[LOGO FEDERATED INVESTORS]
Federated Growth
Strategies Fund
(formerly, Federated
Growth Trust)
Semi-Annual Report
April 30, 1996
Established 1984
President's Message
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- ---
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Federated Growth
Strategies
Fund (formerly, Federated Growth Trust) which covers the six-month period
from
November 1, 1995, through April 30, 1996.
This report begins with an interview with portfolio manager James. E.
Grefenstette, Assistant Vice President, Federated Research Corp. Following
this interview, there are three additional items of shareholder interest: a
complete listing of the fund's stock holdings, a series of graphs showing
investment performance, and the fund's financial statements.
Federated Growth Strategies Fund was established in 1984, and seeks capital
appreciation through a strategically managed portfolio of mid- to large-
cap
stocks. The fund's portfolio includes ninety-seven common stocks and
convertible securities of corporations that are well-known to shareholders
and
which represent twelve business sectors.
This diversified portfolio performed very well in the highly favorable
stock
market environment during the six-month reporting period, as shown by
share
class performance below.*
<TABLE>
<CAPTION>
Total Return Income Capital Gains
based on NAV
<S> <C> <C> <C>
Class A Shares 18.58% $0.04 $5.39
Class B Shares 18.13% $0.00 $5.39
Class C Shares 18.08% $0.00 $5.39
</TABLE>
We encourage you to reinvest your earnings automatically in shares of
Federated
Growth Strategies Fund. It is a convenient way to participate in the
potential
growth of American companies.
We trust you were pleased with the positive performance of your investment.
As
always, we welcome your comments and suggestions. Sincerely,
J. Christopher Donahue
President
June 15, 1996
*Performance quoted reflects past performance and is not indicative of
future
results. Investment return and principal value fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original
cost. Total returns for the period (based on offering price) for Class A
Shares, Class B Shares, and Class C Shares were 12.05%, 11.61%, and
16.89%,
respectively.
Investment Review
- ---------------------------------------------------------------------------
- ---
James E. Grefenstette
Assistant Vice President
Federated Research Corp.
Q. 1995 overall proved to be one of the most pleasantly memorable years
for
stock investors, however, the first quarter of 1996 introduced a more
volatile
market. Do the positive signals still appear to outweigh the negatives?
A. While stock selection has become more complicated over the last couple
of
quarters, we do believe that yes, the positives still outweigh the
negatives.
In addition to the pickup in volatility, which is still below longer-term
averages, interest rates have gone up measurably over the last six months.
The
economy has continued to surprise the experts by growing much faster than
the
experts anticipated. This has led to a good number of companies reporting
higher-than-expected earnings and should lead to analysts' earnings
projections
being revised upward over the coming months. In addition, the cash flow
into
stocks by individual investors is very strong and is continuing to set new
records. This bodes well for maintaining a strong bid in the market for at
least the near future.
Q. How did Federated Growth Strategies Fund perform over the six-month
reporting period compared to the Lipper Growth Fund universe?
A. The fund produced very strong total returns. For example, the Class A
Shares return was 18.58% based on net asset value, which includes capital
appreciation of the shares and adding income dividends and realized capital
gain to the fund's net asset value.* The return for the average fund in
the
Lipper Growth Fund universe was 13.10%.**
* Performance quoted reflects past performance and is not indicative of
future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Total returns for the period based on offering price for
Class
A Shares was 12.05%. Total returns based on net asset value and offering
price for Class B Shares and Class C Shares were and 18.13% and 11.61%,
and
18.08% and 16.89%, respectively.
**Lipper averages do not include the effect of sales charges.
Q. Technology, Health Care, and Finance have been the fund's strongest
performing sectors. Do these sectors continue to offer high growth
potential?
A. The Technology sector has performed well, and we think that it will be
our
strongest sector for some time to come. Technology as a whole may not be
an
ultra high growth sector every year but, over the long run, it definitely
is
the sector that offers the highest growth potential. Similarly, Health
Care
has done well and we still like it. You may not see the big drug companies
grow
at 20% to 25% a year as they did in the late 1980s, but they should
continue
to deliver earning growth at rates that are above the market averages.
Finance
stocks tend to trade in the opposite direction of interest rates. With
rates
drifting up, these stocks have been modest laggards. We believe that rates
will
resume their longer term downward trend, and that this will enhance the
growth
prospects and the stock prices in the Finance sector.
Q. Please tell us about some of your current holdings.
A. Corrections Corp of America owns, operates and manages prisons for
governments. Private management saves governments 10-20% over their own
costs
while providing a higher-quality facility. Fiscal responsibility is in
vogue
with governments, so increased outsourcing of prisons is anticipated.
Currently the penetration of the private sector is low with only 3% market
share of prison beds. A public outcry against crime has led to the Crime
Bill
which calls for 120,000 more prison beds and 100,000 more police officers.
Corrections Corp is the market leader with 45-50% market share.
Veterinary Centers of America is the leader in the highly fragmented
veterinary
hospital market. It will dwarf its private competitors upon the purchase
of
Pet Practice (#2 in market and the only competitor). It is also the largest
independent player in the niche vet lab business. After this recent
acquisition, Vet Centers will own 160 hospitals, 7 labs, and a 50.5%
interest
in the Vet's Choice (high-quality pet foods) joint venture with H.J.
Heinz.
After buying Pet Practice, Vet Centers will still have less than 2% of the
market in revenues. This is a growth story that should last for years.
Trans World Airlines is the last of the airline-turnarounds. Prior
management
saddled the company with debt and did not invest in technology, resulting
in 2
bankruptcies and a significant operating disadvantage versus its
competitors.
New management has been in place since 1994 (20 of 21 managers are new).
Having emerged out of the prepackaged bankruptcy in August 1995, Trans
World
Airlines is now poised for a strong comeback.
