FEDERATED
HIGH
YIELD
TRUST
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
AUGUST 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314197104
8092705 (10/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
High Yield Trust (the "Trust"). This report covers the six-month period ended
August 31, 1994, and includes the Trust's Investment Review, Portfolio of
Investments, and Financial Statements.
The Trust continues to pursue the significant opportunities available in the
lower-grade corporate bond market. Its carefully researched, highly diversified
portfolio includes more than 100 companies across 35 industries. These companies
include such market leaders as Dr. Pepper, Bell & Howell, Owens Illinois,
Revlon, and American Standard.
During the six-month period ended August 31, 1994, the Trust paid dividends of
$0.42 per share, for a total of $18.9 million. At the end of the period, the
Trust's net assets stood at $409.8 million, and its net asset value was $8.68.
We thank you for selecting Federated High Yield Trust, and welcome your
questions and comments.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
October 14, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The resurgence in the U.S. economy has been the driving force in financial
markets so far in 1994. Extremely low interest rates at the end of 1993 resulted
in very strong economic growth in the first half of 1994, led by the housing and
auto markets. The capital spending sector appears to be gaining momentum. Also,
international economies, while still lagging behind the U.S., are starting to
show signs of strength. The simultaneous expansion of world economies could lead
to surprisingly strong growth well into 1995. The major limiting factor would be
the increase in interest rates, which could slow those interest sensitive
sectors.
The rebound in the economy has been both positive and negative for high yield
securities. The stronger economy has improved the financial outlook for many
high yield issuers, as cash flow has increased and debt servicing ability has
improved. The improvement in credit quality has caused the spread between high
yield corporate bonds and government bonds to narrow, resulting in strong
relative performance for the high yield sector. Unfortunately, stronger economic
growth has rekindled the fears of inflation, driving interest rates higher and
all bond prices (including high yield bonds) lower.
Given this environment, the Trust has generated attractive relative returns for
shareholders, although the increase in interest rates has negatively impacted
absolute returns. Year-to-date through August 31, 1994, the Trust had a negative
total return of 1.90%, versus a negative total return of 2.52% for the Lipper
High Yield Index.* In addition, the Trust's 1-year, 5-year and 10-year total
return figures for the period ended September 30, 1994 were 4.33%, 11.04%, and
11.54%, respectively.** The Trust's strong relative performance reflects its
overweight in cyclicals which performed well given the economic rebound. The
Trust also benefited by avoiding deteriorating credit situations, especially the
casino sector, which has been a notable under performer in 1994.
As of August 31, 1994, the Trust's five largest positions were: American
Standard, an internationally diversified industrial company with operations in
plumbing products, air conditioning and braking systems; Flagstar Corporation,
one of the largest food service enterprises in the U.S. operating through
franchises; Stone Container, a leading paper company; Domtar, a Canadian paper
products concern; and Uniroyal Chemical, a specialty chemical company focused on
crop protection and rubber chemicals. The Trust owns 121 different securities in
35 different industries.
As we look out over the balance of 1994 and into 1995, the Trust's management
believes the economy should continue to expand. Therefore, the Trust remains
overweighted in cyclical industries such as paper, chemicals and steels. The
Trust's adviser has also modestly raised the average coupon of the Trust, in
order to limit the volatility of the portfolio to changes in interest rates.
Also, while remaining relatively fully invested, the Trust's adviser has allowed
cash to move to the upper end of its zero to 5% range. Continued economic
strength should make high yield bonds an attractive relative investment going
forward, while absolute returns will be governed by the overall level of
interest rates.
* This index is unmanaged.
