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Previous: IRVINE SENSORS CORP/DE/, 10-K, EX-27, 2000-12-29 |
Next: FEDERATED STOCK TRUST, 497J, 2000-12-29 |
Federated
World-Class Investment Manager®
<R>
</R>
<R>
DECEMBER 31, 2000
</R>
A large capitalization value mutual fund seeking to provide growth of income and capital by investing primarily in common stocks of high quality companies.
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
Risk/Return Summary 1
What are the Fund's Fees and Expenses? 3
What are the Fund's Investment Strategies? 4
What are the Principal Securities in Which the Fund Invests? 5
<R>
What are the Specific Risks of Investing in the Fund? 6
What Do Shares Cost? 8
How is the Fund Sold? 8
How to Purchase Shares 9
How to Redeem Shares 11
Account and Share Information 14
Who Manages the Fund? 15
Financial Information 16
Independent Auditors' Report 29
</R>
The Fund's investment objective is to provide growth of income and capital. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus.
The Fund pursues its investment objective by investing primarily in equity securities of companies that are generally leaders in their industries, are characterized by sound management and have the ability to finance expected growth.
All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include:
The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or 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.
The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The Fund's shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
The Fund's total return for the nine-month period from January 1, 2000 to September 30, 2000 was 0.13%.
Within the period shown in the chart, the Fund's highest quarterly return was 16.48% (quarter ended December 31, 1998). Its lowest quarterly return was (15.58%) (quarter ended September 30, 1990).
<R>
The following table represents the Fund's Average Annual Total Returns for the calendar periods ended December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Standard & Poor's 500 (S&P 500), a broad based market index, and Lipper Multi-Cap Value Funds Average (LMCVFA), an average of funds with similar investment objectives. Total returns for the indexes shown do no reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
</R>
<R>
| Calendar Period | Fund | S&P 500 | LMCVFA | ||||
| 1 Year | 6.08 | % | 21.05 | % | 7.02 | % | |
| 5 Years | 22.40 | % | 28.56 | % | 8.43 | % | |
| 10 Years | 15.49 | % | 18.21 | % | 13.42 | % | |
</R>
Past performance is no guarantee of future results. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
This table describes the fees and expenses that you may pay if you buy and hold Shares of the Fund.
|
Shareholder Fees |
|
|
|
|
Fees Paid Directly From Your Investment |
|
|
|
|
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
|
None |
|
|
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) |
|
None |
|
|
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) |
|
None |
|
|
Redemption Fee (as a percentage of amount redeemed, if applicable) |
|
None |
|
|
Exchange Fee |
|
None |
|
|
|
|
|
|
|
Annual Fund Operating Expenses (Before Waivers)1 |
|
|
|
|
Expenses That are Deducted From Fund Assets (as a percentage of average net assets) |
|
|
|
|
Management Fee2 |
|
0.67% |
|
|
Distribution (12b-1) Fee |
|
None |
|
|
Shareholder Services Fee3 |
|
0.25% |
|
|
Other Expenses |
|
0.12% |
|
|
Total Annual Fund Operating Expenses |
|
1.04% |
|
| 1 Although not contractually obligated to do so, the shareholder services provider waived certain amounts. These are shown below along with the net expenses the Fund actually paid for the fiscal year ended October 31, 2000. | |||
| Total Waiver of Fund Expenses | 0.10% | ||
| Total Actual Annual Fund Operating Expenses (after waivers) | 0.94% | ||
| 2 The maximum investment management fee is 0.75% of the first $500 million in average daily net assets, 0.675% of the second $500 million in average daily net assets, 0.60% of the third $500 million in average daily net assets, 0.525% of the fourth $500 million in average daily net assets and 0.40% of average daily net assets in excess of $2 billion. | |||
| 3 A portion of the shareholder services fee has been voluntarily waived. This voluntary waiver can be terminated at any time. The shareholder services fee paid by the Fund (after the voluntary waiver) was 0.15% for the fiscal year ended October 31, 2000. | |||
This Example is intended to help you compare the cost of investing in the Fund's Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's Shares operating expenses are before waivers as shown in the table and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
<R>
| 1 Year | $ | 106 | |
| 3 Years | $ | 331 | |
| 5 Years | $ | 574 | |
| 10 Years | $ | 1,271 | |
</R>
The Fund pursues its investment objective by investing primarily in equity securities of companies that are generally leaders in their industries, are characterized by sound management and have the ability to finance expected growth. The Adviser attempts to identify good long-term values through disciplined investing and careful fundamental research. The Fund's holdings ordinarily will be in large capitalization companies that are in the top 25% of their industries with regard to revenues.
The Adviser ranks the future performance potential of companies, based on valuation models which attempt to identify companies trading at low valuation relative to their history, to the market and to their expected future growth. To determine the timing of purchases and sales of portfolio securities, the Adviser looks at recent stock price performance and the direction of current fiscal year earning estimates. In addition, the Adviser performs traditional fundamental analysis to select the most promising companies for the Fund's portfolio.
Companies with similar characteristics may be grouped together in broad categories called sectors. In determining the amount to invest in a security, the Adviser limits the Fund's exposure to each business sector that comprises more than 5% of the S&P 500 Index. The Fund's allocation to a sector will not be less than 50% or more than 200% of the Index's allocation to that sector.
The Fund actively trades its portfolio securities in an attempt to achieve its investment objective. Active trading will cause the Fund to have an increased portfolio turnover rate, which is likely to generate shorter-term gains (losses) for its shareholders, which are taxed at a higher rate than longer-term gains (losses). Actively trading portfolio securities increases the Fund's trading costs and may have an adverse impact on the Fund's performance.
The Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term debt securities and similar obligations. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.
Equity securities represent a share of an issuer's earnings and assets, after the issuer pays its liabilities. The Fund cannot predict the income it will receive from equity securities because issuers generally have discretion as to the payment of any dividends or distributions. However, equity securities offer greater potential for appreciation than many other types of securities, because their value increases directly with the value of the issuer's business. The following describes the principal types of equity securities in which the Fund may invest.
Common stocks are the most prevalent type of equity security. Common stocks receive the issuer's earnings after the issuer pays its creditors and any preferred stockholders. As a result, changes in an issuer's earnings directly influence the value of its common stock.
