FEDERATED
SHORT-TERM
INCOME
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1993
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTRS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8112901 (12/93)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Short-Term Income Fund, a portfolio of Federated Income Securities Trust, for
the six-month period ended October 31, 1993. The Report begins with our
Investment Review, in which the Fund's portfolio manager comments on the
corporate bond, asset-backed securities, and mortgage-backed securities markets.
Following the Investment Review, you will find Financial Statements containing
the Fund's Portfolio of Investments.
On behalf of investors, the Fund pursues income through a diversified portfolio
consisting primarily of short-term, high-quality debt securities, including
asset-backed and mortgage-backed securities.
During the six-month reporting period, dividends paid to shareholders totaled
$6.8 million. At the end of the period, net assets soared from $160 million at
the beginning of the period to $383 million at the end of the period.
Thank you for your confidence in Federated Short-Term Income Fund. As always, we
welcome your questions, comments, or suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1993
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
During the past year, the U.S. economy has grown at a very modest pace
commensurate with a low inflation environment. October, 1993 was the first month
during which almost all economic releases were positive. Employment seems to be
making modest but steady gains while personal income and spending have
experienced minor upticks. From a manufacturing vantage point, industrial
production, capacity utilization, and durable goods orders have all begun to
rebound. In this mild recovery, inflation has remained under control with
respect to both the Consumer Price Index and the Producer Price Index. Strength
in the Commodity Research Bureau index has been attributed to problems resulting
from the flooding in the Midwest.
Over the past year, short-term and intermediate-term rates trended downward
despite periods of weakness in November 1992, March 1993, July 1993 and finally
in October 1993. The most recent correction began in mid-October and has
continued through November. Today's yield curve remains quite steep with losses
in the long bond surpassing the declines in short-term bonds. Given the
continued path of recovery, the Federal Reserve has declared a neutral stance.
As long as inflation remains in check, long-term bond rates are still very high
which could result in a yield curve flattening with the long-end retreating and
the short-end rising modestly.
Federated Short-Term Income Fund (the "Fund") has had a target duration of 2.0
years for the past 12 months. This reflects our continuing bias that the yield
curve is quite steep and offers value in the two-year sector. The incremental
risk taken between the one and two year parts of the yield curve is modest in
light of the large gains in incremental yield in this short portion of the
curve. Emphasis on investment sectors has been with asset-backed securities,
whole-loan mortgage-backed securities (both fixed rate and floating rate) and,
finally, corporate bonds. A slight barbell continues to be the portfolio
configuration of choice using floating rate securities on the short-end and
three to five year securities on the long-end.
The performance over the past year for the Fund has been good. The total return
for the six-month period ended October 31, 1993, was 2.43% for the Institutional
Shares and 2.30% for the Institutional Service Shares.* The net asset value of
the Fund decreased from $9.17 to $9.13 over the six month period. The net assets
of the Fund increased from $159.8 million to $382.5 million while the 30-day
distribution rate decreased from 5.76% to 5.47% for the Institutional Shares and
from 5.51% to 5.22% for the Institutional Service Shares. The effective average
duration of the Fund on October 31, was 2.0 years and will be maintained between
1.5 and 2 years.
*Performance quoted represents past performance. 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.