** Past performance may not be indicative of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost.
FEDERATED HIGH YIELD TRUST
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994
(UNAUDITED)
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--92.8%
- -----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.5%
---------------------------------------------------------------
$ 2,000,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 $ 2,000,000
--------------------------------------------------------------- ------------
AIR TRANSPORTATION--0.6%
---------------------------------------------------------------
3,000,000 USAir, Inc., Pass Thru Cert., Series 1993-A, 10.375%, 3/1/2013 2,625,000
--------------------------------------------------------------- ------------
AUTOMOTIVE--3.2%
---------------------------------------------------------------
2,250,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004* 2,306,250
---------------------------------------------------------------
3,500,000 Doehler-Jarvis, Inc., Sr. Note, 11.875%, 6/1/2002 3,508,750
---------------------------------------------------------------
3,500,000 Lear Seating Corp., Sub. Note, 8.25%, 2/1/2002 3,202,500
---------------------------------------------------------------
4,000,000 Motor Wheel Corp., Sr. Note, 11.50%, 3/1/2000 3,980,000
--------------------------------------------------------------- ------------
Total 12,997,500
--------------------------------------------------------------- ------------
BANKING--0.9%
---------------------------------------------------------------
3,625,000 First Nationwide Holdings Inc., Sr. Note, 12.25%, 5/15/2001* 3,779,062
--------------------------------------------------------------- ------------
BEVERAGE & TOBACCO--1.8%
---------------------------------------------------------------
6,000,000 Dr. Pepper Bottling Holdings Co., Sr. Disc. Note, 0/11.625%,
2/15/2003 4,050,000
---------------------------------------------------------------
3,750,000 Heileman Acquisition Co., Sr. Sub. Note, 9.625%, 1/31/2004 3,206,250
--------------------------------------------------------------- ------------
Total 7,256,250
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BROADCAST RADIO & TV--4.4%
---------------------------------------------------------------
5,000,000 Ackerly Communications, Inc., Sr. Secd. Note, 10.75%, 10/1/2003 4,750,000
---------------------------------------------------------------
3,750,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 3,909,375
---------------------------------------------------------------
6,250,000 SCI Television, Inc., Sr. Secd. Note, 11.00%, 6/30/2005 6,390,625
---------------------------------------------------------------
2,950,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 12/15/2003 2,846,750
--------------------------------------------------------------- ------------
Total 17,896,750
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BUSINESS EQUIPMENT & SERVICES--2.6%
---------------------------------------------------------------
3,250,000 Anacomp, Inc., Sr. Sub. Note, 15.00%, 11/1/2000 3,623,750
---------------------------------------------------------------
5,350,000 Bell & Howell Co., Sr. Sub. Note, 10.75%, 10/1/2002 5,243,000
---------------------------------------------------------------
</TABLE>
FEDERATED HIGH YIELD TRUST
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--CONTINUED
---------------------------------------------------------------
$ 2,350,000 Bell & Howell Holdings Co., Sr. Disc. Deb., 0/11.50%, 3/1/2005 $ 1,198,500
---------------------------------------------------------------
218,221 San Jacinto Holdings, Inc., Sr. Sub. Note, 8.00%, 12/31/2000 121,113
---------------------------------------------------------------
545,460 San Jacinto Holdings, Inc., Sub. PIK Deb., 8.00%, 12/31/2000 384,549
--------------------------------------------------------------- ------------
Total 10,570,912
--------------------------------------------------------------- ------------
CABLE TV--5.9%
---------------------------------------------------------------
4,500,000 Cablevision Industries Corp., Sr. Note, 9.25%, 4/1/2008 3,960,000
---------------------------------------------------------------
5,000,000 Cablevision Systems Co., Sr. Sub. Deb., 9.875%, 2/15/2013 4,737,500
---------------------------------------------------------------
5,500,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 5,060,000
---------------------------------------------------------------
5,250,000 International Cabletel, Inc., Sr. Defd. Note, 0/10.875%,
10/15/2003 3,018,750
---------------------------------------------------------------
3,000,000 Marcus Cable Co., L.P., Sr. Deb., 11.875%, 10/1/2005 2,790,000
---------------------------------------------------------------
7,500,000 Rogers Cablesystems, Ltd., Sr. Secd. Note, 9.65%, 1/15/2014 4,797,851
--------------------------------------------------------------- ------------
Total 24,364,101
--------------------------------------------------------------- ------------
CHEMICALS & PLASTICS--8.7%
---------------------------------------------------------------
6,000,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 6,015,000