<R>
ADRs represent interests in underlying securities issued by a foreign company. Depositary receipts are not traded in the same market as the underlying security. The foreign securities underlying ADRs are not traded in the United States. ADRs provide a way to buy shares of foreign-based companies in the United States rather than in overseas markets. In addition, ADRs are traded in U.S. dollars, eliminating the need for foreign exchange transactions.
</R>
The value of equity securities in the Fund's portfolio will rise and fall. These fluctuations could be a sustained trend or a drastic movement. The Fund's portfolio will reflect changes in prices of individual portfolio stocks or general changes in stock valuations. Consequently, the Fund's share price may decline.
The Adviser attempts to manage market risk by limiting the amount the Fund invests in each company's equity securities. However, diversification will not protect the Fund against widespread or prolonged declines in the stock market.
Companies with similar characteristics may be grouped together in broad categories called sectors. Sector risk is the possibility that a certain sector may underperform other sectors or the market as a whole. As the Adviser allocates more of the Fund's portfolio holdings to a particular sector, the Fund's performance will be more susceptible to any economic, business or other developments which generally affect that sector.
Due to their relatively low valuations, value stocks are typically less volatile than growth stocks. For instance, the price of a value stock may experience a smaller increase on a forecast of higher earnings, a positive fundamental development, or positive market development. Further, value stocks tend to have higher dividends than growth stocks. This means they depend less on price changes for returns and may lag behind growth stocks in an up market.
<R>
Because the Fund may invest in ADRs, interests in underlying securities issued by foreign companies, the Fund's share price may be more affected by foreign economic and political conditions, taxation policies and accounting and auditing standards than would otherwise be the case.
</R>
<R>
You can purchase or redeem shares any day the New York Stock Exchange (NYSE) is open. When the Fund receives your transaction request in proper form (as described in this prospectus) it is processed at the next calculated net asset value (NAV). NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. From time to time, the Fund may purchase foreign securities that trade in foreign markets on days the NYSE is closed. The value of the Fund's assets may change on days you cannot purchase or redeem Shares. The Fund does not charge a front-end sales charge. The Fund generally values equity securities according to the last sale price in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market).
</R>
The Fund's current NAV and public offering price may be found in the mutual funds section of certain local newspapers under "Federated."
The required minimum initial investment for Fund Shares is $25,000. There is no required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $25,000 minimum is reached within 90 days. An institutional investor's minimum investment is calculated by combining all accounts it maintains with the Fund. Accounts established through investment professionals may be subject to a smaller minimum investment amount. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions.
The Fund's Distributor, Federated Securities Corp., markets the Shares described in this prospectus to institutions or to individuals, directly or through investment professionals.
The Distributor and its affiliates may pay out of their assets other amounts (including items of material value) to investment professionals for marketing and servicing Shares. The Distributor is a subsidiary of Federated Investors, Inc. (Federated).
You may purchase Shares through an investment professional or directly from the Fund. The Fund reserves the right to reject any request to purchase Shares.
Investment professionals should send payments according to the instructions in the sections "By Wire" or "By Check."
You will become the owner of Shares and your Shares will be priced at the next calculated NAV after the Fund receives your wire or your check. If your check does not clear, your purchase will be canceled and you could be liable for any losses or fees incurred by the Fund or Federated Shareholder Services Company, the Fund's transfer agent.
An institution may establish an account and place an order by calling the Fund and the Shares will be priced at the next calculated NAV after the Fund receives the order.
Send your wire to:
| State Street Bank and Trust Company | |
| Boston, MA | |
| Dollar Amount of Wire | |
| ABA Number 011000028 | |
| Attention: EDGEWIRE | |
| Wire Order Number, Dealer Number or Group Number | |
| Nominee/Institution Name | |
| Fund Name and Number and Account Number |
You cannot purchase Shares by wire on holidays when wire transfers are restricted.
Make your check payable to The Federated Funds, note your account number on the check, and mail it to:
| Federated Shareholder Services Company | |
| P.O. Box 8600 | |
| Boston, MA 02266-8600 | |
If you send your check by a private courier or overnight delivery service that requires a street address, mail it to:
| Federated Shareholder Services Company | |
| 1099 Hingham Street | |
| Rockland, MA 02370-3317 | |
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will not accept third-party checks (checks originally payable to someone other than you or The Federated Funds).
Once you have opened an account, you may purchase additional Shares through a depository institution that is an ACH member. This purchase option can be established by completing the appropriate sections of the New Account Form.
You may purchase Shares as retirement investments (such as qualified plans and IRAs or transfer or rollover of assets). Call your investment professional or the Fund for information on retirement investments. We suggest that you discuss retirement investments with your tax adviser. You may be subject to an annual IRA account fee.
You should redeem Shares:
Submit your redemption request to your investment professional by the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption amount you will receive is based upon the next calculated NAV after the Fund receives the order from your investment professional.
<R>
You may redeem Shares by simply calling the Fund at 1-800-341-7400. If you call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time) you will receive a redemption amount based on that day's NAV.
</R>
You may redeem Shares by mailing a written request to the Fund.
You will receive a redemption amount based on the next calculated NAV after the Fund receives your written request in proper form.
Send requests by mail to:
| Federated Shareholder Services Company | |
| P.O. Box 8600 | |
| Boston, MA 02266-8600 | |
Send requests by private courier or overnight delivery service to:
| Federated Shareholder Services Company | |
| 1099 Hingham Street | |
| Rockland, MA 02370-3317 | |
All requests must include:
Call your investment professional or the Fund if you need special instructions.
Signatures must be guaranteed if:
A signature guarantee is designed to protect your account from fraud. Obtain a signature guarantee from a bank or trust company, savings association, credit union or broker, dealer, or securities exchange member. A notary public cannot provide a signature guarantee.
Your redemption proceeds will be mailed by check to your address of record. The following payment options are available if you complete the appropriate section of the New Account Form or an Account Service Options Form. These payment options require a signature guarantee if they were not established when the account was opened:
Although the Fund intends to pay Share redemptions in cash, it reserves the right to pay the redemption price in whole or in part by a distribution of the Fund's portfolio securities.
Redemption proceeds normally are wired or mailed within one business day after receiving a request in proper form. Payment may be delayed up to seven days:
You will not accrue interest or dividends on uncashed checks from the Fund if those checks are undeliverable and returned to the Fund.
In the absence of your specific instructions, 10% of the value of your redemption from a retirement account in the Fund may be withheld for taxes. This withholding only applies to certain types of retirement accounts.
