
Corp. 1,055,750
65,200 PepsiCo,
Inc. 2,273,850
18,900 Philip Morris Cos.,
Inc. 744,188
22,600 RJR Nabisco Holdings
Corp. 672,350
45,000 Russell
Corp. 1,248,750
18,500 Tambrands,
Inc. 869,500
12,500 Unilever N.V.,
ADR 2,453,125
12,900 V.F.
Corp. 930,413
Total 11,107,226
ENERGY MINERALS -- 7.1%
17,000 Amerada-Hess
Corp. 826,625
6,500 Atlantic Richfield
Co. 884,812
20,000 Chevron
Corp. 1,370,000
26,400 Exxon
Corp. 1,494,900
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
SHARES
VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
ENERGY MINERALS -- CONTINUED
38,200 Occidental Petroleum Corp.
$ 845,175
4,300 Royal Dutch Petroleum Co.,
ADR 775,075
24,500 Sun Co.,
Inc. 670,688
14,700 Texaco,
Inc. 1,550,850
52,800 USX-Marathon
Group 1,458,600
12,800 Western Atlas,
Inc. 793,600
Total 10,670,325
FINANCE -- 9.5%
44,000 Allmerica Financial
Corp. 1,584,000
23,700 Allstate
Corp. 1,552,350
29,925 Bear Stearns Cos.,
Inc. 912,712
13,500 CIGNA
Corp. 2,030,062
14,500 Chase Manhattan
Corp. 1,343,062
24,600 Dean Witter, Discover &
Co. 940,950
21,500 Federal National Mortgage
Association 884,187
16,000 Marsh & McLennan Cos.,
Inc. 1,928,000
19,600 National City
Corp. 955,500
17,500 Providian
Corp. 1,010,625
19,865 Travelers Group,
Inc. 1,100,024
Total 14,241,472
HEALTH CARE -- 7.9%
23,000 Abbott
Laboratories 1,403,000
13,500 American Home Products
Corp. 894,375
30,000 Bard (C.R.),
Inc. 952,500
69,500 Beverly Enterprises,
Inc. 1,007,750
42,400 Biomet,
Inc. 643,950
27,000 Bristol-Myers Squibb
Co. 1,768,500
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
SHARES
VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
HEALTH CARE -- CONTINUED
26,000 Columbia/HCA Healthcare Corp.
$ 910,000
52,400 Healthsource,
Inc. 1,100,400
11,800 Merck & Co.,
Inc. 1,067,900
12,500 Smithkline Beecham Corp.,
ADR 1,007,813
22,500 United Healthcare
Corp. 1,094,063
Total 11,850,251
PRODUCER MANUFACTURING -- 4.1%
71,000 ITT Industries,
Inc. 1,792,750
38,500 Ingersoll-Rand
Co. 1,891,312
39,000 Lexmark Intl. Group, Class
A 906,750
9,000 Loews
Corp. 826,875
12,000 PACCAR,
Inc. 838,500
Total 6,256,187
RETAIL TRADE -- 4.3%
44,500 Dayton-Hudson
Corp. 2,002,500
124,500 K Mart
Corp. 1,696,312
23,800 Meyer (Fred),
Inc. 978,775
64,000 Wal-Mart Stores,
Inc. 1,808,000
Total 6,485,587
SERVICES -- 1.6%
31,000 Block (H&R),
Inc. 999,750
47,800 Browning-Ferris Industries,
Inc. 1,356,325
Total 2,356,075
TECHNOLOGY -- 6.1%
33,000 AMP,
Inc. 1,183,875
28,000 Cabletron Systems,
Inc. 966,000
28,900 Electronic Data Systems
Corp. 964,537
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
SHARES
VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
TECHNOLOGY -- CONTINUED
22,500 General Motors Corp., Class H
$ 1,209,375
6,000 International Business Machines
Corp. 964,500
17,000 Lucent Technologies,
Inc. 1,005,125
14,500 Raytheon
Co. 632,563
13,100 Rockwell International
Corp. 871,150
38,000 Storage Technology
Corp. 1,334,750
Total 9,131,875
TRANSPORTATION -- 1.4%
38,000 Consolidated Freightways,
Inc. 1,130,500
34,000 KLM Royal Dutch Airlines,
ADR 1,011,500
Total 2,142,000
UTILITIES -- 6.7%
24,000 CMS Energy
Corp. 762,000
17,500 Coastal
Corp. 831,250
16,800 Columbia Gas System,
Inc. 1,039,500
17,100 FPL Group,
Inc. 763,087
30,000 GTE
Corp. 1,376,250
42,500 Houston Industries,
Inc. 850,000
48,500 MCI Communications
Corp. 1,849,062
33,900 P G & E
Corp. 813,600
136,000 Tele-Communications, Inc., Class
A 1,878,500
Total 10,163,249
TOTAL COMMON STOCKS (IDENTIFIED COST
$75,616,653) 91,776,122
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT
VALUE
PREFERRED STOCKS -- 0.4%
<C> <S> <C>
FINANCE -- 0.3%