---------------------------------------------------------------
6,000,000 Foamex Capital Corp., Sr. Sub. Deb., 11.875%, 10/1/2004 6,075,000
---------------------------------------------------------------
12,000,000 G-I Holdings, Inc., Sr. Disc. Note, 0/11.375%, 10/1/98 7,380,000
---------------------------------------------------------------
2,000,000 LaRoche Industries, Inc., Sr. Sub. Note, 13.00%, 8/15/2004 2,002,500
---------------------------------------------------------------
5,500,000 Polymer Group, Inc., Sr. Note, 12.25%, 7/15/2002* 5,582,500
---------------------------------------------------------------
5,000,000 UCC Investors Holdings, Inc., Sr. Sub. Note, 11.00%, 5/1/2003 5,150,000
---------------------------------------------------------------
5,000,000 UCC Investors Holdings, Inc., Sub. Disc. Note, 0/12.00%,
5/1/2005 3,300,000
--------------------------------------------------------------- ------------
Total 35,505,000
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CLOTHING & TEXTILES--2.0%
---------------------------------------------------------------
9,125,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 8,303,750
--------------------------------------------------------------- ------------
CONGLOMERATES--3.0%
---------------------------------------------------------------
4,000,000 Fairchild Industries, Sr. Secd. Note, 12.25%, 2/1/99 3,890,000
---------------------------------------------------------------
</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
CONGLOMERATES--CONTINUED
---------------------------------------------------------------
$ 4,200,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 $ 4,126,500
---------------------------------------------------------------
5,000,000 (a) Walter Industries, Inc., Sub. Deb., 17.00%, 1/1/96 4,125,000
--------------------------------------------------------------- ------------
Total 12,141,500
--------------------------------------------------------------- ------------
CONTAINER & GLASS PRODUCTS--4.8%
---------------------------------------------------------------
3,500,000 Ivex Holdings Corp., Sr. Disc. Deb., Series A, 0/13.25%,
3/15/2005 1,732,500
---------------------------------------------------------------
1,260,000 (a) Kane Industries, Inc., Sr. Sub. Disc. Note, 0/8.00%, 2/1/98* 0
---------------------------------------------------------------
3,000,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 3,060,000
---------------------------------------------------------------
2,000,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 1,955,000
---------------------------------------------------------------
1,500,000 Plastic Containers, Inc., Sr. Secd. Note, 10.75%, 4/1/2001 1,500,000
---------------------------------------------------------------
2,000,000 Silgan Corp., Sr. Sub. Note, 11.75%, 6/15/2002 2,080,000
---------------------------------------------------------------
6,250,000 Silgan Holdings, Inc., Sr. Disc. Deb., 0/13.25%, 12/15/2002 5,093,750
---------------------------------------------------------------
4,000,000 U.S. Can Co., Sr. Sub. Note, 13.50%, 1/15/2002 4,480,000
--------------------------------------------------------------- ------------
Total 19,901,250
--------------------------------------------------------------- ------------
COSMETICS & TOILETRIES--1.5%
---------------------------------------------------------------
2,000,000 Revlon Consumer Products Corp., Sr. Sub. Note, 10.50%,
2/15/2003 1,645,000
---------------------------------------------------------------
11,000,000 Revlon Worldwide Corp., Sr. Secd. Note, Series B, 0/12.00%,
3/15/98 4,675,000
--------------------------------------------------------------- ------------
Total 6,320,000
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ECOLOGICAL SERVICES & EQUIPMENT--3.0%
---------------------------------------------------------------
4,625,000 Allied Waste Industries, Inc., Sr. Sub. Note, 10.75%, 2/1/2004 4,255,000
---------------------------------------------------------------
4,000,000 ICF Kaiser International, Sr. Sub. Note, 12.00%, 12/31/2003 3,640,000
---------------------------------------------------------------
4,500,000 Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%,
2/15/2003 4,376,250
--------------------------------------------------------------- ------------
Total 12,271,250
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</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
FARMING & AGRICULTURE--0.7%
---------------------------------------------------------------
$ 3,000,000 (a) Spreckels Industries, Inc., Sr. Secd. Note, 11.50%, 9/1/2000 $ 2,895,000
--------------------------------------------------------------- ------------
FINANCIAL INTERMEDIARIES--1.2%
---------------------------------------------------------------
4,750,000 Coldwell Banker Corp., Sr. Sub. Note, 10.25%, 6/30/2003 4,868,750
--------------------------------------------------------------- ------------
FOOD & DRUG RETAILERS--4.2%
---------------------------------------------------------------
3,500,000 Food 4 Less Supermarkets, Inc., Sr. Note, 10.45%, 4/15/2000 3,395,000
---------------------------------------------------------------
8,500,000 Grand Union Co., Sr. Sub. Note, 12.25%, 7/15/2002 6,672,500