FEDERATED SHORT-TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
CORPORATE BONDS/ASSET-BACKED SECURITIES--57.5%
- ------------------------------------------------------------------------------------
AUTOMOTIVE--10.2%
--------------------------------------------------------------------
$ 3,840,717 Capital Auto Receivables Asset Trust 1992-1, Class B, 6.200%,
12/15/97 A+ $ 3,922,870
--------------------------------------------------------------------
2,000,000 Capital Auto Receivables Asset Trust 1993-1, Class B, 5.85%, 2/17/98 A+ 2,018,760
--------------------------------------------------------------------
8,000,000 Ford Credit Auto Loan Master Trust 1992-1, 6.875%,
1/15/99 AAA 8,447,680
--------------------------------------------------------------------
1,663,305 John Deere Owner Trust 1992-A, Class E, 4.00%+,
12/29/99 A 1,665,900
--------------------------------------------------------------------
2,390,075 Midlantic Auto Grantor Trust 1992-1, Class B, 5.15%,
9/15/97 A- 2,396,051
--------------------------------------------------------------------
3,450,000 Navistar Financial Dealer Note Trust 1990, Class A-3, 4,15%+,
1/25/2003 AAA 3,475,875
--------------------------------------------------------------------
1,795,089 Nissan Auto Receivables 1992-A Grantor Trust, 5.30%,
6/15/97 AAA 1,809,845
--------------------------------------------------------------------
570,205 Premier Auto Trust 1992-3, Class B, 6.25%, 11/17/97 A+ 578,058
--------------------------------------------------------------------
2,916,492 Premier Auto Trust 1993-1, Class B, 5.60%, 10/15/98 A+ 2,936,440
--------------------------------------------------------------------
9,999,863 Premier Auto Trust 1993-4, Class A2, 4.650%, 2/2/99 AAA 10,024,963
--------------------------------------------------------------------
1,663,667 Volvo Auto Trust 1991-A, 5.65% 12/15/98 AAA 1,686,459
-------------------------------------------------------------------- ---------------
Total 38,962,901
-------------------------------------------------------------------- ---------------
BANKING--9.3%
--------------------------------------------------------------------
12,500,000 Advanta Credit Card Master Trust 1992-3, Class A1, 5.95%, 8/31/99 AAA 12,883,750
--------------------------------------------------------------------
3,000,000 Bankers Trust New York Corp., 5.38%+, 9/24/2002 AA 3,054,390
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
CORPORATE BONDS/ASSET-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
BANKING--CONTINUED
--------------------------------------------------------------------
$ 4,000,000 Colonial Credit Card Trust 1991-B, Class B, 7.95%,
1/15/98 AA- $ 4,220,000
--------------------------------------------------------------------
5,000,000 First Chicago Corp., 4.25%+, 7/28/2003 A- 4,981,250
--------------------------------------------------------------------
7,500,000 MBNA Master Credit Card Trust 1991-1, 7.75%, 10/15/98 AAA 8,091,075
--------------------------------------------------------------------
2,000,000 Standard Credit Card Master Trust 1991-1A, 8.50%,
8/7/97 AAA 2,163,720
-------------------------------------------------------------------- ---------------
Total 35,394,185
-------------------------------------------------------------------- ---------------
FINANCE--AUTOMOTIVE--1.1%
--------------------------------------------------------------------
3,000,000 Ford Motor Credit Co., 6.55%, 2/3/98 A 3,128,400
--------------------------------------------------------------------
1,000,000 Ford Motor Credit Co., 9.50%, 11/15/98 A 1,000,000
-------------------------------------------------------------------- ---------------
Total 4,128,400
-------------------------------------------------------------------- ---------------
FINANCE--COMMERCIAL--0.8%
--------------------------------------------------------------------
3,000,000 General Electric Capital Corp., Capital Reset Note, 8.00%+,
3/15/2018 AAA 3,000,000
-------------------------------------------------------------------- ---------------
FINANCE--RETAIL--13.4%
--------------------------------------------------------------------
3,500,000 Diamond Funding Corp., 6.35%, 11/20/97 AAA 3,577,105
--------------------------------------------------------------------
5,000,000 Discover Credit Card Trust 1991-B, Class A, 8.625%,
7/15/98 AAA 5,463,750
--------------------------------------------------------------------
2,500,000 Discover Credit Card Trust 1991-B, Class B, 8.85%,
7/15/98 AA 2,727,000
--------------------------------------------------------------------
7,000,000 Discover Credit Card Trust 1991-E, 7.30%, 5/20/99 AAA 7,437,010
--------------------------------------------------------------------
10,000,000 Discover Credit Card Trust 1991-F, Class A, 7.85%,
11/21/2000 AAA 11,001,100
--------------------------------------------------------------------
4,000,000 Household Credit Card Trust 1991-1, Class B, 8.13%,
10/15/97 A+ 4,295,960
--------------------------------------------------------------------