500 Highwoods Properties, Inc., REIT Perpetual Pfd. Stock, Series A, $86.25
$ 494,312
PRODUCER MANUFACTURING -- 0.0%
50 (a)Fairfield Manufacturing Co., Inc., Exchangeable Pfd. Stock, Series A,
$11.25 50,000
SERVICES -- 0.1%
511 (a)American Radio Systems Corp., Cumulative Exchangeable Pfd. Stock,
$11.38 50,589
500 (a)Sinclair Broadcast Group, Inc., Pfd., Series A,
$11.63 50,250
Total 100,839
TOTAL PREFERRED STOCKS (IDENTIFIED COST
$751,144) 645,151
CORPORATE BONDS -- 36.5%
AUTOMOTIVE -- 0.1%
$ 100,000 Collins & Aikman Products Co., Sr. Sub. Note, 11.50%,
4/15/2006 110,250
100,000 Lear Corp., Sub. Note, 9.50%,
7/15/2006 104,500
Total 214,750
BANKING -- 0.2%
250,000 First Nationwide Holdings, Inc., Sr. Sub. Note, 9.125%,
1/15/2003 251,875
BASIC INDUSTRY -- 1.0%
250,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.75%,
8/15/2004 264,375
250,000 Pope & Talbot, Inc., 8.375%,
6/1/2013 231,618
50,000 Riverwood International Corp., Sr. Sub. Note, 10.875%,
4/1/2008 41,750
500,000 Sweden, Kingdom of, Deb., 10.25%,
11/1/2015 625,870
250,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%,
12/15/2005 255,313
Total 1,418,926
</TABLE>
Federated Stockand Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
BROADCAST RADIO & TV -- 0.4%
$ 100,000 Chancellor Radio Broadcasting Co., Sr. Sub. Note, 9.375%, 10/1/2004
$ 99,000
100,000 Lamar Advertising Co., Sr. Sub. Note, 9.625%,
12/1/2006 99,500
100,000 Pegasus Media, Note, 12.50%,
7/1/2005 107,500
250,000 SCI Television, Inc., Sr. Secd. Note, 11.00%,
6/30/2005 264,688
Total 570,688
BUILDING & DEVELOPMENT -- 0.1%
100,000 Building Materials Corp. of America, Sr. Note, 8.625%,
12/15/2006 98,000
BUSINESS EQUIPMENT & SERVICES -- 0.0%
50,000 United Stationers Supply Co., Sr. Sub. Note, 12.75%,
5/1/2005 55,875
CABLE TELEVISION -- 1.2%
200,000 Cablevision Systems Corp., Sr. Sub. Note, 9.25%,
11/1/2005 196,000
50,000 Charter Communications Southeast, L.P., Sr. Note, 11.25%,
3/15/2006 51,875
150,000 Comcast UK Cable, Deb., 0/11.20%,
11/15/2007 104,625
125,000 (a)Diamond Cable Communications PLC, Sr. Disc. Note, 0/10.75%,
2/15/2007 75,000
75,000 EchoStar Satellite Broadcasting Corp., Sr. Disc. Note, 0/13.125%,
3/15/2004 54,750
50,000 Lenfest Communications Inc., Sr. Note, 8.375%,
11/1/2005 47,625
1,000,000 TKR Cable, Inc., 10.50%,
10/30/2007 1,091,170
150,000 TeleWest PLC, Sr. Disc. Deb., 0/11.00%,
10/1/2007 102,000
100,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%,
5/15/2006 50,375
Total 1,773,420
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
CHEMICALS & PLASTICS -- 1.0%
$ 100,000 Harris Chemical North America, Inc., Sr. Note 10.875%, 7/15/2001
$ 101,500
100,000 ISP Holding, Inc., Sr. Note, 9.00%,
10/15/2003 101,500
1,250,000 (a)Reliance Industries Ltd., Bond, 8.25%,
1/15/2027 1,231,225
100,000 Sterling Chemicals Holdings, Inc., Sr. Disc. Note, 0/13.50%,
8/15/2008 63,000
Total 1,497,225
CLOTHING & TEXTILES -- 0.0%
50,000 (a)Collins & Aikman Floorcoverings, Inc., Sr. Sub. Note, 10.00%,
1/15/2007 49,312
CONSUMER DURABLES -- 0.5%
50,000 Pillowtex Corp., Sr. Sub. Note, 10.00%,
11/15/2006 51,563
750,000 Smurfit Capital, Note, 6.75%,
11/20/2005 718,590
50,000 Syratech Corp., Sr. Note, 11.00%,
4/15/2007 51,625
Total 821,778
CONSUMER NON-DURABLES -- 1.7%
100,000 Dimon, Inc., Sr. Note, 8.875%,
6/1/2006 102,625
1,281,000 Philip Morris Cos., Inc., Deb., 6.00%,
7/15/2001 1,223,124
1,250,000 Philip Morris Cos., Inc., Deb., 7.75%,
1/15/2027 1,197,713
50,000 (a)Tultex Corp., Sr. Note, 9.625%,
4/15/2007 51,750
Total 2,575,212
CONSUMER PRODUCTS -- 0.2%
75,000 (a)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%,
11/15/2006 39,375