Quintiles Transnational is the largest outside provider of drug development
services to pharmaceutical and biotech companies. They help take new drugs
from pre-clinical trials all the way through to Food and Drug
Administration
approval. Quintiles Transnational offers big and small drug companies
access
to broader patient sample bases and expertise across more disease states
than
any one company could manage alone. They are also at the forefront of
pharmacoeconomic consulting, which performs economic evaluations of drugs,
a
crucial element in the determination of future drug pricing. This is one
of
the fastest growing mid- to large-cap health care services companies
around,
with earnings per share expected to grow at least 35%-40% annually for the
next three years.
Solectron is the second-largest company in the electronic manufacturing
services sector. It specializes in the assembly of printed circuit boards,
and
provides a full range of manufacturing services, including materials
procurement, systems integration, testing, and assistance in board design.
Larger customers include, Apple, AT&T, Bay Networks, Hewlett-Packard,
Cisco,
Intel, IBM and Sun. With manufacturing capabilities in the U.S., Europe
and
the Far East, Solectron is in good shape to meet the growing, global
outsourcing needs of these original equipment manufacturers.
Electronic Data Systems is the dominant provider of systems integration,
which
is the design and installation of new management information systems
including
both the computer and telecommunications aspects. They also specialize in
facilities management, where they take on overall responsibility for most
of a
client's data processing and management information systems operations.
These
are both high-growth, high-value-added businesses.
Q. What is your outlook for growth stocks at this point in 1996?
A. Growth stocks tend to underperform, relative to value stocks, when
economic
growth is expected to increase. With the last two quarters of economic
growth
coming in above expectations, growth stocks have traded about in line with
value stocks so far this year. We believe that the market will begin to
anticipate an economic "cooling off" towards year end and that this will
bode
well for growth stocks for the second half of 1996 and into 1997.
Two Ways You May Seek to Invest for Success in
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
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- -----
Initial Investment:
If you had made an initial investment of $12,000 in the Class A Shares of
Federated Growth Strategies Fund on 8/23/84, reinvested dividends and
capital
gains, and didn't redeem any shares, your account would be worth $64,560 on
4/30/96. You would have earned a 14.47%* average annual total return for
the
12-year investment life span.
One key to investing wisely is to reinvest all distributions in fund
shares.
This increases the number of shares on which you can earn future
dividends,
and you gain the benefit of compounding.
As of 3/31/96, the Class A Shares' average annual one-year, five-year, and
ten-year total returns were 29.57%, 10.00%, and 11.96%, respectively. Class
B
Shares' total return since inception (8/15/95) was 9.00%. Class C Shares'
total return since inception (8/15/95) was 14.13%.**
[GRAPH APPEARS HERE-see appendix]
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the
5.5% sales charge applicable to an initial investment in Class A Shares.
Data quoted represents past performance and does not guarantee future
results.
Investment return and principal value will fluctuate so an investor's
shares,
when redeemed, may be worth more or less than their original cost.
** The total return stated takes into account the 5.50% sales charge for
Class A Shares, the 5.50% contingent deferred sales charge on Class B
Shares,
and the 1.00% contingent deferred sales charge on Class C Shares.
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
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- ----
One Step at a Time:
$1,000 invested each year for 12 years (reinvesting all dividends and
capital
gains) grew to $28,890.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of
Federated
Growth Stra-tegies Fund on 8/23/84, reinvested your dividends and capital
gains, and didn't redeem any shares, you would have invested only $12,000,
but
your account would have reached a total value of $28,890* by 4/30/96. You
would have earned an average annual total return of 11.81%.
A practical investment plan helps you pursue long-term performance from
growth
oriented stocks. Through systematic investing, you buy shares on a regular
basis and reinvest all earnings. An investment plan works for you when you
invest only $1,000 annually. You can take it one step at a time. Put time
and
compounding to work!
[GRAPH APPEARS HERE-see appendix]
* No method of investing can guarantee a profit or protect against loss in
down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and
all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regard-
less of changing price levels, the investor should consider whether or not
to
continue purchases through periods of low price levels.
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Hypothetical Investor Profile: Investing for a College Education
- ---------------------------------------------------------------------------
- ----
David and Joan Rice are a fictitious couple who, like many shareholders,
are
searching for a way to make their money grow over time.
David and Joan are planning for the college education of their child. On
April
30, 1986, they invested $5,000 in the Class A Shares of Federated Growth
Strategies Fund. Since then, David and Joan have made additional
investments of
$250 every month.
As this chart shows, over 10 years, the original $5,000 investment along
with
their additional monthly $250 investments totaling $35,000 has grown to
$74,389. This represents a 12.76% average annual total return. For the
Rices, a
dedicated program of monthly investment really paid off. This hypothetical
scenario is provided for illustrative purposes only and does not represent
the
results obtained by any particular shareholder. Past performance does not
guarantee future results.
[GRAPH APPEARS HERE-see appendix]
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Portfolio of Investments
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- -----
April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
SHARES
VALUE
<C> <S>
<C>
- ------------- ------------------------------------------------------------
- --------------------- --------------
EQUITIES--93.7%
- ---------------------------------------------------------------------------
- ---------------------
BASIC INDUSTRY--6.2%
------------------------------------------------------------
- ---------------------
90,000 Barrick Gold Corp.
$ 2,756,250
------------------------------------------------------------
- ---------------------
19,600 Monsanto Co.
2,969,400
------------------------------------------------------------
- ---------------------
69,800 Potash Corporation of Saskatchewan, Inc.
4,920,900
------------------------------------------------------------
- ---------------------
71,500 Praxair, Inc.
2,761,688
------------------------------------------------------------
- ---------------------
95,000 UCAR Global Enterprises, Inc.
3,895,000
------------------------------------------------------------
- --------------------- --------------
Total
17,303,238
------------------------------------------------------------
- --------------------- --------------
CONSUMER DURABLES--4.0%
------------------------------------------------------------
- ---------------------
69,600 Anthony Industries, Inc.
1,983,600
------------------------------------------------------------
- ---------------------
56,593 General Motors Corp., Class E
3,190,430
------------------------------------------------------------
- ---------------------
50,500 Harley Davidson, Inc.
2,228,312
------------------------------------------------------------
- ---------------------
85,000 Oakley, Inc.