6,000,000 Household Credit Card Trust 1992-1, Class B, 6.25%,
12/15/97 A+ 6,158,460
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
CORPORATE BONDS/ASSET-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FINANCE--RETAIL--CONTINUED
--------------------------------------------------------------------
$ 10,000,000 Sears Credit Account Trust 1991-D, 7.75%, 9/15/98 AAA $ 10,752,100
-------------------------------------------------------------------- ---------------
Total 51,412,485
-------------------------------------------------------------------- ---------------
HOME EQUITY RECEIVABLES--14.4%
--------------------------------------------------------------------
1,526,127 Advanta Home Equity Loan Trust 1991-1, 9.00%,
2/25/2006 AAA 1,620,960
--------------------------------------------------------------------
5,431,210 Advanta Home Equity Loan Trust 1992-1, 7.88%,
9/25/2008 AAA 5,705,214
--------------------------------------------------------------------
3,557,888 Advanta Home Equity Loan Trust 1992-4, Class A-2, 7.15%, 12/25/2008 AAA 3,673,377
--------------------------------------------------------------------
589,525 AFC Home Equity Loan Trust 1991-4, 7.75%, 2/15/2006 AAA 615,057
--------------------------------------------------------------------
1,512,772 AFC Home Equity Loan Trust 1992-3, 7.05%, 8/15/2007 AAA 1,557,020
--------------------------------------------------------------------
1,000,000 Capital Home Equity Loan Trust 1991-1B, 3.79%+,
11/14/2011 AAA 1,001,400
--------------------------------------------------------------------
8,936,778 Conti Mortgage Home Equity Loan Trust 1993-3,
Class A-2, 5.54%, 7/15/2020 AAA 8,936,778
--------------------------------------------------------------------
1,274,088 Fleet Finance Home Equity Trust 1991-2, 6.70%,
10/15/2006 AAA 1,301,251
--------------------------------------------------------------------
1,500,000 GE Capital Mortgage Services, Inc. 1991-1, Class B, 8.70%, 8/30/2011 AAA 1,657,980
--------------------------------------------------------------------
898,290 Home Equity Loan REMIC Trust 1992-1, Class A, 5.650%, 11/17/2014 AAA 899,754
--------------------------------------------------------------------
3,866,675 Merrill Lynch Home Equity Loan Trust 1993-1, Class B, 4.25%+,
2/15/2003 A+ 3,883,572
--------------------------------------------------------------------
1,706,027 TMS Home Equity Loan Trust 1992-A, Class A, 6.95%, 12/15/2007 AAA 1,755,707
--------------------------------------------------------------------
1,413,566 TMS Home Equity Loan Trust 1992-B, Class A, 6.90%,
7/15/2007 AAA 1,447,040
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
CORPORATE BONDS/ASSET-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
HOME EQUITY RECEIVABLES--CONTINUED
--------------------------------------------------------------------
$ 10,683,489 TMS Home Equity Loan Trust 1992-D, Class A3, 7.55%, 1/15/2018 AAA $ 11,070,231
--------------------------------------------------------------------
9,985,284 TMS Home Equity Loan Trust 1993-C, Class A3, 5.750%, 10/15/2022 AAA 10,103,859
-------------------------------------------------------------------- ---------------
Total 55,229,200
-------------------------------------------------------------------- ---------------
LEASING--1.1%
--------------------------------------------------------------------
229,197 Comdisco Receivables Trust 1991-A, 7.70%, 5/15/96 AAA 229,915
--------------------------------------------------------------------
1,473,491 Concord Leasing Grantor Trust 1992-C, Class A-1, 5.31%, 1/20/99 AAA 1,478,103
--------------------------------------------------------------------
2,250,000 U.S. Leasing, Inc., 7.00%, 11/1/97 A 2,381,355
-------------------------------------------------------------------- ---------------
Total 4,089,373
-------------------------------------------------------------------- ---------------
MANUFACTURED HOUSING RECEIVABLES--2.1%
--------------------------------------------------------------------
4,554,163 CIT Group Manufactured Housing 1993-1, Class A-1, 4.70%, 6/15/2018 AAA 4,549,062
--------------------------------------------------------------------
2,679,667 Greentree Manufactured Housing 1992-1, Class A-5, 6.50%, 10/15/2017 Aa3 2,698,987
--------------------------------------------------------------------
699,581 Merrill Lynch Mortgage Investments, Inc. 8.5% Mfd. Housing Contract,
1992B, 4/15/2012 A2 738,086
-------------------------------------------------------------------- ---------------
Total 7,986,135
-------------------------------------------------------------------- ---------------
MARINE RECEIVABLES--1.6%
--------------------------------------------------------------------
409,311 CFC-11 Grantor Trust, Class A, 8.90%, 8/15/97 AAA 429,322
--------------------------------------------------------------------
5,675,967 CFC-14 Grantor Trust, Class A, 7.15%, 11/15/2006 AAA 5,775,297
-------------------------------------------------------------------- ---------------