100,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%,
12/15/2003 98,750
50,000 (a)Renaissance Cosmetics, Inc., Sr. Note, 11.75%,
2/15/2004 50,750
50,000 Revlon Consumer Products Corp., Sr. Sub. Note, 10.50%,
2/15/2003 52,500
50,000 Simmons Co., Sr. Sub. Note, 10.75%,
4/15/2006 51,750
Total 293,125
CONTAINER & GLASS PRODUCTS -- 0.0%
50,000 (a)Plastic Containers, Inc., Sr. Secd. Note, 10.00%,
12/15/2006 51,438
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
ECOLOGICAL SERVICES & EQUIPMENT -- 0.1%
$ 100,000 (a)Allied Waste North America, Inc., Sr. Sub. Note, 10.25%, 12/1/2006
$ 105,750
EDUCATION -- 0.7%
1,000,000 Harvard University, Deb., 8.125%,
4/15/2007 1,075,610
ELECTRONICS -- 0.0%
50,000 (a)Fairchild Semiconductor Corp., Sr. Sub. Note, 10.125%,
3/15/2007 50,875
ELECTRONIC TECHNOLOGY -- 0.3%
500,000 (a)Tenaga Nasional Berhad, Deb., 7.50%,
1/15/2096 465,760
ENERGY MINERALS -- 0.1%
100,000 Forcenergy Gas Exploration, Inc., Sr. Sub. Note, 9.50%,
11/1/2006 101,500
100,000 United Meridian Corp., Sr. Sub. Note, 10.375%,
10/15/2005 107,500
Total 209,000
FINANCE -- 10.9%
1,000,000 African Development Bank, Note, 6.875%,
10/15/2015 944,980
1,250,000 American General Corp., S.F. Deb., 9.625%,
2/1/2018 1,356,287
1,500,000 Bank of Montreal, Sub. Note, 7.80%,
4/1/2007 1,545,735
2,000,000 CNA Financial Corp., Deb., 7.25%,
11/15/2023 1,831,340
1,000,000 Conseco, Inc., Sr. Note, 10.50%,
12/15/2004 1,163,920
250,000 Continental Corp., Note, 8.25%,
4/15/1999 257,485
1,250,000 Delphi Financial Group, Inc., 9.31%,
3/25/2027 1,262,425
1,000,000 (a)Equitable Life, Note, 7.70%,
12/1/2015 975,840
500,000 FirstBank Puerto Rico, Sub. Note, 7.625%,
12/20/2005 494,040
1,000,000 Green Tree Financial Corp., Sr. Sub. Note, 10.25%,
6/1/2002 1,134,040
1,000,000 Morgan Stanley Group, Inc., Deb., 9.25%,
3/1/1998 1,026,100
1,000,000 Norwest Financial, Inc., Note, 6.23%,
9/1/1998 999,880
50,000 Olympic Financial Ltd., Unit, 11.50%,
3/15/2007 48,250
500,000 Price REIT, Inc., Sr. Note, 7.50%,
11/5/2006 497,710
1,000,000 Santander Finance Issuances, Bank Guarantee, 7.875%,
4/15/2005 1,030,950
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
FINANCE -- CONTINUED
$ 1,000,000 Swedish Export Credit, 9.875%, 3/15/2038
$ 1,074,650
750,000 USF&G Corp., Company Guarantee, 8.47%,
1/10/2027 734,717
Total 16,378,349
FOOD & DRUG RETAILER -- 0.2%
200,000 Ralph's Grocery Co., Sr. Sub. Note, 11.00%,
6/15/2005 213,500
FOOD PRODUCTS -- 0.1%
100,000 International Home Foods, Inc., Sr. Sub. Note, 10.375%,
11/1/2006 102,000
50,000 (a)MBW Foods Inc., Sr. Sub. Note, 9.875%,
2/15/2007 49,750
Total 151,750
FOREST PRODUCTS -- 0.1%
200,000 Four M Corp., Sr. Note, 12.00%,
6/1/2006 198,000
HEALTH CARE -- 1.4%
1,000,000 Columbia/HCA Healthcare Corp., Note, 9.00%,
12/15/2014 1,126,910
250,000 Dade International, Inc., Sr. Sub. Note, 11.125%,
5/1/2006 275,000
500,000 Tenet Healthcare Corp., Sr. Note, 8.00%,
1/15/2005 490,000
250,000 Tenet Healthcare Corp., Sr. Sub. Note, 10.125%,
3/1/2005 269,375
Total 2,161,285
INDUSTRIAL PRODUCTS & EQUIPMENT -- 0.4%
50,000 (a)Continental Global Group, Inc., Sr. Note, 11.00%,
4/1/2007 51,187
150,000 Euramax International PLC, Sr. Sub. Note, 11.25%,
10/1/2006 157,125
100,000 Hawk Corp., Sr. Note, 10.25%,
12/1/2003 100,750
100,000 International Knife & Saw, Inc., Sr. Sub. Note, 11.375%,
11/15/2006 102,000
75,000 (a)MMI Products, Inc., Sr. Sub. Note, 11.25%,
4/15/2007 77,625
50,000 (a)Neenah Corp., Sr. Sub. Note, 11.125%,
5/1/2007 51,500
50,000 Unifrax Investment Corp., Sr. Note, 10.50%,
11/1/2003 51,500
Total 591,687
</TABLE>
Federated Stock and Bond Fund, Inc.