---------------------------------------------------------------
4,125,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 3,733,125
---------------------------------------------------------------
3,500,000 Penn Traffic Co., Sr. Sub. Note, 9.625%, 4/15/2005 3,241,875
--------------------------------------------------------------- ------------
Total 17,042,500
--------------------------------------------------------------- ------------
FOOD PRODUCTS--2.5%
---------------------------------------------------------------
4,500,000 Doskocil Cos., Inc., Sr. Sub. Note, 9.75%, 7/15/2000 3,960,000
---------------------------------------------------------------
1,000,000 PMI Acquisition Corp., Sr. Sub. Note, 10.25%, 9/1/2003 1,001,250
---------------------------------------------------------------
6,000,000 Specialty Foods Acquisition Corp., Sr. Secd. Disc. Deb.,
0/13.00%, 8/15/2005 2,130,000
---------------------------------------------------------------
3,750,000 Specialty Foods Corp., Sr. Sub. Note, 11.25%, 8/15/2003 3,131,250
--------------------------------------------------------------- ------------
Total 10,222,500
--------------------------------------------------------------- ------------
FOOD SERVICE--3.2%
---------------------------------------------------------------
3,000,000 Americold Corp., 1st Mtg. Bond, Series B, 11.50%, 3/1/2005 2,730,000
---------------------------------------------------------------
8,000,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 7,480,000
---------------------------------------------------------------
3,250,000 Flagstar Corp., Sr. Sub. Deb., 11.25%, 11/1/2004 2,835,625
--------------------------------------------------------------- ------------
Total 13,045,625
--------------------------------------------------------------- ------------
FOREST PRODUCTS--6.6%
---------------------------------------------------------------
1,875,000 Container Corp. of America, Sr. Note, 11.25%, 5/1/2004 1,968,750
---------------------------------------------------------------
4,000,000 Container Corp. of America, Sr. Note, 9.75%, 4/1/2003 3,890,000
---------------------------------------------------------------
4,500,000 Domtar, Inc., Deb., 11.25%, 9/15/2017 4,545,000
---------------------------------------------------------------
4,500,000 Domtar, Inc., Note, 12.00%, 4/15/2001 4,781,250
---------------------------------------------------------------
500,000 Repap Wisconsin, Inc., 1st Priority Sr. Secd. Note, 9.25%,
2/1/2002 446,250
---------------------------------------------------------------
</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
FOREST PRODUCTS--CONTINUED
---------------------------------------------------------------
$ 1,750,000 Repap Wisconsin, Inc., 2nd Priority Sr. Secd. Note, 9.875%,
5/1/2006 $ 1,526,875
---------------------------------------------------------------
1,500,000 Stone Container Corp., Sr. Note, 11.875%, 12/1/98 1,541,250
---------------------------------------------------------------
9,000,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 8,415,000
--------------------------------------------------------------- ------------
Total 27,114,375
--------------------------------------------------------------- ------------
HEALTHCARE--1.5%
---------------------------------------------------------------
3,890,956 AmeriSource Corp., Sr. PIK Deb., 11.25%, 7/15/2005 3,920,138
---------------------------------------------------------------
2,375,000 Surgical Health Corp., Sr. Sub. Note, 11.50%, 7/15/2004 2,386,875
--------------------------------------------------------------- ------------
Total 6,307,013
--------------------------------------------------------------- ------------
HOME PRODUCTS & FURNISHINGS--4.5%
---------------------------------------------------------------
2,250,000 American Standard, Inc., Sr. Deb., 11.375%, 5/15/2004 2,385,000
---------------------------------------------------------------
13,500,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%,
6/1/2005 8,842,500
---------------------------------------------------------------
3,000,000 Nortek, Inc., Sr. Sub. Note, 9.875%, 3/1/2004 2,745,000
---------------------------------------------------------------
4,500,000 Triangle Pacific Corp., Sr. Note, 10.50%, 8/1/2003 4,432,500
--------------------------------------------------------------- ------------
Total 18,405,000
--------------------------------------------------------------- ------------
HOTELS, MOTELS, INNS & CASINOS--0.5%
---------------------------------------------------------------
2,250,000 Motels of America, Inc., Sr. Sub. Note, 12.00%, 4/15/2004 2,188,125
--------------------------------------------------------------- ------------
INDUSTRIAL PRODUCTS & EQUIPMENT--2.6%
---------------------------------------------------------------
1,500,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%,
7/1/2001 1,500,000
---------------------------------------------------------------
4,000,000 Interlake Corp., Sr. Sub. Deb., 12.125%, 3/1/2002 3,810,000
---------------------------------------------------------------
2,250,000 Pace Industries, Inc., Sr. Note, 10.625%, 12/1/2002 2,047,500
---------------------------------------------------------------