Total 6,204,619
-------------------------------------------------------------------- ---------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
CORPORATE BONDS/ASSET-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
RECREATIONAL VEHICLE RECEIVABLES--2.2%
--------------------------------------------------------------------
$ 8,419,826 Fleetwood Credit 1993-A, Class A, 6.00%, 1/15/2008 AAA $ 8,600,852
-------------------------------------------------------------------- ---------------
TRADE RECEIVABLES--1.0%
--------------------------------------------------------------------
4,000,000 Unisys Receivables Master Trust I, 5.05%, 11/15/96 AAA 4,023,400
-------------------------------------------------------------------- ---------------
UTILITIES--0.3%
--------------------------------------------------------------------
1,000,000 Pennsylvania Power & Light Co., 7.625%, 2/1/2002 A 1,022,000
-------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS/ASSET-BACKED SECURITIES
(IDENTIFIED COST $219,203,738) 220,053,550
-------------------------------------------------------------------- ---------------
GOVERNMENT AGENCIES--1.9%
- ------------------------------------------------------------------------------------
712,000 Patriot Shipping IV Co., 8.00% 12/7/2004 AAA 735,589
--------------------------------------------------------------------
1,000,000 Student Loan Marketing Association, 3.81%+, 5/8/95 AAA 1,000,000
--------------------------------------------------------------------
5,000,000 Tennessee Valley Authority, Debenture, Series E, 8.75%,
10/1/2019 AAA 5,432,800
-------------------------------------------------------------------- ---------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 7,189,341) 7,168,389
-------------------------------------------------------------------- ---------------
MORTGAGE-BACKED SECURITIES--33.3%
- ------------------------------------------------------------------------------------
GOVERNMENT AGENCY--MORTGAGE-BACKED SECURITIES--1.9%
--------------------------------------------------------------------
1,515,172 Federal Home Loan Mortgage Corp. Pound606116, 5.79%+,
9/1/2019 AAA 1,575,309
--------------------------------------------------------------------
1,797,689 Federal Home Loan Mortgage Corp. Pound785167, 6.41+,
12/1/2018 AAA 1,867,349
--------------------------------------------------------------------
255,784 Federal Home Loan Mortgage Corp. CMO Series 1097 Class F, 8.60%
6/15/2014 AAA 256,728
--------------------------------------------------------------------
1,000,000 Federal Home Loan Mortgage Corp. Series 1132 Class G, 8.00%,
1/15/2005 AAA 1,039,600
--------------------------------------------------------------------
1,580,000 Federal National Mortgage Association 1991-140 C, 8.50%, 5/25/2020 AAA 1,629,407
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
MORTGAGE--BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
GOVERNMENT AGENCY--MORTGAGE-BACKED SECURITIES-- CONTINUED
--------------------------------------------------------------------
$ 1,000,000 Federal National Mortgage Association Series 126 Class PJ P11,
6.00%, 4/25/2014 AAA $ 999,450
-------------------------------------------------------------------- ---------------
Total 7,367,843
-------------------------------------------------------------------- ---------------
NON-GOVERNMENT AGENCY--MORTGAGE-BACKED SECURITIES--31.4%
--------------------------------------------------------------------
5,000,000 Capstead Securities Corp. 1992-10, Class D, 8.25%,
7/25/2023 AAA 5,187,350
--------------------------------------------------------------------
1,665,671 Capstead Securities Corp. IV 1992, Class 4-E, 3.99%+,
6/25/2018 AAA 1,669,835
--------------------------------------------------------------------
4,663,865 Chase Home Mortgage Corp. 1992-M2 Class 2A, 8.00%, 12/25/2023 AAA 4,754,111
--------------------------------------------------------------------
2,060,000 Chemical Mortgage Securities, Inc. 1993, Class A-4, 7.45%, 7/25/2020 AAA 2,123,736
--------------------------------------------------------------------
4,094,226 Citicorp Mortgage Securities 1992-18, Class A-1, 5.21%+, 10/25/2022 AAA 4,147,983
--------------------------------------------------------------------
3,663,761 Citicorp Mortgage Securities 1992-5, Clas A-1, 8.00%,
9/25/2021 AAA 3,746,709
--------------------------------------------------------------------
9,810,000 Countrywide Mortgage 1993-7, Class A-1, 5.40%,
9/25/2023 AAA 9,840,656
--------------------------------------------------------------------
7,000,000 GCA 1993-3, Class A-1, 5.58%+, 8/25/2023 AAA 7,275,660
--------------------------------------------------------------------
7,952,913 GCA 1993-LB2, Class A-1, 5.58%+, 8/25/2023 AAA 8,266,099
--------------------------------------------------------------------
6,429,613 GCA Long Beach Mortgage PTC 1992, Class A-2, 6.08%+, 7/25/2022 AAA 6,666,673
--------------------------------------------------------------------