3,910,000
------------------------------------------------------------
- --------------------- --------------
Total
11,312,342
------------------------------------------------------------
- --------------------- --------------
CONSUMER NON-DURABLES--5.7%
------------------------------------------------------------
- ---------------------
42,500 Campbell Soup Co.
2,656,250
------------------------------------------------------------
- ---------------------
16,200 Coca-Cola Co.
1,320,300
------------------------------------------------------------
- ---------------------
107,700 Mossimo, Inc.
4,092,600
------------------------------------------------------------
- ---------------------
51,500 Nike, Inc., Class B
4,506,250
------------------------------------------------------------
- ---------------------
35,500 Philip Morris Cos., Inc.
3,199,438
------------------------------------------------------------
- --------------------- --------------
Total
15,774,838
------------------------------------------------------------
- --------------------- --------------
ENERGY MINERALS--6.4%
------------------------------------------------------------
- ---------------------
28,000 British Petroleum Co. PLC, ADR
3,059,000
------------------------------------------------------------
- ---------------------
285,000 Global Marine, Inc.
3,241,875
------------------------------------------------------------
- ---------------------
95,000 Petroleum Geo-Services, ADR
3,004,375
------------------------------------------------------------
- ---------------------
156,900 Reading & Bates Corp.
3,844,050
------------------------------------------------------------
- ---------------------
26,700 Western Atlas, Inc.
1,602,000
------------------------------------------------------------
- ---------------------
153,000 YPF Sociedad Anonima, ADR
$ 3,346,875
------------------------------------------------------------
- --------------------- --------------
Total
18,098,175
------------------------------------------------------------
- --------------------- --------------
FINANCE--10.5%
------------------------------------------------------------
- ---------------------
79,500 Aflac, Inc.
2,464,500
------------------------------------------------------------
- ---------------------
144,900 (a)Amerin Corp.
3,278,362
------------------------------------------------------------
- ---------------------
36,500 Citicorp
2,874,375
------------------------------------------------------------
- ---------------------
127,500 MBNA Corp.
3,617,812
------------------------------------------------------------
- ---------------------
45,500 Mellon Bank Corp.
2,445,625
------------------------------------------------------------
- ---------------------
117,900 Schwab (Charles) Corp.
2,888,550
------------------------------------------------------------
- ---------------------
85,000 Sunamerica, Inc.
4,632,500
------------------------------------------------------------
- ---------------------
93,600 TCF Financial Corp.
3,311,100
------------------------------------------------------------
- ---------------------
65,000 Travelers Group, Inc.
3,997,500
------------------------------------------------------------
- --------------------- --------------
Total
29,510,324
------------------------------------------------------------
- --------------------- --------------
HEALTH CARE--14.6%
------------------------------------------------------------
- ---------------------
52,900 (a)Amgen, Inc.
3,041,750
------------------------------------------------------------
- ---------------------
55,000 (a)Foundation Health Corp.
2,151,875
------------------------------------------------------------
- ---------------------
29,800 (a)Geltex Pharmaceuticals, Inc.
700,300
------------------------------------------------------------
- ---------------------
53,400 (a)Genzyme Corp.
3,003,750
------------------------------------------------------------
- ---------------------
28,100 Johnson & Johnson
2,599,250
------------------------------------------------------------
- ---------------------
38,600 (a)KeraVision, Inc.
612,775
------------------------------------------------------------
- ---------------------
58,000 Lilly (Eli) & Co.
3,422,000
------------------------------------------------------------
- ---------------------
51,500 Medtronic, Inc.
2,735,938
------------------------------------------------------------
- ---------------------
53,000 Merck & Co., Inc.
3,206,500
------------------------------------------------------------
- ---------------------
105,000 Mylan Laboratories, Inc.
2,047,500
------------------------------------------------------------
- ---------------------
143,200 (a)Ornda Healthcorp
3,938,000
------------------------------------------------------------
- ---------------------
50,000 Pfizer, Inc.
3,443,750
------------------------------------------------------------
- ---------------------
30,000 (a)Quintiles Transnational Corp.
2,197,500
------------------------------------------------------------
- ---------------------
60,000 Teva Pharmaceutical Industries, Ltd., ADR
$ 2,692,500
------------------------------------------------------------
- ---------------------
100,000 (a)Thermedics, Inc.
3,025,000
------------------------------------------------------------
- ---------------------
74,100 (a)Veterinary Centers of America
2,260,050
------------------------------------------------------------
- --------------------- --------------
Total
41,078,438
------------------------------------------------------------
- --------------------- --------------
PRODUCER MANUFACTURING--4.9%
------------------------------------------------------------
- ---------------------
82,000 (a)American Standard Cos.
2,316,500
------------------------------------------------------------
- ---------------------
71,300 (a)Cable Design Technologies, Class A
2,352,900
------------------------------------------------------------
- ---------------------
81,600 Greenfield Industries, Inc.
3,100,800
------------------------------------------------------------
- ---------------------
49,400 Magna International, Inc., Class A
2,290,925
------------------------------------------------------------
- ---------------------
60,000 (a)Thermo Electron Corp.
3,697,500
------------------------------------------------------------
- --------------------- --------------
Total
13,758,625
------------------------------------------------------------
- --------------------- --------------
RETAIL TRADE--5.4%
------------------------------------------------------------
- ---------------------
131,600 (a)General Nutrition Cos., Inc.
2,566,200
------------------------------------------------------------
- ---------------------
69,800 (a)Kohl's Corp.
2,399,375
------------------------------------------------------------
- ---------------------
102,700 (a)MSC Industrial Direct Co.
3,735,713
------------------------------------------------------------
- ---------------------
124,900 (a)Safeway, Inc.
4,215,375
------------------------------------------------------------
- ---------------------
75,600 TJX Cos., Inc.
2,230,200
------------------------------------------------------------
- --------------------- --------------
Total
15,146,863
------------------------------------------------------------
- --------------------- --------------
SERVICES--7.2%
------------------------------------------------------------
- ---------------------
122,000 (a)Calenergy, Inc.