3,000,000 Truck Components, Inc., Sr. Note, 12.25%, 6/30/2001 3,180,000
--------------------------------------------------------------- ------------
Total 10,537,500
--------------------------------------------------------------- ------------
LEISURE & ENTERTAINMENT--1.2%
---------------------------------------------------------------
3,750,000 Affinity Group, Inc., Sr. Sub. Note, 11.50%, 10/15/2003 3,750,000
---------------------------------------------------------------
1,000,000 Plitt Theatres, Inc., Sr. Sub. Note, 10.875%, 6/15/2004 1,000,000
--------------------------------------------------------------- ------------
Total 4,750,000
--------------------------------------------------------------- ------------
</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--0.7%
---------------------------------------------------------------
$ 3,000,000 Waters Corp., Sr. Sub. Note, 12.75%, 9/30/2004* $ 3,037,500
--------------------------------------------------------------- ------------
OIL & GAS--2.3%
---------------------------------------------------------------
3,500,000 Falcon Drilling Co., Inc., Sr. Note, 9.75%, 1/15/2001 3,368,750
---------------------------------------------------------------
2,500,000 Giant Industries, Sr. Sub. Note, 9.75%, 11/15/2003 2,337,500
---------------------------------------------------------------
2,250,000 H.S. Resources, Inc., Sr. Sub. Note, 9.875%, 12/1/2003 2,126,250
---------------------------------------------------------------
2,000,000 Triton Energy Corp., Sr. Sub. Disc. Note, 0/9.75%, 12/15/2000 1,510,000
--------------------------------------------------------------- ------------
Total 9,342,500
--------------------------------------------------------------- ------------
PRINTING & PUBLISHING--2.0%
---------------------------------------------------------------
4,500,000 (a) Affiliated Newspapers, Sr. Disc. Note, 0/13.25%, 7/1/2006 2,407,500
---------------------------------------------------------------
625,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 625,000
---------------------------------------------------------------
2,500,000 K-III Communications Corp., Sr. Note, 10.25%, 6/1/2004 2,481,250
---------------------------------------------------------------
2,750,000 Webcraft Technologies, Inc., Sr. Sub. Note, 9.375%, 2/15/2002 2,574,688
--------------------------------------------------------------- ------------
Total 8,088,438
--------------------------------------------------------------- ------------
RETAILERS--1.0%
---------------------------------------------------------------
4,200,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 3,969,000
--------------------------------------------------------------- ------------
SERVICES--1.0%
---------------------------------------------------------------
3,975,000 Solon Automated Services, Inc., Sr. Note, 12.75%, 7/15/2001 4,014,750
--------------------------------------------------------------- ------------
STEEL--6.2%
---------------------------------------------------------------
4,650,000 Acme Metals Inc., Sr. Secd. Disc. Note, 0/13.25%, 8/1/2004 3,196,875
---------------------------------------------------------------
2,000,000 Armco, Inc., Sr. Note, 9.375%, 11/1/2000 1,875,000
---------------------------------------------------------------
2,500,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 2,393,750
---------------------------------------------------------------
4,250,000 Carbide/Graphite Group, Sr. Note, 11.50%, 9/1/2003 4,313,750
---------------------------------------------------------------
6,000,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 5,415,000
---------------------------------------------------------------
2,000,000 Geneva Steel, Sr. Note, 11.125%, 3/15/2001 2,040,000
---------------------------------------------------------------
3,500,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 3,578,750
---------------------------------------------------------------
3,000,000 Northwestern Steel & Wire Co., Sr. Note, 9.50%, 6/15/2001 2,820,000
--------------------------------------------------------------- ------------
Total 25,633,125
--------------------------------------------------------------- ------------
</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
SURFACE TRANSPORTATION--4.1%
---------------------------------------------------------------
$ 3,500,000 Moran Transportation Co., 1st Mtg. Note, 11.75%, 7/15/2004* $ 3,543,750
---------------------------------------------------------------
3,500,000 Sea Containers, Ltd., Sr. Note, 9.50%, 7/1/2003 3,272,500
---------------------------------------------------------------
775,000 Sea Containers, Ltd., Sr. Sub. Deb., Series B, 12.50%,
12/1/2004 817,625
---------------------------------------------------------------
2,750,000 Sea Containers, Ltd., Sr. Sub. Note, 12.50%, 12/1/2004 2,915,000
---------------------------------------------------------------
3,125,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 3,087,500
---------------------------------------------------------------
3,000,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 2,992,500
--------------------------------------------------------------- ------------
Total 16,628,875
--------------------------------------------------------------- ------------