2,520,492 GCA REMIC PTC1991-4, Class B-1A, 8.64%+, 7/1/2019 AA 2,605,558
--------------------------------------------------------------------
10,000,000 GE Capital Mortgage Services Inc. 1993-12, Class A, 6.50%,
11/25/2023 AAA 10,139,063
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
MORTGAGE-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NON-GOVERNMENT AGENCY--MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------
$ 4,968,232 GE Capital Mortgage Services Inc. 1993-9, Class A-1, 6.00%,
8/25/2008 AAA $ 5,013,641
--------------------------------------------------------------------
3,217,775 Glendale Federal Bank, 1988-1A, 5.54%+, 11/25/2027 Aaa 3,245,931
--------------------------------------------------------------------
2,281,665 GMBS 1990-5, Class A, 6.62%+, 12/26/2020 AAA 2,298,071
--------------------------------------------------------------------
1,836,265 Long Beach Bank Mortgage Series 1992-3, Class A, 9.60%, 7/15/2002 AAA 1,890,196
--------------------------------------------------------------------
2,031,281 Prudential Home Mortgage 1992-33, Class A-2, 7.50%, 11/25/2022 AAA 2,068,007
--------------------------------------------------------------------
2,864,655 Prudential Home Mortgage 1992-A, Class B1-1, 7.20%, 11/25/2022 AAA 2,904,216
--------------------------------------------------------------------
1,914,678 Residential Funding Corp. 1993-S18, Class-A-2, 7.50%,
5/25/2023 AAA 1,975,564
--------------------------------------------------------------------
6,667,033 Residential Funding Corp. 1993-S29, Class A-7, 7.00%,
8/25/2008 AAA 6,785,972
--------------------------------------------------------------------
5,000,000 Residential Funding Mortgage Securities, Inc. 1993-S38, Class A,
4.85%+, 8/25/2023 AA 5,193,000
--------------------------------------------------------------------
811,079 Resolution Trust Corp. 1992-12, Class B-2, 7.50%,
9/25/2023 AAA 814,883
--------------------------------------------------------------------
2,000,000 Resolution Trust Corp. 1992-12, Class B-3, 5.98%+,
12/25/2025 AA+ 2,013,120
--------------------------------------------------------------------
176,449 Resolution Trust Corp. 1992-7, Class A-2A, 8.35%,
6/25/2029 AAA 178,434
--------------------------------------------------------------------
2,000,125 Resolution Trust Corp. 1992-7, Class B-2B, 8.35%,
6/29/2029 AAA 2,016,066
--------------------------------------------------------------------
4,481,293 Salomon Brothers Mortgage Securities VII, Inc. 1992-6, Class A-1,
5.42%+, 11/25/2022 AAA 4,628,504
--------------------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
MORTGAGE-BACKED SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NON-GOVERNMENT AGENCY--MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------
$ 12,000,000 Salomon Brothers Mortgage Securities VII, Inc. 1993-5, Class A-3C,
7.44%+, 10/25/2023 Aaa $ 12,433,080
-------------------------------------------------------------------- ---------------
Total 119,882,118
-------------------------------------------------------------------- ---------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $127,562,414) 127,249,961
-------------------------------------------------------------------- ---------------
COMMERCIAL PAPER--2.9%
- ------------------------------------------------------------------------------------
6,000,000 Dollar Yield Agreement-FNB Chicago, 4.75%, 11/15/93 A+ 6,000,000
--------------------------------------------------------------------
5,000,000 Dollar Yield Agreement-FNB Chicago, 4.75%, 11/12/93 A+ 5,000,000
-------------------------------------------------------------------- ---------------
TOTAL COMMERCIAL PAPER (IDENTIFIED COST $11,000,000) 11,000,000
-------------------------------------------------------------------- ---------------
*REPURCHASE AGREEMENTS--5.6%
- ------------------------------------------------------------------------------------
10,000,000 Goldman Sachs, 2.97%, 11/1/93 10,000,000
--------------------------------------------------------------------
11,264,000 Greenwich Capital, 3.00%, 11/1/93 11,264,000
-------------------------------------------------------------------- ---------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 21,264,000
-------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $386,219,493) $ 386,735,900\\
-------------------------------------------------------------------- ---------------
</TABLE>
* Repurchase agreements are fully collateralized by U.S.
government and/or agency obligations. The investments in the
repurchase agreements are through participation in a joint
account with other Federated funds based on market prices at the
date of the portfolio.
\ Denotes variable rate and floating rate obligations for which the
current yield is shown.
\\ The cost for federal tax purposes amounts to $386,219,493. The net unrealized
appreciation of investments on a federal tax basis amounts to $516,407 which
is comprised of $1,592,461 appreciation and $1,076,054 depreciation at
October 31, 1993.