The Fund will record your telephone instructions. If the Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions.
<R>
The Fund no longer issues share certificates. If you are redeeming Shares represented by certificates previously issued by the Fund, you must return the certificates with your written redemption request. For your protection, send your certificates by registered or certified mail, but do not endorse them.
</R>
You will receive confirmation of purchases and redemptions. In addition, you will receive periodic statements reporting all account activity, including dividends and capital gains paid.
The Fund declares and pays any dividends quarterly to shareholders. Dividends are paid to all shareholders invested in the Fund on the record date. The record date is the date on which a shareholder must officially own Shares in order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital gain distribution, you will pay the full price for the Shares and then receive a portion of the price back in the form of a taxable distribution, whether or not you reinvest the distribution in Shares. Therefore, you should consider the tax implications of purchasing Shares shortly before the Fund declares a dividend or capital gain. Contact your investment professional or the Fund for information concerning when dividends and capital gains will be paid.
Due to the high cost of maintaining accounts with low balances, non-retirement accounts may be closed if redemptions cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum.
The Fund sends an annual statement of your account activity to assist you in completing your federal, state and local tax returns. Fund distributions of dividends and capital gains are taxable to you whether paid in cash or reinvested in the Fund. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time the Fund holds its assets.
Fund distributions are expected to be both dividends and capital gains. Redemptions are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability.
The Board of Trustees governs the Fund. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Fund's assets, including buying and selling portfolio securities. The Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
<R>
The Adviser and other subsidiaries of Federated advise approximately 176 mutual funds and separate accounts, which totaled approximately $125 billion in assets as of December 31, 1999. Federated was established in 1955 and is one of the largest mutual fund investment managers in the United States with approximately 1,900 employees. More than 4,000 investment professionals make Federated Funds available to their customers.
</R>
<R>
Michael P. Donnelly has been a Portfolio Manager of the Fund since November 1997. He is Vice President of the Fund. Mr. Donnelly joined Federated in 1989 as an Investment Analyst. He served as a Portfolio Manager from 1994 to 1998 and became a Senior Portfolio Manager in 1998. He was a Vice President of the Fund's Adviser from 1994 to 1999. In May 1999, Mr. Donnelly became a Senior Vice President of the Fund's Adviser. Mr. Donnelly is a Chartered Financial Analyst and received his M.B.A. from the University of Virginia.
</R>
Kevin R. McCloskey was named a Portfolio Manager of the Fund in October 1999. Mr. McCloskey joined Federated in 1999 as a Portfolio Manager and is a Vice President of the Fund's Adviser. From September 1994 to July 1999, he served as a portfolio manager, and from January 1994 to September 1994, he served as an investment/quantitative analyst at Killian Asset Management Corporation. Mr. McCloskey is a Chartered Financial Analyst. He earned his M.B.A. with concentrations in investment management and quantitative methods from the University of Dayton.
The Adviser receives an annual investment advisory fee based on the Fund's average daily net assets as shown in the chart below. The Adviser may voluntarily waive a portion of its fee or reimburse the Fund for certain operating expenses.
| Average Daily Net Assets | Advisory Fee as a Percentage of Average Daily Net Assets |
|
| First $500 million | 0.750% | |
| Second $500 million | 0.675% | |
| Third $500 million | 0.600% | |
| Fourth $500 million | 0.525% | |
| Over $2 billion | 0.400% | |
<R>
Under the investment advisory contract, the Adviser will waive or reimburse the Fund the amount, limited to the amount of the advisory fee, by which the Fund's aggregate annual operating expenses, including its investment advisory fee but excluding interest, taxes, brokerage commissions, expenses of registering and qualifying the Fund and its Shares under federal and state laws, expenses of withholding taxes and extraordinary expenses, exceed 1.00% of its average daily net assets. This does not include reimbursement to the Fund of any expenses incurred by shareholders who use the transfer agent's subaccounting facilities.
</R>
<R>
The following Financial Highlights will help you understand the Fund's financial performance for its past five fiscal years. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in the Fund, assuming reinvestment of any dividends and capital gains.
</R>
<R>
The Financial Highlights for the years ended October 31, 2000 and October 31, 1999, have been audited by Deloitte & Touche LLP. The Financial Highlights for each of the years in the three years ended October 31, 1998, were audited by other auditors. Deloitte & Touche LLP's report is included with the Fund's audited financial statements in this prospectus.
</R>
(For a Share Outstanding Throughout Each Period)
Reference is made to the Independent Auditors' Report on page 29.