3,172,000
------------------------------------------------------------
- ---------------------
35,500 (a)Corrections Corp. America
2,263,125
------------------------------------------------------------
- ---------------------
48,800 (a)HFS, Inc.
2,507,100
------------------------------------------------------------
- ---------------------
89,550 Olsten Corp.
2,720,081
------------------------------------------------------------
- ---------------------
62,500 Reynolds & Reynolds Co., Class A
2,890,625
------------------------------------------------------------
- ---------------------
61,500 Service Corp. International
3,267,188
------------------------------------------------------------
- ---------------------
127,400 (a)USA Waste Services, Inc.
3,312,400
------------------------------------------------------------
- --------------------- --------------
Total
20,132,519
------------------------------------------------------------
- --------------------- --------------
TECHNOLOGY--19.3%
------------------------------------------------------------
- ---------------------
49,000 (a)Altera Corp.
$ 2,584,750
------------------------------------------------------------
- ---------------------
43,000 (a)Atmel Corp.
1,720,000
------------------------------------------------------------
- ---------------------
9,500 (a)Cascade Communications Corp.
952,375
------------------------------------------------------------
- ---------------------
113,500 (a)Cheyenne Software, Inc.
2,582,125
------------------------------------------------------------
- ---------------------
63,900 (a)Cisco Systems, Inc.
3,314,812
------------------------------------------------------------
- ---------------------
35,300 (a)Digital Equipment Corp.
2,109,175
------------------------------------------------------------
- ---------------------
79,400 (a)DST Systems, Inc.
2,917,950
------------------------------------------------------------
- ---------------------
129,000 Ericsson LM
2,628,375
------------------------------------------------------------
- ---------------------
73,200 (a)ESS Technology, Inc.
1,656,150
------------------------------------------------------------
- ---------------------
27,800 First Data Corp., Class
2,112,800
------------------------------------------------------------
- ---------------------
35,000 (a)FORE Systems, Inc.
2,765,000
------------------------------------------------------------
- ---------------------
38,500 HMC Software
1,434,125
------------------------------------------------------------
- ---------------------
46,100 (a)Informix Corp.
1,215,887
------------------------------------------------------------
- ---------------------
50,000 Intel Corp.
3,387,500
------------------------------------------------------------
- ---------------------
102,300 Lucent Technologies, Inc.
3,593,287
------------------------------------------------------------
- ---------------------
62,700 MEMC Electronic Materials
3,127,162
------------------------------------------------------------
- ---------------------
48,000 Micron Technology, Inc.
1,746,000
------------------------------------------------------------
- ---------------------
28,000 (a)Microsoft Corp.
3,174,500
------------------------------------------------------------
- ---------------------
41,400 (a)Oracle Corp.
1,397,250
------------------------------------------------------------
- ---------------------
54,200 (a)Solectron Corp.
2,411,900
------------------------------------------------------------
- ---------------------
65,400 (a)StorMedia, Inc.
2,779,500
------------------------------------------------------------
- ---------------------
44,300 (a)Sun Microsystems, Inc.
2,403,275
------------------------------------------------------------
- ---------------------
39,600 Varian Association, Inc.
2,262,150
------------------------------------------------------------
- --------------------- --------------
Total
54,276,048
------------------------------------------------------------
- --------------------- --------------
TRANSPORTATION--1.3%
------------------------------------------------------------
- ---------------------
34,000 (a)Continental Airlines, Inc., Class B
$ 1,929,500
------------------------------------------------------------
- ---------------------
103,000 (a)Trans World Airlines, Inc.
1,841,125
------------------------------------------------------------
- --------------------- --------------
Total
3,770,625
------------------------------------------------------------
- --------------------- --------------
UTILITIES--8.2%
------------------------------------------------------------
- ---------------------
103,000 CMS Energy Corp.
2,999,875
------------------------------------------------------------
- ---------------------
29,000 FPL Group, Inc.
1,250,625
------------------------------------------------------------
- ---------------------
94,800 MCI Communications Corp.
2,790,675
------------------------------------------------------------
- ---------------------
115,700 (a)Paging Network, Inc.
2,718,950
------------------------------------------------------------
- ---------------------
123,000 (a)PanAmSat Corp.
4,089,750
------------------------------------------------------------
- ---------------------
91,300 Sonat, Inc.
3,982,963
------------------------------------------------------------
- ---------------------
76,500 Vodafone Group PLC, ADR
3,069,563
------------------------------------------------------------
- ---------------------
42,300 Williams Cos., Inc. (The)
2,162,588
------------------------------------------------------------
- --------------------- --------------
Total
23,064,989
------------------------------------------------------------
- --------------------- --------------
TOTAL EQUITIES (IDENTIFIED COST $199,937,375)
263,227,024
------------------------------------------------------------
- --------------------- --------------
CONVERTIBLE SECURITIES--1.9%
- ---------------------------------------------------------------------------
- ---------------------
FINANCE--1.2%
------------------------------------------------------------
- ---------------------
$ 71,200 First USA, Inc., Cumulative PRIDES, $1.99
3,471,000
------------------------------------------------------------
- --------------------- --------------
SERVICES--0.7%
------------------------------------------------------------
- ---------------------
6,870,000 Boston Chicken, Inc., Conv. LYON, .08% accrual, 6/1/2015
2,026,650
------------------------------------------------------------
- --------------------- --------------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $3,806,807)
5,497,650
------------------------------------------------------------
- --------------------- --------------
</TABLE>
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Portfolio of Investments
- ---------------------------------------------------------------------------
- -----
April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
<C> <S>
<C>
- ------------- ------------------------------------------------------------
- --------------------- --------------
(B) REPURCHASE AGREEMENT--4.7%
- ---------------------------------------------------------------------------
- ---------------------
$ 13,330,000 BT Securities Corporation, 5.35%, dated 4/30/1996 due
5/1/1996
(AT AMORTIZED COST)
$ 13,330,000
------------------------------------------------------------
- --------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $217,074,182)(C)
$ 282,054,674
------------------------------------------------------------
- --------------------- --------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government
and/or
agency obligations based on market prices at the date of the portfolio.