TELECOMMUNICATIONS & CELLULAR--2.8%
---------------------------------------------------------------
3,000,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 1,830,000
---------------------------------------------------------------
3,000,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%, 8/15/2004 1,627,500
---------------------------------------------------------------
6,250,000 PanAmSat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 4,109,375
---------------------------------------------------------------
4,250,000 USA Mobile Communications, Inc., Sr. Note, 9.50%, 2/1/2004 3,846,250
--------------------------------------------------------------- ------------
Total 11,413,125
--------------------------------------------------------------- ------------
UTILITIES--1.1%
---------------------------------------------------------------
6,500,000 California Energy Co., Inc., Sr. Disc. Note, 0/10.25%,
1/15/2004 4,680,000
--------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $405,307,144) 380,116,026
--------------------------------------------------------------- ------------
COMMON STOCKS--0.6%
- -----------------------------------------------------------------------------------
BUILDING & DEVELOPMENT--0.0%
---------------------------------------------------------------
3,080 (a) Atlantic Gulf Communities Corp. 36,960
---------------------------------------------------------------
2,342 (a) Atlantic Gulf Communities Corp., Warrants 1,903
--------------------------------------------------------------- ------------
Total 38,863
--------------------------------------------------------------- ------------
BUSINESS EQUIPMENT & SERVICES--0.0%
---------------------------------------------------------------
5,460 (a) San Jacinto Holdings, Inc.* 16,380
--------------------------------------------------------------- ------------
CHEMICALS & PLASTICS--0.0%
---------------------------------------------------------------
14,862 (a) UCC Investors Holdings, Inc.* 178,344
--------------------------------------------------------------- ------------
</TABLE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONGLOMERATES--0.4%
---------------------------------------------------------------
722,249 (a) Triton Group, Ltd. $ 1,534,779
--------------------------------------------------------------- ------------
CONTAINER & GLASS PRODUCTS--0.0%
---------------------------------------------------------------
53,400 (a) Kane Industries, Inc., Warrants* 0
--------------------------------------------------------------- ------------
FARMING & AGRICULTURE--0.2%
---------------------------------------------------------------
114,545 Spreckels Industries, Inc., Class A 1,002,154
--------------------------------------------------------------- ------------
PRINTING & PUBLISHING--0.0%
---------------------------------------------------------------
4,500 Affiliated Newspapers, Class B 90,000
--------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $10,241,897) 2,860,520
--------------------------------------------------------------- ------------
**REPURCHASE AGREEMENT--5.9%
- -----------------------------------------------------------------------------------
$24,325,000 J. P. Morgan Securities, Inc., 4.85%, dated 8/31/94, due 9/1/94
(at amortized cost) 24,325,000
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST, $439,874,041) $407,301,546+
--------------------------------------------------------------- ------------
</TABLE>
The following abbreviation is used in this portfolio:
PIK--Payment in Kind
+ The cost of investments for federal tax purposes amounts to $440,648,521. The
net unrealized depreciation on a federal tax basis amounts to $33,346,975,
which is comprised of $1,373,104 appreciation and $34,720,079 depreciation at
August 31, 1994.
* Indicates private placement securities held at August 31, 1994, with a total
market value of $18,443,786, which represents 4.5% of total net assets.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement was through participation in a joint
account with other Federated funds.
(a) Non-income producing.
Note: The categories of investments are shown as a percentage of net assets
($409,754,240) at August 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
WALTER INDUSTRIES (ALSO KNOWN AS GEORGIA MARBLE CO.; FORMERLY JIM WALTER CORP.)
Walter Industries filed for Chapter 11 bankruptcy protection in December, 1989.
The company was forced to seek protection because of pending asbestos
litigation, as well as an inability to reset the coupon on certain debt
instruments as stipulated in instruments' indentures. The bankruptcy court
terminated the company's exclusivity, effective August 2, 1993, which should
accelerate a conclusion to the company's bankruptcy proceedings. The Trust's
management is currently unable to predict the ultimate resolution or the timing
of bankruptcy proceedings.
KANE INDUSTRIES, INC.
On March 18, 1994, Kane Industries, Inc., along with two of its affiliates,
Kane, Inc. and Alford Industries, Inc., filed for protection under Chapter 11
with the U.S. Bankruptcy Court in Wilmington, Delaware. At this time, the
outcome of the bankruptcy proceedings is difficult to predict.