PRINCIPAL
<TABLE>
<CAPTION>
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<S> <C> <C>
INSURANCE -- 0.3%
$ 500,000 (a)Pacific Mutual Life Insurance Company, Note, 7.90%, 12/30/2023
$ 498,265
LEISURE & ENTERTAINMENT -- 0.2%
250,000 AMF Group, Inc., Sr. Sub. Disc. Note, 0/12.25%,
3/15/2006 169,062
175,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%,
6/15/2005 172,375
Total 341,437
MACHINERY & EQUIPMENT -- 0.2%
100,000 Alvey Systems, Inc., Sr. Sub. Note, 11.375%,
1/31/2003 103,500
50,000 Clark Material Handling Corp., Sr. Note, 10.75%,
11/15/2006 50,750
100,000 Tokheim Corp., Sr. Sub. Note, 11.50%,
8/1/2006 107,500
Total 261,750
METALS & MINING -- 0.0%
50,000 Royal Oak Mines, Inc., Sr. Sub. Note, 11.00%,
8/15/2006 49,750
OIL & GAS -- 0.9%
100,000 Abraxas Petroleum Corp., Sr. Note, 11.50%,
11/1/2004 106,500
1,250,000 Husky Oil Ltd., Sr. Note, 7.125%,
11/15/2006 1,227,700
Total 1,334,200
PRINTING & PUBLISHING -- 1.0%
100,000 Affiliated Newspaper Investments, Inc., Sr. Disc. Note, 0/13.25%,
7/1/2006 86,500
250,000 K-III Communications Corp., Company Guarantee, Series B, 8.50%,
2/1/2006 246,250
1,000,000 News America Holdings, Inc., 10.125%,
10/15/2012 1,122,530
100,000 Petersen Publishing Co., L.L.C., Sr. Sub. Note, 11.125%,
11/15/2006 108,500
Total 1,563,780
PRODUCER MANUFACTURING -- 2.1%
1,000,000 Anixter International, Inc., Company Guarantee, 8.00%,
9/15/2003 1,012,920
1,000,000 Figgie International Holdings, Inc., Sr. Note, 9.875%,
10/1/1999 1,038,750
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
PRODUCER MANUFACTURING -- CONTINUED
$ 1,000,000 Joy Technologies, Inc., Sr. Note, 10.25%, 9/1/2003
$ 1,092,540
Total 3,144,210
REAL ESTATE -- 1.1%
1,275,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%,
7/1/2004 1,489,149
100,000 Trizec Finance Ltd., Sr. Note, 10.875%,
10/15/2005 110,000
Total 1,599,149
RETAIL TRADE -- 1.4%
1,000,000 May Department Stores Co., Deb., 8.125%,
8/15/2035 1,014,930
1,000,000 Penney (J.C.) Co., Inc., Deb., 7.65%,
8/15/2016 982,940
50,000 Smith's Food & Drug Centers, Inc., Sr. Sub. Note, 11.25%,
5/15/2007 55,938
Total 2,053,808
SERVICES -- 3.1%
1,000,000 Continental Cablevision, Sr. Deb., 9.50%,
8/1/2013 1,121,820
100,000 Heritage Media Corp., Sr. Sub. Note, 8.75%,
2/15/2006 102,875
100,000 Hollinger International Publishing, Inc., Sr. Sub. Note, 9.25%,
3/15/2007 100,000
100,000 (a)KinderCare Learning Centers, Inc., Sr. Sub. Note, 9.50%,
2/15/2009 95,000
1,300,000 Loewen Group Int'l., Sr. Note, 8.25%,
4/15/2003 1,311,570
50,000 Premier Parks, Inc., Sr. Note, 9.75%,
1/15/2007 51,250
150,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 159,000
50,000 (a)Ryder TRS, Inc., Sr. Sub. Note, 10.00%,
12/1/2006 50,375
100,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%,
5/15/2006 105,000
150,000 Sinclair Broadcast Group, Inc., Sr. Sub. Note, 10.00%,
9/30/2005 152,250
50,000 (a)TCI Satellite Entertainment, Inc., Sr. Sub. Disc. Note, 0/12.25%,
2/15/2007 26,500
150,000 Viacom, Inc., Sub. Deb., 8.00%,
7/7/2006 141,938
1,000,000 WMX Technologies, Inc., Deb., 8.75%,
5/1/2018 1,059,650
100,000 Young Broadcasting, Inc., Sr. Sub. Note, 10.125%,
2/15/2005 101,500
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
SERVICES -- CONTINUED
$ 75,000 Young Broadcasting, Inc., Sr. Sub. Note, 9.00%, 1/15/2006
$ 72,375
Total 4,651,103
SOVEREIGN GOVERNMENT -- 0.7%
1,000,000 Quebec, Province of, Deb., 7.00%,