The
investment in the repurchase agreement is through participation in a
joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to
$217,074,182.
The net unrealized appreciation/depreciation of investments on a
federal tax
basis amounts to $64,980,492 which is comprised of $66,704,777
appreciation
and $1,724,285 depreciation at April 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($280,861,670) at April 30, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
LYON--Liquid Yield Option Note
PLC--Public Limited Company
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Statement of Assets and Liabilities
- ---------------------------------------------------------------------------
- -----
April 30, 1996 (unaudited)
<TABLE>
<S>
<C> <C>
ASSETS:
- ---------------------------------------------------------------------------
- ------------------------
Total investments in securities, at value (identified and tax cost
$217,074,182) $282,054,674
- ---------------------------------------------------------------------------
- ------------------------
Income receivable
156,277
- ---------------------------------------------------------------------------
- ------------------------
Receivable for shares sold
390,933
- ---------------------------------------------------------------------------
- ------------------------ -----------
Total assets
282,601,884
- ---------------------------------------------------------------------------
- ------------------------
LIABILITIES:
- ---------------------------------------------------------------------------
- -------------
Payable for investments purchased
$1,655,980
- ---------------------------------------------------------------------------
- -------------
Payable for shares redeemed
1,038
- ---------------------------------------------------------------------------
- -------------
Payable to Bank
65,853
- ---------------------------------------------------------------------------
- -------------
Payable for taxes withheld
7,257
- ---------------------------------------------------------------------------
- -------------
Accrued expenses
10,086
- ---------------------------------------------------------------------------
- ------------- ---------
Total liabilities
1,740,214
- ---------------------------------------------------------------------------
- ------------------------ -----------
Net Assets for 11,288,761 shares outstanding
$280,861,670
- ---------------------------------------------------------------------------
- ------------------------ -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------
- ------------------------
Paid in capital
$199,433,838
- ---------------------------------------------------------------------------
- ------------------------
Net unrealized appreciation of investments
64,980,492
- ---------------------------------------------------------------------------
- ------------------------
Accumulated net realized gain on investments
16,463,686
- ---------------------------------------------------------------------------
- ------------------------
Distributions in excess of net investment income
(16,346)
- ---------------------------------------------------------------------------
- ------------------------ -----------
Total Net Assets
$280,861,670
- ---------------------------------------------------------------------------
- ------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------
- ------------------------
CLASS A SHARES:
- ---------------------------------------------------------------------------
- ------------------------
Net Asset Value Per Share ($273,758,200 / 11,002,704 shares outstanding)
$24.88
- ---------------------------------------------------------------------------
- ------------------------ -----------
Offering Price Per Share (100/94.50 of $24.88)*
$26.33
- ---------------------------------------------------------------------------
- ------------------------ -----------
Redemption Proceeds Per Share
$24.88
- ---------------------------------------------------------------------------
- ------------------------ -----------
CLASS B SHARES:
- ---------------------------------------------------------------------------
- ------------------------
Net Asset Value Per Share ($6,490,546 / 261,369 shares outstanding)
$24.83
- ---------------------------------------------------------------------------
- ------------------------ -----------
Offering Price Per Share
$24.83
- ---------------------------------------------------------------------------
- ------------------------ -----------
Redemption Proceeds Per Share (94.50/100 of $24.83)**
$23.46
- ---------------------------------------------------------------------------
- ------------------------ -----------
CLASS C SHARES:
- ---------------------------------------------------------------------------
- ------------------------
Net Asset Value Per Share ($612,924 / 24,688 shares outstanding)
$24.83
- ---------------------------------------------------------------------------
- ------------------------ -----------
Offering Price Per Share
$24.83
- ---------------------------------------------------------------------------
- ------------------------ -----------
Redemption Proceeds Per Share (99.00/100 of $24.83)**
$24.58
- ---------------------------------------------------------------------------
- ------------------------ -----------
</TABLE>
*See "How to Purchase Shares" in the Prospectus.
**See "How to Redeem Shares" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Statement of Operations
- ---------------------------------------------------------------------------
- -----
Six Months Ended April 30, 1996 (unaudited)
<TABLE>
<S>
<C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------
- -------------------------
Dividends
$ 1,256,732
- ---------------------------------------------------------------------------
- -------------------------
Interest
451,207
- ---------------------------------------------------------------------------
- ------------------------- ------------
Total income
1,707,939
- ---------------------------------------------------------------------------
- -------------------------
EXPENSES:
- ---------------------------------------------------------------------------
- ------------
Investment advisory fee
$ 940,146
- ---------------------------------------------------------------------------
- ------------
Administrative personnel and services fee
94,789
- ---------------------------------------------------------------------------
- ------------
Custodian fees
19,849
- ---------------------------------------------------------------------------
- ------------
Transfer and dividend disbursing agent fees and expenses
79,077
- ---------------------------------------------------------------------------
- ------------
Directors'/Trustees' fees
4,006
- ---------------------------------------------------------------------------
- ------------
Auditing fees
8,918
- ---------------------------------------------------------------------------
- ------------
Legal fees
4,004
- ---------------------------------------------------------------------------
- ------------
Portfolio accounting fees
45,328
- ---------------------------------------------------------------------------
- ------------
Distribution services fee--Class B Shares
12,828
- ---------------------------------------------------------------------------
- ------------
Distribution services fee--Class C Shares
1,493
- ---------------------------------------------------------------------------
- ------------
Shareholder services fee--Class A Shares
308,610
- ---------------------------------------------------------------------------
- ------------
Shareholder services fee--Class B Shares
4,276
- ---------------------------------------------------------------------------
- ------------
Shareholder services fee--Class C Shares
498
- ---------------------------------------------------------------------------
- ------------
Share registration costs
15,106
- ---------------------------------------------------------------------------
- ------------
Printing and postage
19,058
- ---------------------------------------------------------------------------
- ------------
Insurance premiums
3,821
- ---------------------------------------------------------------------------
- ------------
Taxes
6,309
- ---------------------------------------------------------------------------
- ------------
Miscellaneous
4,975
- ---------------------------------------------------------------------------
- ------------ -----------
Total expenses
1,573,091
- ---------------------------------------------------------------------------