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
CMO--Collateralized Mortgage Obligation
PTC--Pass Through Certificate
REMIC--Real Estate Mortgage Investment Conduit
Note: The categories of investments are shown as a percentage of net assets
($382,521,435) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements.)
FEDERATED SHORT-TERM INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Total investments, at value (Notes 1A and 1B)
(identified and tax cost, $386,219,493) $ 386,735,900
- ------------------------------------------------------------------------------------------------
Cash 1,934
- ------------------------------------------------------------------------------------------------
Interest receivable 2,750,614
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,944,244
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 391,432,692
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Payable for investments purchased $ 7,270,156
- --------------------------------------------------------------------------------
Dividends payable 1,240,990
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed 292,159
- --------------------------------------------------------------------------------
Accrued expenses and other liabilities 107,952
- -------------------------------------------------------------------------------- --------------
Total liabilities 8,911,257
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 41,896,837 shares of beneficial interest outstanding $ 382,521,435
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 392,257,723
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on investments 516,407
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (10,252,695)
- ------------------------------------------------------------------------------------------------ ---------------
Total $ 382,521,435
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
Institutional Shares ($349,959,023 / 38,330,302 shares of beneficial interest
outstanding) $9.13
- ------------------------------------------------------------------------------------------------ ---------------
Institutional Service Shares ($32,562,412 / 3,566,535 shares of beneficial interest outstanding)
$9.13
- ------------------------------------------------------------------------------------------------ ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 1C) $ 7,488,024
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 485,265
- --------------------------------------------------------------------------------------
Directors' fees 5,248
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 196,128
- --------------------------------------------------------------------------------------
Custodian, transfer agent and dividend disbursing agent fees and expenses 65,058
- --------------------------------------------------------------------------------------
Fund share registration costs 40,234
- --------------------------------------------------------------------------------------
Auditing fees 11,780
- --------------------------------------------------------------------------------------
Distribution fees (Note 4) 28,043
- --------------------------------------------------------------------------------------
Legal fees 8,300
- --------------------------------------------------------------------------------------
Printing and postage 22,500
- --------------------------------------------------------------------------------------
Insurance premiums 4,459
- --------------------------------------------------------------------------------------
Taxes 167
- --------------------------------------------------------------------------------------
Miscellaneous 1,574
- -------------------------------------------------------------------------------------- -----------
Total expenses 868,756
- --------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 177,985
- -------------------------------------------------------------------------------------- -----------
Net expenses 690,771
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 6,797,253
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (identified cost basis) (497,614)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (457,680)
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments (955,294)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 5,841,959
- --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------
<S> <C> <C>
1994* 1993
- ----------------------------------------------------------------------------- ---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 6,797,253 $ 5,989,214
- -----------------------------------------------------------------------------
Net realized loss on investment transactions ($497,614 net loss and $61,811
net gain, respectively, as computed for federal
tax purposes) (497,614) (2,884)
- -----------------------------------------------------------------------------
Change in unrealized appreciation of investments (457,680) 1,162,577
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from operations 5,841,959 7,148,907
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Institutional Shares (6,191,540) (5,534,478)
- -----------------------------------------------------------------------------
Institutional Service Shares (605,713) (340,673)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from distributions to shareholders (6,797,253) (5,875,151)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE TRANSACTIONS (NOTE 3)
(EXCLUSIVE OF AMOUNTS ALLOCATED TO NET INVESTMENT INCOME)--
- -----------------------------------------------------------------------------
Net proceeds from sale of shares 306,015,977 202,156,588
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 1,398,699 895,871
- -----------------------------------------------------------------------------
Cost of shares redeemed (83,739,615) (81,349,085)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions 223,675,061 121,703,374
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 222,719,767 122,977,130
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 159,801,668 36,824,538