1/30/2007 977,270
SURFACE TRANSPORTATION -- 0.3%
100,000 AmeriTruck Distribution Corp., Sr. Sub. Note, 12.25%,
11/15/2005 102,000
100,000 Gearbulk Holding Limited, Sr. Note, 11.25%,
12/1/2004 109,750
100,000 Statia Terminals International N.V., 1st Mtg. Note, 11.75%,
11/15/2003 103,500
100,000 Stena AB, Sr. Note, 10.50%,
12/15/2005 106,500
Total 421,750
STEEL -- 0.1%
100,000 GS Technologies Operating Co., Inc., Sr. Note, 12.25%,
10/1/2005 106,250
TECHNOLOGY -- 0.7%
1,000,000 Kansas City, MO Redevelopment Authority, 7.65% (FSA LOC),
11/1/2018 973,330
50,000 (a)Tracor, Inc., Sr. Sub. Note, 8.50%,
3/1/2007 49,125
Total 1,022,455
TELECOMMUNICATIONS & CELLULAR -- 0.8%
175,000 Brooks Fiber Properties, Inc., Sr. Disc. Note, 0/11.875%,
11/1/2006 109,812
100,000 (a)McLeod, Inc., Sr. Disc. Note, 0/10.50%,
3/1/2007 57,250
150,000 Millicom International Cellular S. A., Sr. Disc. Note, 0/13.50%,
6/1/2006 105,375
100,000 (a)Qwest Communications International, Inc., Sr. Note, 10.875%,
4/1/2007 102,250
175,000 Teleport Communications Group, Inc., Sr. Disc. Note, 0/11.125%,
7/1/2007 121,188
750,000 U.S. West Capital Funding, Inc., Company Guarantee, 7.90%,
2/1/2027 741,383
Total 1,237,258
</TABLE>
Federated Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
CORPORATE BONDS -- CONTINUED
<C> <S> <C>
UTILITIES -- 2.9%
$ 250,000 CalEnergy Co., Inc., Sr. Note, 9.50%, 9/15/2006
$ 261,875
100,000 Cellular Communications International, Inc., Sr. Disc. Note, 13.25%
accrual,
8/15/2000 72,500
50,000 (a)Cellular Communications of Puerto Rico, Inc., Sr. Sub. Note, 10.00%,
2/1/2007 48,187
1,000,000 (a)Comcast Corp., 8.50%,
5/1/2027 1,018,310
200,000 Comcast Corp., Sr. Sub. Deb., 9.375%,
5/15/2005 205,000
100,000 El Paso Electric Co., 1st Mtg. Note, 9.40%,
5/1/2011 107,307
1,000,000 Enersis S.A., Note, 7.40%,
12/1/2016 950,480
100,000 Intermedia Communications of Florida, Inc., Sr. Disc. Note, 0/12.50%,
5/15/2006 65,500
150,000 International Cabletel, Inc., Sr. Defd. Cpn. Note, 0/11.50%,
2/1/2006 97,875
1,000,000 Michigan Bell Telephone Co., Deb., 7.85%,
1/15/2022 1,047,500
150,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%,
8/15/2004 109,688
150,000 Paging Network, Inc., Sr. Sub. Note, 10.125%,
8/1/2007 136,125
250,000 Vanguard Cellular Systems, Inc., Deb., 9.375%,
4/15/2006 246,250
Total 4,366,597
TOTAL CORPORATE BONDS (IDENTIFIED COST
$54,066,768) 54,902,222
GOVERNMENT OBLIGATIONS -- 2.3%
GOVERNMENT AGENCY SECURITIES -- 0.9% 500,000 Federal Home Loan
Bank System, Deb., 4.94%,
1/15/1998 494,700
1,000,000 Federal National Mortgage Association, 0/8.62%,
3/9/2022 949,470
Total 1,444,170
</TABLE>
Federate Stock and Bond Fund, Inc.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
GOVERNMENT OBLIGATIONS -- CONTINUED
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 1.4%
472,717 Federal National Mortgage Association, 9.00%, 11/1/2021
$ 501,227
712,175 Federal National Mortgage Association, 7.00%,
11/1/2007 711,064
31,987 Federal National Mortgage Association, 7.50%,
9/1/2023 31,888
791,312 Government National Mortgage Association, 8.00%,
9/15/2024 805,904
Total 2,050,083
TOTAL GOVERNMENT OBLIGATIONS (IDENTIFIED COST $3,481,274)
3,494,253
TOTAL INVESTMENTS (IDENTIFIED COST $133,915,839)(B)
$ 150,817,748
</TABLE>
(a) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At April 30, 1997, these securities amounted
to $5,473,238 which represents 3.6% of net assets.