- ------------
Waivers--
- ---------------------------------------------------------------------------
- ------------
Waiver of shareholder services fee--Class A Shares
(185,166)
- ---------------------------------------------------------------------------
- ------------ -----------
Net expenses
1,387,925
- ---------------------------------------------------------------------------
- ------------------------- ------------
Net investment income
320,014
- ---------------------------------------------------------------------------
- ------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------
- -------------------------
Net realized gain on investments
16,464,514
- ---------------------------------------------------------------------------
- -------------------------
Net change in unrealized appreciation of investments
27,546,495
- ---------------------------------------------------------------------------
- ------------------------- ------------
Net realized and unrealized gain on investments
44,011,009
- ---------------------------------------------------------------------------
- ------------------------- ------------
Change in net assets resulting from operations
$ 44,331,023
- ---------------------------------------------------------------------------
- ------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------
- -----
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
<S>
<C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
- --
OPERATIONS--
- ---------------------------------------------------------------------------
- --
Net investment income
$ 320,014 $ 2,736,582
- ---------------------------------------------------------------------------
- --
Net realized gain (loss) on investments ($16,464,514 and $51,266,240 net
gains, respectively, as computed for federal tax purposes)
16,464,514 51,470,307
- ---------------------------------------------------------------------------
- --
Net change in unrealized appreciation
27,546,495 8,029,038
- ---------------------------------------------------------------------------
- -- --------------- ------------------
Change in net assets resulting from operations
44,331,023 62,235,927
- ---------------------------------------------------------------------------
- -- --------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
- --
Distributions from net investment income
- ---------------------------------------------------------------------------
- --
Class A Shares
(437,229) (3,142,465)
- ---------------------------------------------------------------------------
- --
Class B Shares
- -- --
- ---------------------------------------------------------------------------
- --
Class C Shares
- -- --
- ---------------------------------------------------------------------------
- --
Distributions from net realized gains
- ---------------------------------------------------------------------------
- --
Class A Shares
(50,905,303) (9,574,950)
- ---------------------------------------------------------------------------
- --
Class B Shares
(314,552) --
- ---------------------------------------------------------------------------
- --
Class C Shares
(47,135) --
- ---------------------------------------------------------------------------
- -- --------------- ------------------
Change in net assets resulting from distributions to shareholders
(51,704,219) (12,717,415)
- ---------------------------------------------------------------------------
- -- --------------- ------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
- --
Proceeds from sale of shares
68,600,119 85,256,559
- ---------------------------------------------------------------------------
- --
Net asset value of shares issued to shareholders in payment of
distributions
declared
29,896,563 6,491,787
- ---------------------------------------------------------------------------
- --
Cost of shares redeemed
(60,774,086) (211,384,336)
- ---------------------------------------------------------------------------
- -- --------------- ------------------
Change in net assets resulting from share transactions
37,722,596 (119,635,990)
- ---------------------------------------------------------------------------
- -- --------------- ------------------
Change in net assets
30,349,400 (70,117,478)
- ---------------------------------------------------------------------------
- --
NET ASSETS:
- ---------------------------------------------------------------------------
- --
Beginning of period
250,512,270 320,629,748
- ---------------------------------------------------------------------------
- -- --------------- ------------------
End of period (including undistributed net investment income of $(0 and
$100,869, respectively)
$ 280,861,670 $ 250,512,270
- ---------------------------------------------------------------------------
- -- --------------- ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Financial Highlights--Class A Shares
- ---------------------------------------------------------------------------
- -----
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
(UNAUDITED)
APRIL 30,
YEAR ENDED OCTOBER 31,
1996 1995 1994 1993
1992 1991 1990 1989 1988(A)
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 26.22 $ 21.28 $ 23.92 $ 21.16
$ 21.58 $ 16.78 $ 20.99 $ 17.18 $ 16.93
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.03 0.24 0.21 0.20
0.33 0.57 0.75 0.59 0.09
- -------------------------
Net realized and
unrealized gain (loss)
on investments 4.06 5.64 (2.18) 2.96
0.45 5.97 (2.69) 3.80 1.08
- ------------------------- ------ --------- --------- ---------
- --------- --------- --------- --------- -----------
Total from investment
operations 4.09 5.88 (1.97) 3.16
0.78 6.54 (1.94) 4.39 1.17
- ------------------------- ------ --------- --------- ---------
- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.04) (0.26) (0.19) (0.23)
(0.33) (0.61) (0.79) (0.52) (0.15)
- -------------------------
Distributions from net
realized gain on
investment transactions (5.39) (0.68) (0.48) (0.17)
(0.87) (1.13) (1.48) (0.06) (0.77)
- ------------------------- ------ --------- --------- ---------
- --------- --------- --------- --------- -----------
Total distributions (5.43) (0.94) (0.67) (0.40)
(1.20) (1.74) (2.27) (0.58) (0.92)
- ------------------------- ------ --------- --------- ---------
- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF
PERIOD $ 24.88 $ 26.22 $ 21.28 $ 23.92
$ 21.16 $ 21.58 $ 16.78 $ 20.99 $ 17.18
- ------------------------- ------ --------- --------- ---------
- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 18.58% 29.03% (8.43%) 15.06%
3.93% 41.54% (10.41%) 25.87% 6.95%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses 1.09%* 1.10% 0.99% 0.96%
1.01% 1.01% 1.01% 1.01% 1.00%*
- -------------------------
Net investment income 0.27%* 1.05% 0.89% 0.90%
1.54% 2.88% 4.00% 2.99% 1.30%*
- -------------------------
Expense waiver/
reimbursement (c) 0.15%* 0.16% -- --
- -- 0.10% 0.22% 0.14% 0.60%*
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted) $273,758 $249,110 $320,630 $460,811 $391,655
$275,561 $138,407 $134,735 $104,146 $102,395 $134,657
- -------------------------
Average commission rate
paid $ 0.056 -- -- --
- -- -- -- -- --
- -------------------------
Portfolio turnover 56 % 125% 59% 57%
46% 54% 67% 79% 24%
- -------------------------
<CAPTION>
YEAR ENDED
MAY 31,
1988 1987
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.67 $ 16.03
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.25 0.28
- -------------------------
Net realized and
unrealized gain (loss)
on investments (0.23) 2.40
- ------------------------- --------- ---------
Total from investment
operations 0.02 2.68
- ------------------------- --------- ---------
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.20) (0.26)
- -------------------------
Distributions from net
realized gain on
investment transactions (0.56) (0.78)
- ------------------------- --------- ---------
Total distributions (0.76) (1.04)
- ------------------------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 16.93 $ 17.67
- ------------------------- --------- ---------
TOTAL RETURN (B) 0.50% 17.55%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses 1.00% 1.00%
- -------------------------
Net investment income 1.39% 1.78%
- -------------------------
Expense waiver/
reimbursement (c) 0.15% 0.18%
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted)
- -------------------------
Average commission rate
paid -- --
- -------------------------
Portfolio turnover 88% 66%
- -------------------------
</TABLE>
* Computed on an annualized basis.