FEDERATED HIGH YIELD TRUST
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (identified cost, $439,874,041;
tax cost, $440,648,521) $407,301,546
- --------------------------------------------------------------------------------
Cash 4,438
- --------------------------------------------------------------------------------
Interest receivable 8,646,782
- --------------------------------------------------------------------------------
Receivable for Trust shares sold 1,278,058
- --------------------------------------------------------------------------------
Receivable for investments sold 1,063,125
- -------------------------------------------------------------------------------- ------------
Total assets 418,293,949
- --------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------
Payable for investments purchased $6,491,396
- -------------------------------------------------------------------
Dividends payable 1,477,738
- -------------------------------------------------------------------
Payable for Trust shares redeemed 543,533
- -------------------------------------------------------------------
Accrued expenses 27,042
- ------------------------------------------------------------------- ----------
Total liabilities 8,539,709
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 47,230,713 shares of beneficial interest outstanding $409,754,240
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSISTS OF:
- --------------------------------------------------------------------------------
Paid-in capital $465,717,926
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (32,572,495)
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (23,391,191)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $409,754,240
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share
($409,754,240 / 47,230,713 shares of beneficial interest outstanding) $8.68
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest income $ 20,542,761
- --------------------------------------------------------------------------------
Expenses--
- --------------------------------------------------------------------------------
Investment advisory fee $1,489,524
- -------------------------------------------------------------------
Trustees' fees 7,986
- -------------------------------------------------------------------
Administrative personnel and services fee 150,942
- -------------------------------------------------------------------
Custodian and portfolio accounting fees 87,843
- -------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,968
- -------------------------------------------------------------------
Trust share registration costs 12,453
- -------------------------------------------------------------------
Shareholder services fee 262,375
- -------------------------------------------------------------------
Auditing fees 11,979
- -------------------------------------------------------------------
Legal fees 7,986
- -------------------------------------------------------------------
Printing and postage 13,975
- -------------------------------------------------------------------
Insurance premiums 3,724
- -------------------------------------------------------------------
Taxes 4,300
- -------------------------------------------------------------------
Miscellaneous 2,540
- ------------------------------------------------------------------- ----------
Total expenses 2,073,595
- -------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 384,851
- ------------------------------------------------------------------- ----------
Net expenses 1,688,744
- -------------------------------------------------------------------------------- ------------
Net investment income 18,854,017
- -------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (280,590)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (34,389,077)
- -------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments (34,669,667)
- -------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $(15,815,650)
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-------------------------------
1995* 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 18,854,017 $ 39,253,901
- -------------------------------------------------------------
Net realized gain (loss) on investment ($473,551 net loss and
$6,960,443 net gain, respectively, as computed for federal
tax purposes) (280,590) 8,764,555
- -------------------------------------------------------------
Change in unrealized appreciation (depreciation) on
investments (34,389,077) 8,262,255
- ------------------------------------------------------------- ------------- -------------
Change in net assets from operations (15,815,650) 56,280,711
- ------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------
Dividends to shareholders from net investment income (18,854,017) (39,699,282)
- ------------------------------------------------------------- ------------- -------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------
Proceeds from sale of shares 334,300,660 576,417,640
- -------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 9,891,662 21,954,239
- -------------------------------------------------------------
Cost of shares redeemed (331,813,590) (537,290,888)
- ------------------------------------------------------------- ------------- -------------
Change in net assets from Trust share transactions 12,378,732 61,080,991
- ------------------------------------------------------------- ------------- -------------
Change in net assets (22,290,935) 77,662,420
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 432,045,175 354,382,755
- ------------------------------------------------------------- ------------- -------------
End of period $ 409,754,240 $ 432,045,175
- ------------------------------------------------------------- ------------- -------------
</TABLE>
* Six months ended August 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR 29,
---------------------------------------------------------------------------------------------------
1995* 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.48 $ 9.10 $ 8.91 $ 6.99 $ 8.02 $ 9.96 $10.21 $11.25 $10.96 $10.02
- --------------------------
INCOME FROM INVESTMENT
OPERATIONS
- --------------------------
Net investment income 0.42 0.84 0.93 1.03 1.04 1.30 1.30 1.26 1.30 1.37
- --------------------------
Net realized and
unrealized gain (loss) on
investments (0.80) 0.40 0.19 1.90 (0.92) (1.96) (0.25) (0.98) 0.32 0.95
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total from investment
operations (0.38) 1.24 1.12 2.93 0.12 (0.66) 1.05 0.28 1.62 2.32
- --------------------------
LESS DISTRIBUTIONS
- --------------------------
Dividends to shareholders
from net investment
income (0.42) (0.86) (0.93) (1.01) (1.06) (1.28) (1.30) (1.26) (1.30) (1.37)
- --------------------------
Distributions to
shareholders from net
realized gain on
investment transactions -- -- -- -- -- -- -- (0.06) (0.03) (0.01)
- --------------------------
Distributions in excess
of net investment income -- -- -- -- (.09)** -- -- -- -- --
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total distributions (0.42) (0.86) (0.93) (1.01) (1.15) (1.28) (1.30) (1.32) (1.33) (1.38)
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF
PERIOD $ 8.68 $ 9.48 $ 9.10 $ 8.91 $ 6.99 $ 8.02 $ 9.96 $10.21 $11.25 $10.96
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL RETURN*** (3.94%) 14.16% 13.28% 44.15% 3.12% (7.50%) 10.92% 3.08% 15.75% 24.70%
- --------------------------
RATIOS TO AVERAGE NET
ASSETS
- --------------------------
Expenses 0.85%(a) 0.83% 0.77% 0.76% 0.78% 0.76% 0.75% 0.75% 0.75% 0.75%
- --------------------------
Net investment income 9.49%(a) 9.17% 10.54% 12.73% 14.82% 13.87% 12.89% 12.25% 11.86% 13.25%
- --------------------------
Expense
waiver/reimbursement(b) 0.19%(a) 0.13% 0.22% 0.33% 0.49% 0.33% 0.32% 0.24% 0.35% 0.75%
- --------------------------
SUPPLEMENTAL DATA
- --------------------------
Net assets, end of period
(000 omitted) $409,754 $432,045 $354,383 $222,937 $103,647 $134,242 $235,208 $246,745 $271,148 $26,883
- --------------------------
Portfolio turnover rate 57% 112% 93% 61% 31% 24% 51% 73% 57% 31%
- --------------------------
</TABLE>
* Six months ended August 31, 1994 (unaudited).