(b) The cost of investments for federal tax purposes amounts to $133,915,839.
The net unrealized appreciation of investments on a federal tax basis
amounts to $16,901,909 which is comprised of $18,587,697 appreciation and
$1,685,788 depreciation at April 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($150,420,367) at April 30, 1997.
The following acronyms are used throughout this portfolio:
ADR -- American Depository Receipt
FSA -- Financial Security Assurance
LOC -- Letter of Credit
PLC -- Public Limited Company
REIT -- Real Estate Investment Trust
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $133,915,839) $
150,817,748
Income receivable
1,240,315
Receivable for investments sold
759,425
Receivable for shares sold
113,719
Deferred expenses
4,928
Total assets
152,936,135
LIABILITIES:
Payable for investments purchased $ 2,313,942
Payable for shares redeemed 169,814
Accrued expenses 32,012
Total liabilities
2,515,768
NET ASSETS for 8,215,169 shares outstanding $
150,420,367
NET ASSETS CONSIST OF:
Paid in capital $
123,627,231
Net unrealized appreciation of investments
16,901,909
Accumulated net realized gain on investments
9,253,375
Undistributed net investment income
637,852
Total Net Assets $
150,420,367
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($148,381,553 / 8,103,737 shares outstanding)
$18.31
Offering Price Per Share (100/94.50 of $18.31)*
$19.38
Redemption Proceeds Per Share
$18.31
CLASS B SHARES:
Net Asset Value Per Share ($1,694,680 / 92,617 shares outstanding)
$18.30
Offering Price Per Share
$18.30
Redemption Proceeds Per Share (94.50/100 of $18.30)**
$17.29
CLASS C SHARES:
Net Asset Value Per Share ($344,134 / 18,815 shares outstanding)
$18.29
Offering Price Per Share
$18.29
Redemption Proceeds Per Share (99.00/100 of $18.29)**
$18.11
</TABLE>
* See "Investing in the Fund" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<C> <C> <C>
INVESTMENT INCOME:
Dividends $
829,864
Interest
2,169,759
Total income
2,999,623
EXPENSES:
Investment advisory fee $ 524,651
Administrative personnel and services fee 91,740
Custodian fees 6,887
Transfer and dividend disbursing agent fees and expenses 81,683
Directors'/Trustees' fees 2,951
Auditing fees 8,381
Legal fees 3,801
Portfolio accounting fees 36,929
Distribution services fee -- Class B Shares 3,203
Distribution services fee -- Class C Shares 716
Shareholder services fee -- Class A Shares 175,816
Shareholder services fee -- Class B Shares 1,068
Shareholder services fee -- Class C Shares 239
Share registration costs 18,480
Printing and postage 15,802
Insurance premiums 2,355
Taxes 11,403
Miscellaneous 5,429
Total expenses 991,534
Waiver --
Waiver of investment advisory fees $ (127,226)
Net expenses
864,308
Net investment income
2,135,315
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments
9,249,799
Net change in unrealized appreciation of investments
52,958
Net realized and unrealized gain on investments
9,302,757
Change in net assets resulting from operations $
11,438,072
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(UNAUDITED) ENDED
APRIL 30, OCTOBER
31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 2,135,315 $
4,698,067
Net realized gain (loss) on investments ($9,249,799 and $13,291,068 net gain,
respectively, as computed for federal tax purposes) 9,249,799
13,222,540
Net change in unrealized appreciation (depreciation) 52,958
246,245
Change in net assets resulting from operations 11,438,072
18,166,852
NET EQUALIZATION CREDITS (DEBITS) -- 320,916
(105,828)
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income
Class A Shares (2,088,961)
(4,746,649)
Class B Shares
(9,319) --
Class C Shares
(2,158) --
Distributions from net realized gains
Class A Shares (13,236,606)
(9,454,029)
Class B Shares
(45,261) --
Class C Shares
(10,132) --
Change in net assets resulting from distributions to shareholders (15,392,437)
(14,200,678)
SHARE TRANSACTIONS --
Proceeds from sale of shares 38,337,576
35,914,004
Net asset value of shares issued to shareholders in payment
of distributions declared 12,666,137
11,037,554
Cost of shares redeemed (27,738,823)
(54,691,774)
Change in net assets resulting from share transactions 23,264,890
(7,740,216)
Change in net assets 19,631,441
(3,879,870)
NET ASSETS:
Beginning of period 130,788,926
134,668,796
End of period (including undistributed net investment income
of $637,852 and $282,059, respectively) $ 150,420,367 $
130,788,926
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
DECEMBER 31,
1997 1996 1995 1994 1993 1992 1991 1990(A)
1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $18.96 $18.38 $16.25 $16.87 $15.91 $15.74 $13.60 $15.11