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 382,521,435 $ 159,801,668
- ----------------------------------------------------------------------------- ---------------- ----------------
* Six months ended October 31, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
</TABLE>
FEDERATED SHORT-TERM INCOME FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* 1993 1992** 1991 1990 1989 1988 1987***
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.17 $ 8.98 $ 9.07 $ 9.16 $ 9.41 $ 9.56 $ 9.98 $ 10.00
- --------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------
Net investment income 0.26 0.58 0.60 0.83 0.93 0.94 0.94 0.74
- --------------------------------------
Net realized and unrealized
gain/loss on investments (0.04) 0.16 (0.07) (0.08) (0.25) (0.15) (0.42) (0.02)
- -------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.22 0.74 0.53 0.75 0.68 0.79 0.52 0.72
- --------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------
Dividends to shareholders
from net investment income (0.26) (0.55) (0.60) (0.83) (0.93) (0.94) (0.94) (0.74)
- --------------------------------------
Distributions in excess of
net investment income -- -- (0.02)*** (0.01)*** -- -- -- --
- -------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (0.26) (0.55) (0.62) (0.84) (0.93) (0.94) (0.94) (0.74)
- -------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.13 $ 9.17 $ 8.98 $ 9.07 $ 9.16 $ 9.41 $ 9.56 $ 9.98
- -------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN***** 2.43% 8.39% 5.94% 8.80% 7.52% 8.69% 5.43% 7.40%
- --------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------
Expenses 0.55 (b) 0.51% 0.53% 0.52% 0.52% 0.51% 0.50% 0.50%(b
)
- --------------------------------------
Net investment income 5.63 (b) 6.07% 6.71% 9.33% 9.95% 9.90% 9.59% 9.58%(b
)
- --------------------------------------
Expense waiver/reimbursement (a) 0.15% 0.45% 0.98% 0.92% 0.77% 0.76% 0.59% 0.60%
- --------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------
Net assets, end of period (000
omitted) $349,959 $144,129 $36,047 $47,223 $65,429 $69,904 $90,581 $80,073
- --------------------------------------
Portfolio turnover rate 14% 62% 114% 23% 34% 38% 77% 82%
- --------------------------------------
</TABLE>
* For six months ended October 31, 1993 (unaudited).
** On December 31, 1991, the shareholders approved a change in the fundamental
investment policies which state that the Fund will be invested in
high-grade as opposed to lower-rated debt securities, and as a result,
investment income per share is lower.
*** Reflects operations for the period from July 1, 1986 to April 30, 1987. For
the period from the start of business, June 2, 1986, to June 30, 1986, net
investment income aggregating $0.053 per share ($529) was distributed to
the Fund's investment adviser. Such distribution represented the net income
of the Fund prior to the initial public offering of Fund shares which
commenced on July 1, 1986.
**** Distributions in excess of net investment income for the years ended April
30, 1992 and 1991, were a result of certain book and tax timing
differences. These distributions did not represent a return of capital for
federal income tax purposes for the years ended April 30, 1992 and 1991.
***** Based on net asset value which does not reflect the sales load or
redemption fee, if applicable.
(a) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM INCOME FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED APRIL 30,
<S> <C> <C> <C>
1994* 1993 1992**
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.17 $ 8.98 $ 9.08
- -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------
Net investment income 0.25 0.52 0.15
- -------------------------------------------------------------------------
Net realized and unrealized gain/loss on investments (0.04) 0.19 (0.10)
- ------------------------------------------------------------------------- --------- --------- ---------
Total from investment operations 0.21 0.71 0.05
- -------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.25) (0.52) (0.15)
- ------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.13 $ 9.17 $ 8.98
- ------------------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN*** 2.30% 8.12% 0.69%
- -------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------
Expenses 0.80 (b) 0.76% 0.78%(b)
- -------------------------------------------------------------------------
Net investment income 5.38 (b) 5.82% 6.37%(b)
- -------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.15% 0.45% 0.98%
- -------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
Net assets, end of period (000 omitted) $32,562 $15,673 $778
- -------------------------------------------------------------------------
Portfolio turnover rate 14% 62% 114%
- -------------------------------------------------------------------------
</TABLE>
* For six months ended October 31, 1993 (unaudited).
** Reflects operations for the period from January 21, 1992 (date of initial
public investment) to April 30, 1992.
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a)The expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 4).
(b)Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940, as amended, as
an open-end, management investment company. The following is a summary of
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
Effective January 21, 1992 (the effective date for the Institutional Shares and
Institutional Service Shares of Federated Short-Term Income Fund), Federated
Short-Term Income Fund provided two classes of shares ("Institutional Shares"
and "Institutional Service Shares"). Institutional Service Shares are identical
in all respects to Institutional Shares except that Institutional Service Shares
are sold pursuant to a distribution plan ("Plan") adopted in accordance with
Investment Company Act Rule 12b-1. Under the Plan, the Fund may pay Federated
Securities Corp. (the "distributor") a fee at an annual rate up to .25 of 1% of
the average daily net asset value of Institutional Service Shares to finance any
activity which is principally intended to result in the sale of Institutional
Service Shares.