|
Year Ended October 31 |
|
2000 |
|
|
1999 |
1 |
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
|
|||||||||||||||
|
Net Asset Value, Beginning of Period |
|
$37.83 |
|
|
$38.07 |
|
|
$39.90 |
|
|
$34.38 |
|
|
$30.66 |
|
|
|
|||||||||||||||
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net investment income |
|
0.38 |
|
|
0.37 |
|
|
0.37 |
|
|
0.36 |
|
|
0.53 |
|
|
|
|||||||||||||||
|
Net realized and unrealized gain on investments |
|
1.53 |
|
|
3.64 |
|
|
5.38 |
|
|
9.54 |
|
|
5.84 |
|
|
|
|||||||||||||||
|
TOTAL FROM INVESTMENT OPERATIONS |
|
1.91 |
|
|
4.01 |
|
|
5.75 |
|
|
9.90 |
|
|
6.37 |
|
|
|
|||||||||||||||
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Distributions from net investment income |
|
(0.37 |
) |
|
(0.36 |
) |
|
(0.36 |
) |
|
(0.38 |
) |
|
(0.51 |
) |
|
|
|||||||||||||||
|
Distributions from net realized gain on investments |
|
(2.55 |
) |
|
(3.89 |
) |
|
(7.22 |
) |
|
(4.00 |
) |
|
(2.14 |
) |
|
|
|||||||||||||||
|
TOTAL DISTRIBUTIONS |
|
(2.92 |
) |
|
(4.25 |
) |
|
(7.58 |
) |
|
(4.38 |
) |
|
(2.65 |
) |
|
|
|||||||||||||||
|
Net Asset Value, End of Period |
|
$36.82 |
|
|
$37.83 |
|
|
$38.07 |
|
|
$39.90 |
|
|
$34.38 |
|
|
|
|||||||||||||||
|
Total Return2 |
|
5.49 |
% |
|
11.03 |
% |
|
16.40 |
% |
|
32.27 |
% |
|
22.08 |
% |
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Expenses |
|
0.94 |
% |
|
0.95 |
% |
|
0.96 |
% |
|
0.99 |
% |
|
0.99 |
% |
|
|
|||||||||||||||
|
Net investment income |
|
1.06 |
% |
|
0.98 |
% |
|
0.98 |
% |
|
0.99 |
% |
|
1.64 |
% |
|
|
|||||||||||||||
|
Expense waiver/reimbursement3 |
|
0.10 |
% |
|
0.10 |
% |
|
0.11 |
% |
|
0.13 |
% |
|
0.15 |
% |
|
|
|||||||||||||||
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net assets, end of period (000 omitted) |
|
$1,456,221 |
|
|
$1,659,250 |
|
|
$1,448,819 |
|
|
$1,174,018 |
|
|
$830,545 |
|
|
|
|||||||||||||||
|
Portfolio turnover |
|
26 |
% |
|
25 |
% |
|
41 |
% |
|
71 |
% |
|
55 |
% |
|
|
|||||||||||||||
1 For the year ended October 31, 1999, the Fund was audited by Deloitte & Touche LLP. Each of the previous years was audited by other auditors.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
October 31, 2000
|
Shares |
|
|
|
Value |
|||||||||||
|
|
|||||||||||||||
|
|
|
COMMON STOCKS--99.2% |
|
|
|
||||||||||
|
|
|
Basic Materials--2.8% |
|
|
|
||||||||||
|
303,000 |
|
Du Pont (E.I.) de Nemours & Co. |
|
$ |
13,748,625 |
||||||||||
|
375,500 |
|
International Paper Co. |
|
|
13,752,687 |
||||||||||
|
283,300 |
|
PPG Industries, Inc. |
|
|
12,642,263 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
40,143,575 |
||||||||||
|
|
|||||||||||||||
|
|
|
Capital Goods--8.6% |
|
|
|
||||||||||
|
336,400 |
|
Ingersoll-Rand Co. |
|
|
12,699,100 |
||||||||||
|
256,700 |
|
Johnson Controls, Inc. |
|
|
15,305,737 |
||||||||||
|
517,010 |
|
Koninklijke (Royal) Philips Electronics NV, ADR |
|
|
20,648,087 |
||||||||||
|
196,600 |
|
Northrop Grumman Corp. |
|
|
16,514,400 |
||||||||||
|
373,600 |
|
Parker-Hannifin Corp. |
|
|
15,457,700 |
||||||||||
|
187,800 |
|
Textron, Inc. |
|
|
9,472,163 |
||||||||||
|
467,544 |
|
Tyco International Ltd. |
|
|
26,503,901 |
||||||||||
|
420,400 |
|
Waste Management, Inc. |
|
|
8,408,000 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
125,009,088 |
||||||||||
|
|
|||||||||||||||
|
|
|
Communication Services--4.2% |
|
|
|
||||||||||
|
468,850 |
|
AT&T Corp. |
|
|
10,871,459 |
||||||||||
|
489,800 |
|
Sprint Corp. (Fon Group) |
|
|
12,489,900 |
||||||||||
|
512,156 |
|
Verizon Communications |
|
|
29,609,019 |
||||||||||
|
364,000 |
1 |
WorldCom, Inc. |
|
|
8,645,000 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
61,615,378 |
||||||||||
|
|
|||||||||||||||
|
|
|
Consumer Cyclicals--6.5% |
|
|
|
||||||||||
|
367,900 |
|
Block (H&R), Inc. |
|
|
13,129,431 |
||||||||||
|
856,200 |
1 |
Cendant Corp. |
|
|
10,274,400 |
||||||||||
|
952,900 |
|
Cooper Tire & Rubber Co. |
|
|
10,422,344 |
||||||||||
|
351,200 |
1 |
Federated Department Stores, Inc. |
|
|
11,435,950 |
||||||||||
|
609,064 |
|
Ford Motor Co. |
|
|
15,911,797 |
||||||||||
|
189,230 |
|
General Motors Corp. |
|
|
11,755,914 |
||||||||||
|
288,200 |
|
TRW, Inc. |
|
|
12,104,400 |
||||||||||
|
204,200 |
|
Wal-Mart Stores, Inc. |
|
|
9,265,575 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
94,299,811 |
||||||||||
|
|
|||||||||||||||
|
|
|
Consumer Staples--11.1% |
|
|
|
||||||||||
|
798,800 |
1 |
Charter Communications, Inc. |
|
|
15,576,600 |
||||||||||
|
342,600 |
|
General Mills, Inc. |
|
|
14,303,550 |
||||||||||
|
365,000 |
|
Kimberly-Clark Corp. |
|
|
24,090,000 |
||||||||||
|
449,600 |
|
Nabisco Group Holdings Corp. |
|
|
12,982,200 |
||||||||||
|
674,400 |
|
News Corp. Ltd., ADR |
|
|
24,404,850 |
||||||||||
|
517,200 |
|
Philip Morris Cos., Inc. |
|
|
18,942,450 |
||||||||||
|
640,600 |
|
Sara Lee Corp. |
|
|
13,812,938 |
||||||||||
|
572,200 |
|
UST, Inc. |
|
|
14,448,050 |
||||||||||
|
396,000 |
1 |
Viacom, Inc., Class A |
|
|
22,671,000 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
161,231,638 |
||||||||||
|
|