$14.94 $14.89
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.32 0.61 0.63 0.51 0.55 0.65 0.74 1.37
0.91 0.85
Net realized and
unrealized gain
(loss) on investments 1.22 1.81 2.21 (0.59) 1.58 0.39 2.17 (2.22)
0.91 0.52
Total from
investment operations 1.54 2.42 2.84 (0.08) 2.13 1.04 2.91 (0.85)
1.82 1.37
LESS DISTRIBUTIONS
Distributions from
net investment income (0.28) (0.63) (0.62) (0.54) (0.56) (0.68) (0.77) (0.66)
(0.94) (0.86)
Distributions from
net realized gain on
investments (1.91) (1.21) (0.09) -- (0.61) (0.19) -- --
(0.71) (0.46)
Total distributions (2.19) (1.84) (0.71) (0.54) (1.17) (0.87) (0.77) (0.66)
(1.65) (1.32)
NET ASSET VALUE,
END OF PERIOD $18.31 $18.96 $18.38 $16.25 $16.87 $15.91 $15.74 $13.60
$15.11 $14.94
TOTAL RETURN(B) 8.53% 14.57% 17.99% (0.48)% 14.10% 7.94% 21.78% (5.90)%
12.46% 9.28%
RATIOS TO AVERAGE
NET ASSETS
Expenses 1.21%* 1.10% 1.07% 1.06% 1.04% 1.04% 1.01% 1.01%*
1.01% 1.00%
Net investment income 3.02%* 3.44% 3.71% 3.23% 3.49% 4.15% 4.91% 5.77%*
5.82% 5.53%
Expense waiver/
reimbursement(c) 0.18%* 0.27% 0.31% 0.07% 0.20% 0.21% 0.45% 0.54%*
0.51% 0.39%
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $148,382 $130,694 $134,669 $125,382 $124,583 $95,387 $88,534 $79,003
$88,367 $90,504
Average commission
rate paid(d) $.0028 $.0307 -- -- -- -- --
- -- -- --
Portfolio turnover 41% 74% 68% 45% 51% 43% 72%
49% 26% 131%
</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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, OCTOBER 31,
1997 1996(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.96 $17.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.26 0.02
Net realized and unrealized gain (loss) on investments 1.22 1.05
Total from investment operations 1.48 1.07
LESS DISTRIBUTIONS
Distributions from net investment income (0.23) --
Distributions from net realized gain on investments (1.91) --
Total distributions (2.14) --
NET ASSET VALUE, END OF PERIOD $18.30 $18.96
TOTAL RETURN(B) 8.18% 5.98%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.98%* 1.96%*
Net investment income 2.22%* 3.52%*
Expense waiver/reimbursement(c) 0.18%* 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,695 $94
Average commission rate paid(d) $.0028 $.0307
Portfolio turnover 41% 74%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 30, 1996 (date of initial
public offering) to October 31, 1996.
(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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, OCTOBER 31,
1997 1996(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.96 $17.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.23 0.04
Net realized and unrealized gain (loss) on investments 1.24 1.03
Total from investment operations 1.47 1.07
LESS DISTRIBUTIONS
Distributions from net investment income (0.23) --
Distributions from net realized gain on investments (1.91) --
Total distributions (2.14) --
NET ASSET VALUE, END OF PERIOD $18.29 $18.96
TOTAL RETURN(B) 8.12% 5.98%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.94%* 2.03%*
Net investment income 2.16%* 1.94%*
Expense waiver/reimbursement(c) 0.18%* 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $344 $2
Average commission rate paid(d) $.0028 $.0307
Portfolio turnover 41% 74%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 30, 1996 (date of initial
public offering) to October 31, 1996.
(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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED STOCK AND BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (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 Fund offers three classes of shares:
Class A Shares, Class B Shares and Class C Shares. The investment objectives of
the Fund are to provide relative safety of capital with the possibility of
long-term growth of capital and income.
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 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. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense either upon demand by the Fund or in connection with another
registered offering of the securities. Many restricted securities may be
resold in the secondary market in transactions exempt from registration. Such
restricted securities may be determined to be liquid under criteria
established by the Directors. The Fund will not incur any registration costs
upon such resales. The Fund's restricted securities are valued at the price
provided by dealers in the secondary market or, if no market prices are
available, at the fair value as determined by the Fund's pricing committee.