A. INVESTMENT VALUATIONS--Listed securities are valued at the last sale price
reported on national securities exchanges. Unlisted securities, or listed
securities in which there are no current sales, are valued on the basis of
prices provided by independent pricing services. Short-term obligations are
valued at the mean between bid and asked prices as furnished by an
independent pricing service, however, such issues with maturities of sixty
days or less are valued at amortized cost, which approximates market value.
B. 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 in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of
collateral.
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. 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.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium) on short-term
obligations, and interest earned on all other debt securities including
original issue discount as required by the Internal Revenue Code.
FEDERATED SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code available to investment companies and distribute to
shareholders each year substantially all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal tax
is necessary. At April 30, 1993, the Fund for federal income tax purposes had
a capital loss carryforward of $9,580,334 which expires in 1995 ($156,476),
1996 ($791,359), 1997 ($3,077,752), 1998 ($316,627), 1999 ($1,132,354), and
2000 ($4,105,766) which will reduce the Trust's taxable income arising from
future net realized gains on investments, if any, to the extent permitted by
the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal income tax. Additionally, net capital
losses of $174,705 attributable to security transactions incurred after
October 31, 1992, are treated as arising on the first day (May 1, 1993) of
the Trust's next taxable year.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed transactions. To the extent the Fund engages in such
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with its investment objective and policies and not for the purpose
of investment leverage. The Fund will record a when-issued security and the
related liability on the trade date. Until the securities are received and
paid for, the Fund will maintain 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. OTHER--Investment transactions are accounted for on the date of the
transaction. Dividends and distributions to shareholders are recorded on the
ex-dividend date.
(2) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date. Capital gains realized by the
Fund are distributed at least once every twelve months and are recorded on the
ex-dividend 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 Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months
Ended
10/31/93 Year Ended
(unaudited) 4/30/93
<S> <C> <C> <C> <C>
Institutional Shares Shares Dollars Shares Dollars
Shares outstanding, beginning of period 15,724,052 $ 152,989,819 4,014,094 $ 46,084,269
- -----------------------------------------------
Shares sold 30,574,196 279,538,213 19,997,401 182,667,537
- -----------------------------------------------
Shares issued to shareholders in
payment of dividends declared 106,227 970,695 69,745 637,195
- -----------------------------------------------
Shares redeemed (8,074,173) (73,810,607) (8,357,188) (76,399,182)
- ----------------------------------------------- ------------- --------------- ------------- ---------------
Shares outstanding, end of period 38,330,302 $ 359,688,120 15,724,052 $ 152,989,819
- ----------------------------------------------- ------------- --------------- ------------- ---------------
<CAPTION>
Institutional Service Shares Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 1,709,356 $ 15,592,843 88,464 $ 795,019
- -----------------------------------------------
Shares sold 2,896,348 26,477,764 2,134,568 19,489,051
- -----------------------------------------------
Shares issued to shareholders in
payment of dividends declared 46,843 428,004 28,299 258,676
- -----------------------------------------------
Shares redeemed (1,086,012) (9,929,008) (541,975) (4,949,903)
- ----------------------------------------------- ------------- --------------- ------------- ---------------
Shares outstanding, end of period 3,566,535 $ 32,569,603 1,709,356 $ 15,592,843
- ----------------------------------------------- ------------- --------------- ------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser ("Adviser"), receives for
its services an annual investment advisory fee equal to .40 of 1% of the Fund's
average daily net assets. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion. For the six months ended October 31, 1993 the
advisory fee amounted to $485,265, of which $177,985 was voluntarily waived.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Fund will pay Federated Securities
Corp ("FSC"), the principal distributor, up to .25 of 1% of the average daily
net asset value of the Institutional Service Shares. For the six months ended
October 31, 1993, $28,043 was payable in distribution services fees.
Administrative personnel and services are provided at approximate cost by
Federated Administrative Services, Inc. ("FAS"). Certain of the Officers and
Trustees of the Trust are Officers and Directors of the above corporation.
(5) INVESTMENT TRANSACTIONS
Purchases, and sales of investments (excluding short-term obligations) for the
six months ended October 31, 1993, were as follows:
<TABLE>
<S> <C>
PURCHASES-- $ 226,962,269
- ------------------------------------------------------------------------------------------------- ---------------
SALES-- $ 34,092,851
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
Wesley W. Posvar Edward C. Gonzales
Marjorie P. Smuts Vice President and Treasurer
John A. Staley, IV John W. McGonigle
Vice President and Secretary
John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Victor R. Siclari
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves 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.