|||||||||||||||
|
|
|
Energy--10.4% |
|
|
|
||||||||||
|
471,800 |
|
Ashland, Inc. |
|
|
15,451,450 |
||||||||||
|
181,500 |
|
Chevron Corp. |
|
|
14,905,687 |
||||||||||
|
606,400 |
|
ENSCO International, Inc. |
|
|
20,162,800 |
||||||||||
|
245,800 |
|
ExxonMobil Corp. |
|
|
21,922,287 |
||||||||||
|
264,000 |
|
Kerr-McGee Corp. |
|
|
17,242,500 |
||||||||||
|
342,800 |
|
Royal Dutch Petroleum Co., ADR |
|
|
20,353,750 |
||||||||||
|
196,000 |
|
Texaco, Inc. |
|
|
11,576,250 |
||||||||||
|
505,700 |
|
Tosco Corp. |
|
|
14,475,663 |
||||||||||
|
539,500 |
|
USX - Marathon Group, Inc. |
|
|
14,667,656 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
150,758,043 |
||||||||||
|
|
|||||||||||||||
|
|
|
Financials--21.9% |
|
|
|
||||||||||
|
241,975 |
|
ABB AB, ADR |
|
|
21,498,099 |
||||||||||
|
291,100 |
|
Allmerica Financial Corp. |
|
|
18,357,494 |
||||||||||
|
556,300 |
|
Allstate Corp. |
|
|
22,391,075 |
||||||||||
|
391,700 |
|
Bank of America Corp. |
|
|
18,826,081 |
||||||||||
|
332,006 |
|
Bear Stearns Cos., Inc. |
|
|
20,127,864 |
||||||||||
|
182,400 |
|
CIGNA Corp. |
|
|
22,243,680 |
||||||||||
|
686,300 |
|
CIT Group, Inc., Class A |
|
|
11,967,356 |
||||||||||
|
1,899,700 |
|
Conseco, Inc. |
|
|
13,179,169 |
||||||||||
|
351,900 |
|
First Union Corp. |
|
|
10,666,969 |
||||||||||
|
414,800 |
|
Lincoln National Corp. |
|
|
20,065,950 |
||||||||||
|
241,600 |
|
Loews Corp. |
|
|
21,970,500 |
||||||||||
|
273,600 |
|
MBIA, Inc. |
|
|
19,887,300 |
||||||||||
|
158,450 |
|
Marsh & McLennan Cos., Inc. |
|
|
20,717,337 |
||||||||||
|
372,500 |
|
Morgan Stanley, Dean Witter & Co. |
|
|
29,916,406 |
||||||||||
|
409,300 |
|
PNC Financial Services Group |
|
|
27,371,938 |
||||||||||
|
463,700 |
|
Washington Mutual, Inc. |
|
|
20,402,800 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
319,590,018 |
||||||||||
|
|
|||||||||||||||
|
|
|
Health Care--10.4% |
|
|
|
||||||||||
|
488,000 |
|
Abbott Laboratories |
|
|
25,772,500 |
||||||||||
|
258,900 |
|
Baxter International, Inc. |
|
|
21,278,344 |
||||||||||
|
474,000 |
|
Bristol-Myers Squibb Co. |
|
|
28,884,375 |
||||||||||
|
1,639,800 |
1 |
HEALTHSOUTH Corp. |
|
|
19,677,600 |
||||||||||
|
250,600 |
|
Merck & Co., Inc. |
|
|
22,538,337 |
||||||||||
|
259,922 |
|
Pharmacia Corp. |
|
|
14,295,710 |
||||||||||
|
178,700 |
|
UnitedHealth Group, Inc. |
|
|
19,545,313 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
151,992,179 |
||||||||||
|
|
|||||||||||||||
|
|
|
Technology--15.7% |
|
|
|
||||||||||
|
542,100 |
|
Compaq Computer Corp. |
|
|
16,485,261 |
||||||||||
|
193,800 |
1 |
Computer Sciences Corp. |
|
|
12,209,400 |
||||||||||
|
243,500 |
|
Electronic Data Systems Corp. |
|
|
11,429,281 |
||||||||||
|
523,600 |
|
First Data Corp. |
|
|
26,245,450 |
||||||||||
|
831,300 |
|
Galileo International, Inc. |
|
|
16,418,175 |
||||||||||
|
199,275 |
|
General Motors Corp., Class H |
|
|
6,456,510 |
||||||||||
|
215,300 |
|
International Business Machines Corp. |
|
|
21,207,050 |
||||||||||
|
283,500 |
1 |
Lexmark International Group, Class A |
|
|
11,623,500 |
||||||||||
|
348,800 |
|
Lucent Technologies, Inc. |
|
|
8,131,400 |
||||||||||
|
506,000 |
|
Motorola, Inc. |
|
|
12,618,375 |
||||||||||
|
1,586,000 |
1 |
Novell, Inc. |
|
|
14,274,000 |
||||||||||
|
351,800 |
1 |
Seagate Technology, Inc. |
|
|
24,582,025 |
||||||||||
|
896,600 |
1 |
Storage Technology Corp. |
|
|
8,741,850 |
||||||||||
|
287,800 |
1 |
Sun Microsystems, Inc. |
|
|
31,909,825 |
||||||||||
|
550,000 |
1 |
Unisys Corp. |
|
|
7,012,500 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
229,344,602 |
||||||||||
|
|
|||||||||||||||
|
|
|
Transportation--1.1% |
|
|
|
||||||||||
|
334,200 |
|
Union Pacific Corp. |
|
|
15,665,625 |
||||||||||
|
|
|||||||||||||||
|
|
|
Utilities--6.5% |
|
|
|
||||||||||
|
772,100 |
|
Edison International |
|
|
18,433,888 |
||||||||||
|
601,500 |
|
Entergy Corp. |
|
|
23,044,969 |
||||||||||
|
286,800 |
|
FPL Group, Inc. |
|
|
18,928,800 |
||||||||||
|
426,000 |
|
Public Service Enterprises Group, Inc. |
|
|
17,679,000 |
||||||||||
|
408,500 |
|
Reliant Energy, Inc. |
|
|
16,876,156 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL |
|
|
94,962,813 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL COMMON STOCKS (IDENTIFIED COST $1,150,963,550) |
|
|
1,444,612,770 |
||||||||||
|
|
|||||||||||||||
|
|
|
MUTUAL FUND--0.9% |
|
|
|
||||||||||
|
13,724,453 |
|
Prime Value Obligations Fund, Class IS (at net asset value) |
|
|
13,724,453 |
||||||||||
|
|
|||||||||||||||
|
|
|
TOTAL INVESTMENTS (IDENTIFIED COST $1,164,688,003)2 |
|
$ |
1,458,337,223 |
||||||||||
|
|
|||||||||||||||
1 Denotes a non-income producing security.
2 The cost of investments for federal tax purposes amounts to $1,164,749,744. The net unrealized appreciation of investments on a federal tax basis amounts to $293,587,479 which is comprised of $469,603,895 appreciation and $176,016,416 depreciation at October 31, 2000.
Note: The categories of investments are shown as a percentage of net assets ($1,456,221,275) at October 31, 2000.