Additional information on each restricted security held at April 30, 1997 is
as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Allied Waste North America, Inc. 12/05/96 $ 102,749
American Radio Systems Corp. 12/27/96 50,000
Cellular Communications of Puerto Rico 1/31/97 73,237
Collins & Aikman Floorcoverings 2/06/97 50,000
Comcast Corp. 5/01/97 998,290
Continental Global Group, Inc. 4/01/97 50,000
Diamond Cable Communications 2/27/97 74,218
Equitable Life 12/01/95 993,630
Fairchild Semiconductor Corp. 3/11/97 50,000
Fairfield Manufacturing Co., Inc. 3/07/97 50,000
ICON Fitness Corp. 11/20/96 40,573
KinderCare Learning Centers, Inc. 2/13/97 100,875
MBW Foods Inc. 2/10/97 51,000
McLeod, Inc. 3/04/97 59,522
MMI Products, Inc. 4/16/97 75,000
Neenah Corp. 4/30/97 51,813
Pacific Mutual Life Insurance Co. 12/30/93 493,558
Plastic Containers, Inc. 12/17/96 50,000
Qwest Communications International 3/31/97 99,688
Reliance Industries 1/15/97 1,250,000
Renaissance Cosmetics, Inc. 2/07/97 50,000
Ryder TRS, Inc. 11/25/96 50,000
Sinclair Broadcast Group, Inc. 3/05/97 50,000
TCI Satellite Entertainment, Inc. 2/20/97 28,297
Tenaga Nasional Berhad 1/16/96 474,925
Tracor, Inc. 3/14/97 49,803
Tultex Corp. 4/17/97 50,000
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.
3. CAPITAL STOCK
At April 30, 1997, par value shares ($ 0.001 per share) authorized were as
follows:
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
Class A Shares 750,000,000
Class B Shares 500,000,000
Class C Shares 500,000,000
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,056,865 $ 36,409,644 2,010,466 $
35,819,180
Shares issued to shareholders in payment of
distributions declared 716,375 12,602,278 635,946
11,037,554
Shares redeemed (1,560,909) (27,698,531) (3,082,912)
(54,691,774)
Net change resulting from Class A Share
transactions 1,212,331 $ 21,313,391 (436,500) $
(7,835,040)
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1997 OCTOBER 31, 1996(A)
CLASS B SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 87,019 $ 1,595,121 4,930 $
93,028
Shares issued to shareholders in payment of
distributions declared 2,916 52,110
- -- --
Shares redeemed (2,248) (40,292)
- -- --
Net change resulting from Class B Share
transactions 87,687 $ 1,606,939 4,930 $
93,028
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1997 OCTOBER 31, 1996(A)
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 18,059 $ 332,811 98 $
1,796
Shares issued to shareholders in payment of
distributions declared 658 11,749
- -- --
Shares redeemed -- --
- -- --
Net change resulting from Class C Share
transactions 18,717 $ 344,560 98 $
1,796
Net change resulting from share
transactions 1,318,735 $ 23,264,890 (431,472) $
(7,740,216)
</TABLE>
(a) For the period from August 30, 1996 (date of initial public offering) to
October 31, 1996.
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) 4.5% of the annual 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 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.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's shares. The Plan provides that the Fund may
incur distribution expenses of the average daily net assets of each class as
follows:
PERCENTAGE OF
AVERAGE DAILY
CLASS NET ASSETS
Class A Shares 0.25% Class B Shares 0.75% Class C Shares 0.75%
For the period ended April 30, 1997, Class A Shares did not incur a
distribution services fee.
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 shares for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
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, 1997, were as follows:
PURCHASES $72,010,657
SALES $58,027,486
Directors
John F. 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
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
J. Crilley Kelly
Assistant Secretary
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 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.
[Graphic] Federated Investors
Federated Securities Corp., Distributor
Cusip 313911109
Cusip 313911208
Cusip 313911307
8080105 (6/97) [Graphic]
Federated Stock and Bond Fund, Inc. Appendix
A1. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 12/31/68
to 4/30/97. The "y" axis is measured in increments of $50,000 ranging from $0 to
$300,000 and indicates that the ending value of hypothetical initial investment
of $29,000 in the Class A Shares of Federated Stock and Bond Fund, Inc.,
assuming the reinvestment of capital gains and dividends,would have grown to
$292,034 on 4/30/97.
A2. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 12/31/68
to 4/30/97. The "y" axis is measured in increments of $34,000 ranging from $0 to
$170,000 and indicates that the ending value of hypothetical yearly investments
of $1,000 in the Class A Shares of Federated Stock and Bond Fund, Inc., assuming
the reinvestment of capital gains and dividends,would have grown to $168,330 on
4/30/97.
A3. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
4/30/87 to 4/30/97. The "y" axis is measured in increments of $12,400 ranging
from $0 to $62,000 and indicates that the ending value of a hypothetical initial
investment of $5,000 and subsequent monthly investments of $250 over 10 years in
the Class A Shares of Federated Stock and Bond Fund, Inc. would have grown to
$61,675 on 4/30/97.
FEDERATED STOCK AND BOND FUND, INC.
Federated Investors
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(412) 288-1900
July 1, 1997
EDGAR Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC 20549
RE: FEDERATED STOCK AND BOND FUND, INC. (the "Fund")
1933 Act File No. 2-10415
1940 Act File No. 811-1
The Semi-Annual Report to Shareholders of the above-referenced Fund
dated April 30, 1997, is hereby electronically transmitted pursuant to Section
30(b)(2) of the Investment Company Act of 1940 and Rule 30b2-1 thereunder.
Very truly yours,
/s/ Heather M. Aland
Heather M. Aland
Compliance Analyst
Enclosures