** Distributions in excess of net investment income for the period ended
February 28, 1991 were a result of certain book and tax timing differences.
This distribution does not represent a return of capital for federal income
tax purposes.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED HIGH YIELD TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended(the
"Act"), as a no-load, open-end, diversified, management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities, corporate bonds and other
fixed income securities are valued at the last sale price reported on
national securities exchanges. Unlisted securities and bonds are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less may be stated at
amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust 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 the securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying collateral to ensure that the value of collateral at least equals
the principal amount of the repurchase agreement, including accrued interest.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Trust could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT, INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
D. FEDERAL TAXES--It is the Trust'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 taxable income. Accordingly,
no provisions for federal tax are necessary. At February 28, 1994, the Trust,
for federal tax purposes, had a capital loss carryforward of $22,917,640,
which will reduce the
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
Trust's taxable income arising from future net realized gain on investments,
if any, to the extent permitted by the Code, and thus will reduce the amount
of the distributions to shareholders which would otherwise be necessary to
relieve the Trust of any liability for federal tax. Pursuant to the Code,
such capital loss carryforward will expire in 1998 ($5,075,478), 1999
($11,012,464), and 2000 ($6,829,698).
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust 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.
F. INVESTMENT RISKS--Although the Trust has a diversified portfolio, the Trust
has 93.3% of its portfolio invested in lower rated and comparable quality
unrated high yield securities. Investments in high yield securities are
accompanied by a greater degree of credit risk and the risk tends to be more
sensitive to economic conditions than higher rated securities. The risk of
loss due to default by the issuer may be significantly greater for the
holders of high yield securities because such securities are generally
unsecured and are often subordinated to other creditors of the issuer.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
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 Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
---------------------------
1995* 1994
------------ -----------
<S> <C> <C>
- -----------------------------------------------------------------
Shares sold 37,690,843 62,036,140
- -----------------------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 1,124,188 2,356,256
- -----------------------------------------------------------------
Shares redeemed (37,178,994 ) (57,724,385)
- ----------------------------------------------------------------- ----------- ----------
Net change resulting from Trust share transactions 1,636,037 6,668,011
- ----------------------------------------------------------------- ----------- ----------
</TABLE>
* Six months ended August 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser
(the " Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Trust's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the FAS fee is based
on the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average daily net assets of the Trust for the period. This fee is to
obtain certain personal services for shareholders and to maintain the
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Trust. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended August 31, 1994, were as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------
Purchases-- $210,870,393
- ------------------------------------------------------------------------------ ------------
Sales-- $214,107,950
- ------------------------------------------------------------------------------ ------------
</TABLE>
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Chairman
John T. Conroy Glen R. Johnson
President
William J. Copeland J. Christopher Donahue
Vice President
James E. Dowd Richard B. Fisher
Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Vice President and Treasurer
Edward L. Flaherty, Jr. John W. McGonigle
Vice President and Secretary
Peter E. Madden David M. Taylor
Assistant Treasurer
Gregor F. Meyer Mark A. Sheehan
Assistant Secretary
Wesley W. Posvar
Marjorie P. Smuts
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other government agency. Investment in mutual funds involves investment
risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Trust's prospectus, which contains
facts concerning its objectives and policies, management fees, expenses and
other information.