The following acronym is used throughout this portfolio:
|
ADR |
--American Depositary Receipt |
See Notes which are an integral part of the Financial Statements
October 31, 2000
|
Assets: |
|
|
|
|
|
|
|
Total investments in securities, at value (identified cost $1,164,688,003 and tax cost $1,164,749,744) |
|
|
|
|
$ |
1,458,337,223 |
|
Income receivable |
|
|
|
|
|
1,339,286 |
|
Receivable for shares sold |
|
|
|
|
|
1,768,345 |
|
|
||||||
|
TOTAL ASSETS |
|
|
|
|
|
1,461,444,854 |
|
|
||||||
|
Liabilities: |
|
|
|
|
|
|
|
Payable for shares redeemed |
|
$ |
4,911,367 |
|
|
|
|
Payable to Bank |
|
|
9,242 |
|
|
|
|
Accrued expenses |
|
|
302,970 |
|
|
|
|
|
||||||
|
TOTAL LIABILITIES |
|
|
|
|
|
5,223,579 |
|
|
||||||
|
Net assets for 39,552,699 shares outstanding |
|
|
|
|
$ |
1,456,221,275 |
|
|
||||||
|
Net Assets Consist of: |
|
|
|
|
|
|
|
Paid in capital |
|
|
|
|
$ |
1,049,897,382 |
|
Net unrealized appreciation of investments |
|
|
|
|
|
293,649,220 |
|
Accumulated net realized gain on investments |
|
|
|
|
|
110,744,542 |
|
Undistributed net investment income |
|
|
|
|
|
1,930,131 |
|
|
||||||
|
TOTAL NET ASSETS |
|
|
|
|
$ |
1,456,221,275 |
|
|
||||||
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share: |
|
|
|
|
|
|
|
$1,456,221,275 ÷ 39,552,699 shares outstanding |
|
|
|
|
|
$36.82 |
|
|
||||||
See Notes which are an integral part of the Financial Statements
Year Ended October 31, 2000
|
Investment Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends (net of foreign taxes withheld of $186,173) |
|
|
|
|
|
|
|
|
|
$ |
29,767,419 |
|
|
Interest |
|
|
|
|
|
|
|
|
|
|
1,074,268 |
|
|
|
||||||||||||
|
TOTAL INCOME |
|
|
|
|
|
|
|
|
|
|
30,841,687 |
|
|
|
||||||||||||
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment adviser fee |
|
|
|
|
|
$ |
10,334,324 |
|
|
|
|
|
|
Administrative personnel and services fee |
|
|
|
|
|
|
1,161,368 |
|
|
|
|
|
|
Custodian fees |
|
|
|
|
|
|
87,772 |
|
|
|
|
|
|
Transfer and dividend disbursing agent fees and expenses |
|
|
|
|
|
|
168,134 |
|
|
|
|
|
|
Directors'/Trustees' fees |
|
|
|
|
|
|
22,887 |
|
|
|
|
|
|
Auditing fees |
|
|
|
|
|
|
13,582 |
|
|
|
|
|
|
Legal fees |
|
|
|
|
|
|
8,477 |
|
|
|
|
|
|
Portfolio accounting fees |
|
|
|
|
|
|
156,929 |
|
|
|
|
|
|
Shareholder services fee |
|
|
|
|
|
|
3,855,282 |
|
|
|
|
|
|
Share registration costs |
|
|
|
|
|
|
29,247 |
|
|
|
|
|
|
Printing and postage |
|
|
|
|
|
|
118,324 |
|
|
|
|
|
|
Insurance premiums |
|
|
|
|
|
|
4,646 |
|
|
|
|
|
|
Miscellaneous |
|
|
|
|
|
|
32,693 |
|
|
|
|
|
|
|
||||||||||||
|
TOTAL EXPENSES |
|
|
|
|
|
|
15,993,665 |
|
|
|
|
|
|
|
||||||||||||
|
Waiver, Reimbursement and Expense Reductions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Waiver of shareholder services fee |
|
$ |
(1,449,462 |
) |
|
|
|
|
|
|
|
|
|
Reimbursement of investment adviser fee |
|
|
(453 |
) |
|
|
|
|
|
|
|
|
|
Fees paid indirectly from broker arrangements |
|
|
(13,073 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
TOTAL WAIVER, REIMBURSEMENT AND EXPENSE REDUCTIONS |
|
|
|
|
|
|
(1,462,988 |
) |
|
|
|
|
|
|
||||||||||||
|
Net expenses |
|
|
|
|
|
|
|
|
|
|
14,530,677 |
|
|
|
||||||||||||
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
16,311,010 |
|
|
|
||||||||||||
|
Realized and Unrealized Gain (Loss) on Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments |
|
|
|
|
|
|
|
|
|
|
110,745,708 |
|
|
Net change in unrealized appreciation of investments |
|
|
|
|
|
|
|
|
|
|
(52,963,277 |
) |
|
|
||||||||||||
|
Net realized and unrealized gain on investments |
|
|
|
|
|
|
|
|
|
|
57,782,431 |
|
|
|
||||||||||||
|
Change in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
$ |
74,093,441 |
|
|
|
||||||||||||
See Notes which are an integral part of the Financial Statements
|
Year Ended October 31 |
|
|
2000 |
|
|
|
1999 |
|
|
Increase (Decrease) in Net Assets |
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
16,311,010 |
|
|
$ |
16,250,512 |
|
|
Net realized gain on investments ($110,808,911 and $111,628,083, respectively, as computed for federal tax purposes) |
|
|
110,745,708 |
|
|
|
111,628,083 |
|
|
Net change in unrealized appreciation of investments |
|
|
(52,963,277 |
) |
|
|
28,045,263 |
|
|
|
||||||||
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS |
|
|
74,093,441 |
|
|
|
155,923,858 |
|
|
|
||||||||
|
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
|
(16,237,570 |
) |
|
|
(15,491,074 |
) |
|
Distributions from net realized gain on investments |
|
|
(111,600,043 |
) |
|
|
(148,430,859 |
) |
|
|
||||||||
|
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
|
|
(127,837,613 |
) |
|
|
(163,921,933 |
) |
|
|
||||||||
|
Share Transactions: |
|
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
|
832,506,520 |
|
|
|
682,935,698 |
|
|
Proceeds from shares issued in connection with the tax-free acquisition of assets from WCT Equity Fund |
|
|
22,751,387 |
|
|
|
-- |
|
|
Proceeds from shares issued in connection with the tax-free transfer of assets from Cape Cod Trust, a Common Trust Fund |
|
|
-- |
|
|
|
5,826,243 |
|
|
Proceeds from shares issued in connection with the tax-free transfer of assets from Vermont National Bank, a Common Trust Fund |
|
|
-- |
|
|
|
4,453,500 |
|
|
Net asset value of shares issued to shareholders in payment of distributions declared |
|
|
94,109,835 |
|
|
|
112,836,967 |
|
|
Cost of shares redeemed |
|
|
(1,098,652,645 |
) |
|
|
(587,623,382 |
) |
|
|
||||||||
|
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
|
|
(149,284,903 |
) |
|
|
218,429,026 |
|
|
|
||||||||
|
Change in net assets |
|
|
(203,029,075 |
) |
|
|
210,430,951 |
|
|
|
||||||||
|
Net Assets: |
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
1,659,250,350 |
|
|
|
1,448,819,399 |
|
|
|
||||||||
|
End of period (including undistributed net investment income of $1,930,131 and $1,856,691, respectively) |
|
$ |
1,456,221,275 |
|
|
$ |
1,659,250,350 |
|
|
|
||||||||
See Notes which are an integral part of the Financial Statements
October 31, 2000
Federated Stock Trust (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 objective of the Fund is to provide growth of income and capital by investing principally in a professionally managed and diversified portfolio of common stocks of high-quality companies.