(a) For the five months ended October 31, 1988, the Fund changed its
fiscal
year end from May 31 to October 31.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and
net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Financial Highlights--Class B Shares
- ---------------------------------------------------------------------------
- -----
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, 1996 OCTOBER 31, 1995(A)
<S>
<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 26.23 $ 25.51
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income
(0.03) (0.02)
- -----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
4.02 0.74
- -----------------------------------------------------------------------
- ------- -------
Total from investment operations
3.99 0.72
- -----------------------------------------------------------------------
- ------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income
- -- --
- -----------------------------------------------------------------------
Distributions from net realized gain on investment transactions
(5.39) --
- -----------------------------------------------------------------------
- ------- -------
Total distributions
(5.39) --
- -----------------------------------------------------------------------
- ------- -------
NET ASSET VALUE, END OF PERIOD
$ 24.83 $ 26.23
- -----------------------------------------------------------------------
- ------- -------
TOTAL RETURN (B)
18.13% 2.82%
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses
2.00%* 2.04%*
- -----------------------------------------------------------------------
Net investment income
(0.71%)* (0.66%)*
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted)
$6,491
$1,345
- -----------------------------------------------------------------------
Average commission rate paid $
0.056 --
- -----------------------------------------------------------------------
Portfolio turnover
56 % 125 %
- -----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 15, 1995 (date of
initial
public offering) to October 31, 1995.
(b) Based on net asset value, which does not reflect sales charge or
contingent
deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Financial Highlights--Class C Shares
- ---------------------------------------------------------------------------
- -----
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, 1996 OCTOBER 31, 1995(A)
<S>
<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 26.22 $ 25.51
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income
(0.04) (0.02)
- -----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
4.04 0.73
- -----------------------------------------------------------------------
- ------- -------
Total from investment operations
4.00 0.71
- -----------------------------------------------------------------------
- ------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income
- -- --
- -----------------------------------------------------------------------
Distributions from net realized gain on investment transactions
(5.39) --
- -----------------------------------------------------------------------
- ------- -------
Total distributions
(5.39) --
- -----------------------------------------------------------------------
- ------- -------
NET ASSET VALUE, END OF PERIOD
$ 24.83 $ 26.22
- -----------------------------------------------------------------------
- ------- -------
TOTAL RETURN (B)
18.08% 2.78%
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses
2.00%* 2.05%*
- -----------------------------------------------------------------------
Net investment income
(0.71%)* (0.71%)*
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted)
$613 $57
- -----------------------------------------------------------------------
Average commission rate paid
$0.056 --
- -----------------------------------------------------------------------
Portfolio turnover
56% 125%
- -----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 15, 1995 (date of
initial
public offering) to October 31, 1995.
(b) Based on net asset value, which does not reflect sales charge or
contingent
deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
Federated Growth Strategies Fund
(formerly, Federated Growth Trust)
Notes to Financial Statements
- ---------------------------------------------------------------------------
- -----
April 30, 1996 (unaudited)
1. ORGANIZATION
Federated Equity Funds (the "Trust") is registered under the Investment
Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of three portfolios. The financial statements
included herein are only those of Federated Growth Strategies Fund (the
"Fund"),
a diversified portfolio. The financial statements of the other portfolios
are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are
held. The
investment objective of the Fund is appreciation of capital.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last
sale
price reported on a national securities exchange. Short-term
securities are
valued at the prices provided by an independent pricing service.
However,
short-term securities with remaining maturities of sixty days or less
at
the time of purchase may be valued at amortized cost, which
approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under
repurchase
agreement transactions. Additionally, procedures have been established
by
the Fund to monitor, on a daily basis, the market value of each
repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other
recognized financial institutions, such as broker/dealers, which are
deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines
and/or
standards reviewed or established by the Board of Trustees (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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and
expenses
are accrued daily. Bond premium and discount, if applicable, are
amortized
as required by the Internal Revenue Code, as amended (the "Code").
Dividend
income and distributions to shareholders are recorded on the ex-
dividend
date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions
of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-
issued
securities on the trade date and maintains security positions such
that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest
on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in
conformity
with generally accepted accounting principles requires management to
make
estimates and assumptions that affect the amounts of assets,
liabilities,
expenses and revenues reported in the financial statements. Actual
results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
3. 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) for
each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED
APRIL 30, 1996
OCTOBER 31,
<S> <C> <C>
<C> <C>
SHARES
AMOUNT SHARES AMOUNT
CLASS A SHARES
- -----------------------------------------------------
Shares sold 2,775,912 $
62,641,258 3,574,020 $ 83,512,397
- -----------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 1,358,128
29,564,827 328,335 6,491,787
- -----------------------------------------------------
Shares redeemed (2,630,668)
(59,842,674) (9,466,879) (211,046,538)
- ----------------------------------------------------- ----------- -------
- ------- ----------- ---------------
Net change resulting from Class A
share transactions 1,503,372 $
32,363,411 (5,564,524) $ (121,042,354)
- ----------------------------------------------------- ----------- -------
- ------- ----------- ---------------
PERIOD
ENDED PERIOD ENDED
APRIL
30, 1996 OCTOBER 31, 1995(A)
CLASS B SHARES SHARES
AMOUNT SHARES AMOUNT
<S> <C> <C>
<C> <C>
Shares sold 236,159
$ 5,425,122 63,517 $ 1,671,107
- ----------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 13,074
284,612 -- --
- ----------------------------------------------------------------
Shares redeemed
(39,158) (885,190) (12,223) (322,715)
- ---------------------------------------------------------------- ---------
- ------------ --------- ------------
Net change resulting from Class B
share transactions 210,075
$ 4,824,544 51,294 $ 1,348,392
- ---------------------------------------------------------------- ---------
- ------------ --------- ------------
</TABLE>
(a) Reflects operations for the period from August 15, 1995 (date of
initial
public offering) to October 31, 1995.