On December 14, 1998, the Fund received a tax-free transfer of assets from Cape Cod Trust, a Common Trust Fund as follows:
|
Shares of |
|
Common Trust |
|
Unrealized |
1 |
|
Net Assets |
|
Net Assets |
|
Net Assets |
|
164,444 |
|
$5,826,243 |
|
$3,853,453 |
|
|
$1,467,220,271 |
|
$5,826,243 |
|
$1,473,046,514 |
|
|
|||||||||||
On July 19, 1999, the Fund received a tax-free transfer of assets from Vermont National Bank, a Common Trust Fund as follows:
|
Shares of |
|
Common Trust |
|
Unrealized |
1 |
|
Net Assets |
|
Net Assets |
|
Net Assets |
|
105,709 |
|
$4,453,500 |
|
$2,423,700 |
|
|
$1,917,930,155 |
|
$4,453,500 |
|
$1,922,383,655 |
|
|
|||||||||||
1 Unrealized appreciation is included in the Common Trust Fund Net Assets Received amounts shown above.
On April 28, 2000, the Fund acquired all the net assets of the WCT Equity Fund ("Acquired Fund") pursuant to a plan of reorganization approved by the Acquired Fund's Shareholders. The acquisition was accomplished by a tax-free exchange as follows:
|
Shares of the Fund Issued |
|
WCT Equity |
|
Unrealized |
2 |
|
Net Assets |
|
Net Assets of |
|
Net Assets |
|
648,927 |
|
$22,751,387 |
|
$4,704,126 |
|
|
$1,525,386,116 |
|
$22,751,387 |
|
$1,548,137,503 |
|
|
|||||||||||
2 Unrealized appreciation is included in the WCT Equity Fund Net Assets Received amount shown above.
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.
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 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at their market value as determined in good faith using methods approved by the Board of Trustees (the "Trustees"). Investments in other open-end regulated investment companies are valued at net asset value.
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.
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 Trustees. 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. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.
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. Non-cash dividends included in dividend income, if any, are recorded at fair value.
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 provision for federal tax is necessary.
The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
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.
Investment transactions are accounted for on a trade date basis.
The declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value).
Transactions in capital stock were as follows:
|
Year Ended October 31 |
|
2000 |
|
|
1999 |
|
|
|
||||||
|
Shares sold |
|
23,795,026 |
|
|
17,620,456 |
|
|
Proceeds from shares issued in connection with the tax-free acquisition of assets from WCT Equity Fund |
|
648,927 |
|
|
-- |
|
|
Shares issued in connection with the tax-free transfer of assets from Cape Cod Trust, a Common Trust Fund |
|
-- |
|
|
164,444 |
|
|
Shares issued in connection with the tax-free transfer of assets from Vermont National Bank, a Common Trust Fund |
|
-- |
|
|
105,709 |
|
|
Shares issued to shareholders in payment of distributions declared |
|
2,673,958 |
|
|
3,081,401 |
|
|
Shares redeemed |
|
(31,426,490 |
) |
|
(15,170,316 |
) |
|
|
||||||
|
NET CHANGE RESULTING FROM SHARE TRANSACTIONS |
|
(4,308,579 |
) |
|
5,801,694 |
|
|
|
||||||
Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.75% of the first $500 million in average daily net assets, 0.675% of the second $500 million in average daily net assets, 0.60% of the third $500 million in average daily net assets, 0.525% of the fourth $500 million in average daily net assets, and 0.40% of average daily net assets in excess of $2 billion. The Adviser will waive its adviser fee or reimburse the Fund for certain operating expenses in an amount, if any, by which the Fund's aggregate annual operating expenses, including its investment adviser fee but excluding interest, taxes, brokerage, commissions, expenses of registering and qualifying the Fund and its shares under federal and state laws, expenses of withholding taxes and extraordinary expenses, exceed 1% of average daily net assets of the Fund.
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund may invest in Prime Value Obligations Fund, which is managed by the Adviser. The Adviser has agreed to reimburse certain investment adviser fees as a result of these transactions.
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 a scale that ranges from 0.15% to 0.075% of the average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per each additional class.
Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net assets of the Fund shares for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.
FServ, through its subsidiary 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.
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.
The Fund directs certain portfolio trades to a broker that in turn pays a portion of the Fund's operating expenses. For the year ended October 31, 2000, the Fund's expenses were reduced by $13,073 under these arrangements.
Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.
Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the year ended October 31, 2000 were as follows:
|
Purchases |
|
$ |
396,168,856 |
|
|
|||
|
Sales |
|
$ |
646,887,395 |
|
|
|||
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Federated Stock Trust (the "Fund") as of October 31, 2000, and the related statement of operations for the year then ended, and the statement of changes in net assets for the years ended October 31, 2000 and 1999 and the financial highlights for the years then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the three years ended October 31, 1998 were audited by other auditors whose report dated December 21, 1998, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to provide reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at October 31, 2000, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Federated Stock Trust as of October 31, 2000, the results of its operations, the changes in its net assets and its financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
December 8, 2000
<R>
A Statement of Additional Information (SAI) dated December 31, 2000 is incorporated by reference into this prospectus. Additional information about the Fund and its investments is contained in the Fund's SAI and Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report's Management's Discussion of Fund Performance discusses market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and to make inquiries, call your investment professional or the Fund at 1-800-341-7400.
</R>
<R>
You can obtain information about the Fund (including the SAI) by writing to or visiting the SEC's Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.
</R>
Federated
World-Class Investment Manager®
Federated Stock Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-3385
Cusip 313900102
<R>
8120102A (12/00)
</R>
Federated is a registered mark of Federated Investors, Inc.
2000 ©Federated Investors, Inc.
FEDERATED STOCK TRUST
APPENDIX TO THE PROSPECTUS
Risk/Return Bar Chart
The graphic presentation displayed here consists of a bar chart representing the annual total returns of Federated Stock Trust as of
the calendar year-end for each of ten years.
The 'y' axis reflects the "% Total Return" beginning with "-10%" and increasing in increments of 10% up to 40%.
The 'x' axis represents calculation periods for the last ten calendar years of the Fund, beginning with the earliest year. The light
gray shaded chart features ten distinct vertical bars, each shaded in charcoal, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each
calendar year is stated directly at the top of each respective bar, for the calendar years 1990 through 1999, The percentages noted
are: (4.99%), 29.04%, 11.94%, 12.49%, (0.45%), 35.63%, 21.17%, 34.42%, 17.26% and 6.08%.
Federated
World-Class Investment Manager®
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Annual Report for the 12 Months Ended October 31, 2000
The fiscal year ended October 31, 2000, provided another positive period of returns for the fund. The fund provided a total return of 5.49% versus 10.94% and 6.07% for the Lipper Multi-Cap Value Funds Average and the Standard & Poor's 500 Index (S&P 500), respectively.
The fiscal year started with a speculative boom in technology and internet related stocks and finished with a more favorable environment for value managers. From the beginning of the fiscal year through the March 10, 2000 peak in technology stocks, the NASDAQ Composite rose over 70%, the S&P 500, which at the time had over one-third of its capitalization in technology stocks, rose 3.5% and the fund lost over 6% of its value. From March 10, 2000 through the end of the fiscal year, the picture changed dramatically: the NASDAQ Composite lost 33% of its value, the S&P 500 rose roughly 3% and the fund rose nearly 14% in value. This dramatic shift in sentiment towards such a large sector of the overall market in such a short period of time is historically unprecedented. As enthusiasm for the unlimited potential of the "new economy" percolated to a fevered crescendo, the reality of normal business cycles and the historic difficulty of sustaining long-term, defendable, profitable business franchises within technology took over. As the year evolved, expectations about economic growth changed dramatically as well. Rising energy costs and the six tightenings of the Federal Reserve Board (the "Fed") policy which took place between the middle of 1999 and May 2000 served to reduce earnings expectations for both "new economy" and "old economy" companies. Given the extended valuations of many "new economy" companies and the relatively reasonable levels of valuation for many "old economy" companies, these reduced expectations hit the highflying "new economy" companies much harder than their "old economy" counterparts.
Aiding relative performance for the year was favorable security performance in the healthcare (HEALTHSOUTH Corp. and United Health Group), consumer staples (Nabisco Group Holdings) and utilities sectors (Reliant Energy, Inc. and Entergy Corp.) as well as an overweight position in the strong performing energy and utilities sectors. Nearly equally offsetting these positive influences was an overweight position in the poor performing consumer cyclical sector as well as unfavorable security performance in the technology (Unisys Corp. and Novell, Inc.), consumer cyclical (Federated Department Stores, Inc. and Cendant Corp.) and communication services sectors (AT&T Corp.).
Looking ahead, we believe that the market's rotation back towards value investing has staying power. Recent market activity has been described by "the four Rs": a "return to reasonableness" and "recognition of risk." The market should be more balanced going forward as participants have been reacquainted with the notion that valuation does matter. Over time, we believe that our proprietary valuation models and security selection process can add value for our investors. Our focus is to identify leading companies that are temporarily out of favor and appear inexpensive relative to their history relative to the market as well as to their expected growth. We will continue to add these undervalued securities to the portfolio and eliminate those that appear overvalued.
|
Average Annual Total Return for the Year Ended October 31, 2000 |
|
|
|
1 Year |
|
5.49% |
|
5 Years |
|
17.10% |
|
10 Years |
|
17.85% |
|
Start of Performance (3/31/1982) |
|
16.26% |
The graph above illustrates the hypothetical investment of $25,0001 in the Federated Stock Trust (the "Fund") from October 31, 1990 to October 31, 2000 compared to the Standard and Poor's 500 Index (S&P 500)2 and the Lipper Multi-Cap Value Funds Average (LMCVFA).3
Past performance is no guarantee of future results. Your investment return and principal value will fluctuate so when shares are redeemed, they may be worth more or less than their original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated December 31, 2000, and, together with financial statements contained therein, constitutes the Fund's annual report.
1 The Fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500 and the LMCVFA have been adjusted to reflect reinvestment of dividends on securities in the index and the average.
2 The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission (the "SEC") requires to be reflected in the Fund's performance. This index is unmanaged.
3 The LMCVFA represents the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the category, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in a fund's performance.
Federated
World-Class Investment Manager®
Federated Stock
Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA
15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated
Securities Corp., Distributor
Cusip 313900102
006682-ARS (12/00)
Federated is a registered mark of Federated Investors, Inc.
2000 ©Federated
Investors, Inc.
FEDERATED STOCK TRUST
APPENDIX TO THE MANAGEMENT DISCUSSION OF FUND PERFORMANCE
Growth of $25,000 Invested in Federated Stock Trust
The graphic presentation displayed here consists of a line graph. The corresponding components of the line graph are listed underneath. The Federated Stock Trust (the "Fund") is represented by a solid line. The Standard & Poor's 500 Index (S&P 500) is represented by a dotted line. The Lipper Multi-Cap Value Funds Average (LMCVFA) is represented by a dashed line. The line graph is a visual representation of a comparison of change in value of a $25,000 hypothetical investment in the Fund, the S&P 500 and the LMCVFA. The "x" axis reflects computation periods from 10/31/90 to 10/31/00. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the S&P 500 and the LMCVFA. The ending values were $129,235, $147,417 and $110,856, respectively.
|
|