<TABLE>
<CAPTION>
PERIOD ENDED
PERIOD ENDED
APRIL 30,
1996 OCTOBER 31, 1995(B)
<S> <C> <C>
<C> <C>
CLASS C SHARES SHARES
AMOUNT SHARES AMOUNT
Shares sold 22,303 $
533,739 2,756 $ 73,055
- -------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 2,165
47,124 -- --
- -------------------------------------------------------
Shares redeemed (1,961)
(46,222) (575) (15,083)
- ------------------------------------------------------- ---------- ------
- ------- ----------- ---------------
Net change resulting from Class C
share transactions 22,507 $
534,641 2,181 $ 57,972
- ------------------------------------------------------- ---------- ------
- ------- ----------- ---------------
Net change resulting from share
transactions 1,735,954 $
37,722,596 (5,511,049) (119,635,990)
- ------------------------------------------------------- ---------- ------
- ------- ----------- ---------------
</TABLE>
(b) Reflects operation for the period from August 15, 1995 (date of initial
public offering) to October 31, 1995.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment
adviser,
(the "Adviser"), receives for its services an annual investment advisory
fee
equal to 0.75% of the Fund's average daily net assets.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of
average
aggregate daily net assets of all funds advised by subsidiaries of
Federated
Investors for the period. The administrative fee received during the period
of
the Administrative Services Agreement shall be at least $125,000 per
portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the
"Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will
compensate Federated Securities Corp., the principal distributor, from the
net
assets of the Fund to finance activities intended to result in the sale of
the
Fund's Class B and Class C shares. The Plan provides that the Fund may
incur
distribution expenses according to the following schedule annually, to
compensate Federated Securities Corp.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at
its
sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to
0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS
is
used to finance certain services for shareholders and to maintain
shareholder
accounts. For the period ended April 30, 1996, the Fund's Class A Shares
waived
a portion of the shareholder services fee. FSS may voluntarily choose to
waive
any portion of its fee. FSS can modify or terminate this voluntary waiver
at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company serves as transfer and dividend disbursing agent for the Fund. The
fee
paid to FServ is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records
for
which it receives a fee. The fee is based on the level of the Fund's
average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and 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
period ended April 30, 1996, were as follows:
<TABLE>
<S>
<C>
- ---------------------------------------------------------------------------
- -----------------------
PURCHASES
$ 136,939,092
- ---------------------------------------------------------------------------
- ----------------------- --------------
SALES
$ 147,836,809
- ---------------------------------------------------------------------------
- ----------------------- --------------
</TABLE>
Directors Officers
- ---------------------------------------------------------------------------
- -----
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. J. Christopher
Donahue
William J. Copeland President
J. Christopher Donahue Edward C.
Gonzales
James E. Dowd Executive Vice
President
Lawrence D. Ellis, M.D. John W. McGonigle
Edward L. Flaherty, Jr. Executive Vice
President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts S. Elliott Cohan
Assistant
Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by
any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only
when
preceded
or accompanied by the fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
[LOGO FEDERATED INVESTORS]
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated investors.
Cusip 314172107
Cusip 314172206
Cusip 314172305
8010409 (6/96)
APPENDIX
A. The graphic presentation here displayed consists of a boxed legend in
the upper left corner indicating the components of the corresponding
mountain chart. The lighter-shaded portion represents Reinvested Income.
The darker-shaded portion represents the Principal Value of $12,000
Investment (1,134 Shares) in Federated Growth Strategies Fund (the "Fund").
The mountain chart is a graphic representation of the narrative text above
it. The "x" axis displays annual computation periods form 8/23/84 (fund
inception) to 4/30/96. The right margin displays the ending values of the
hypothetical investment in $10,000 increments ranging from $0 to $70,000.
The ending value of the Reinvested Income on 4/30/96 is $64,560/2,595
Shares.
B. The graphic presentation here displayed consists of a boxed legend in
the upper left corner indicating the components of the corresponding
mountain chart. The lighter-shaded portion represents Reinvested Income.
The darker-shaded portion represents the Principal Value of $1,000
Investments (totaling $12,000 by 4/30/96) in Federated Growth Strategies
Fund. The mountain chart is a graphic representation of the narrative text
above it. The "x" axis displays annual computation periods form 8/23/84
(fund inception) to 4/30/96. The right margin displays the ending values of
the hypothetical investments in $5,000 increments ranging from $0 to
$30,000. The total reinvested value of the $1,000 investments on 4/30/96 is
$28,890/1,161 Shares.
C. The graphic presentation here displayed consists of a boxes legend in
the upper left corner indicating the components of the corresponding
mountain chart. The lighter-shaded portion represents Reinvested Income.
The darker-shaded portion represents the Principal Value of Original and
Subsequent Investments (totaling $35,000 by 4/30/96) in Federated Growth
Strategies Fund. The mountain chart is a graphic representation of the
narrative text above it. The "x" axis displays computation periods ranging
from 4/30/86 to 4/30/96. The right margin displays the ending values of the
Investments in $15,000 increments ranging from $0 to $75,000. The total
reinvested value of the Investments on 4/30/96 is $74,389/2,990 Shares.
